#ITC2017 – The Daily Fintech Review

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The networkers networked.  The start-ups hustled.  The investors swarmed.  The consultants consulted.  The incumbents searched.  And the rest, listened and learned. #ITC2017 was a great event, that brought over 3,500 Insurers, Reinsurers, Start-Ups, Investors, tech firms, consultants and more, from 48 countries together, to discuss Insurtech – anything and everything that has to do with it.  

I had three goals from ITC:

  1. Prospect for my business
  2. Learn about new trends
  3. Find good sound bites/themes to write a good story about the event

About 3 weeks prior to ITC, Bernard Lunn, CEO of Daily Fintech sent me an e-mail with some advice on preparing for an event:

Reporting from a conference/event

Here is what I have learned from doing a lot of them.

Sipping from a firehose is the hardest issue. It is hard to know what to focus on. I have found two techniques to help with this.

  • Mega themes and big issues. Have a few that you are looking out for eg Reinsurance As A Service, pricing Catastrophe Risk. Talk to anybody or attend any sessions that connect to those themes and issues.
  • Let it emerge. Soak it in. This is the opposite of the first. Be open to surprises and feeling the mood of an event.

Enjoy and remember one big lesson of the digital age – what happens in “Vegas lives on YouTube forever”.

With 22 meetings scheduled over two days, my desire to attend 12 of the talks/panel sessions and wanting to view all the start-ups in the expo hall, it looked like I was planning for this, let alone a firehouse.  

There have been a lot of good and interesting reviews of the event and I encourage you to read them to get differing perspectives from the event.  I have included links to some of the ones I have found at the end of this article.  Just by the sheer number of reviews, one can see the amount of buzz there is surrounding this event.

I am going to be critical in some areas and also offer some potential ideas for next year’s event. This in no way takes away from my overall feeling over the event – that it was absolutely amazing one.  A big shout out goes out to Jay, Caribou and their teams. The event was grand and had the feeling and buzz of something big.  There was a lot of substance (I thought there would be more hype to be honest).  It was just great to see so many people excited to talk about Insurance.

Here are my key takeaways from #ITC2017:

The excitement of the event was second to none.  In fact, Insurance almost seems cool now…but how long will this feeling last?

In the hype vs. substance debate, I would agree that there was a lot more substance on display than I thought there would be.  However, the hype was still there, just more so in people’s minds (i.e. the attitude towards Insurance/Insurtech).  If you went to an Insurance conference a 10 years ago (this would have been in the midst of the last financial crisis), almost everyone would be wearing ties and/or a full suit and the theme would be rather somber.  Not here.  I hardly saw a tie during my few days there. Not only that, but we also got to see the standard Silicon Valley start-up solid color shirts with company logo on display.  And the mood was vibrant.  People were excited.  I’ve never in my life seen so many people excited about Insurance and for them to actually feel genuinely cool being in the industry too (I feel that way too, so it’s OK).  

An interesting question (that I have not seen in any other written reviews) was posed in the pre-conference workshop hosted by Hannover Re and Sureify – ‘when will the burnout happen?’.  I found this to be one of the more provocative questions that I heard asked throughout the conference.  

There is an opportunity right now to implement tons of really interesting new solutions to the Insurance value chain.  Many of these solutions happen to be technology, which has helped to dub the term ‘Insurtech’.  I feel that, a bit, just like Fintech, because Insurance has now added a ‘tech’ to it, it feels cool to be in the Insurance business.

However, one day, these solutions will be considered ‘normal’ as it relates to the value chain, and that’s when I think the burn out will happen.  That’s when people who were here for the hype will move on to the next big hype/opportunity, and hopefully there will be some washout of the solutions (and people) that are not so good – allowing for the really good ones to really shine.  

Why such a focus on this?  Because the conference helped to remind everyone what we are here for…

We are here to find solutions, not build technology

I’m just going to come out and say that James Siminoff, CEO of Ring, was the WWE equivalent of a babyface at ITC2017.  His emotionally charged interview with Telisa Yancy from American Family, reminded me of why we are here.  His quote “Humans don’t love technology. They love solutions that make life better. Sometimes technology becomes that” has been mentioned many times so far.  And I couldn’t agree more.

Insurance is a business where we provide people with peace of mind, allowing them to know that there will be a monetary solution provided when they suffer a major loss/accident (or minor, depending on coverage purchased).  This loss/accident can either in the form of health, death or to some sort of property, and the solution is at a time when a person typically needs it most.  That is the core of our business.  

And because that is the core of our business, Insurance is REALLY important to the people who purchase/use it.  That’s why, there was such a focus on customer experience during the event (well, at least it was mentioned a bunch of times throughout the conference…)  

People that have been around the business for a while, or really understand this business, know this.  They know that technology is simply an enabler to improve the Insurance value chain, and that the fundamentals and principles of Insurance still need to be considered, in addition to, the new sources of information (i.e. data), available to them.  

What’s great, is that with some of these technology solutions, not only can we help our customers when they need it most, but we can also engage with them to help them prepare for the events when they need it most.

When we marry the two – fundamentals/principles of Insurance and technology together, then we can find solutions to improve what keeps being mentioned – customer experience.  

As mentioned in some of the other review articles, more incumbents were present than last year.  In my mind, this is important, as they can help teach some of the start-ups the fundamental and principles of Insurance, as well as the operational aspects of their business.  Start-ups, especially tech start-ups, are good at being nimble and offering solutions for incumbents, but they need to understand them first.  In this regard, I personally found that…

The industry ‘vets’ are not the traditional ‘vets’ you would expect

If you take a look at the speakers list for the conference, the majority are from start-ups. Yes, some of the more active Insurers/Reinsurers in the Insurtech space like AIG, AXA, Munich Re, XL Catlin, Chubb, Hanover Re and Allstate featured in some talks, but the list was dominated by start-ups.

‘The Insurance Company of the Future’, session, which featured Nick Martin, Fund Manager at Polar Capital, Steven Mendel, CEO of Bought by Many, Assaf Wand, CEO and Co-Founder of Hippo and Kyle Nakatsuji, founder and CEO of Clearcover was standing room only.

This is quite telling.  People attending the event wanted to hear from some of the new Insurance CEO’s on their take of how Insurance companies will look in the future…looking to them as the vets of the industry.

I was able to spend some time with Kyle and Assaf both individually.  If you take a look at their LinkedIn profiles, they only have a few years of pure ‘Insurance’ experience.  They have been able to, however, learn the principles of Insurance (Assaf through being around it with his father being a senior executive in the Insurance industry and Kyle helping start the Venture fund at American Family), and apply these principles along with technology, to build a proposition that is unique for customers for a variety of reasons.   

Talking to them, I felt as if I was talking to people that had been working in this business their whole life.  They really get Insurance.  It’s not about applying technology to the Insurance value chain, it’s about looking at the fundamentals of Insurance, seeing what customers need and what they don’t need, and then offering it to them, in a way that they would prefer to get it.  Technology is a primary helper in this, but it is not the main driver.

It’s actually quite simple if you start to look at it this way.

This is not to say that the incumbent C-suite that were there didn’t have something valuable to say.  They did.  The session by Benoît Claveranne, Group Chief Transformation Officer of AXA was one of the more informative ones that I attended.  I also heard and have read really good things about the session with Rob Schimek Executive Vice President and CEO, Commercial @ AIG, but unfortunately, I could not attend.  Benoît made a few very key points during his talk:

  1. When a start-up approaches an incumbent, they should make clear what they are looking for – to be invested in, bought out, or partnered with.  A lot of time is wasted on this during early engagement, and will help move the conversation along if it’s clear early on
  2. For start-ups – make a call after 1-2 meetings to see if the incumbent is serious about doing business.  Do they have a budget and a team to develop it?  If not, it may be time to move on to the next client.  

The point I am making here, is that there is a wealth of information from both start-ups and incumbents, and people on both sides of the fence that are looking at the fundamentals/principles first, and tech as an enabler.  The more that incumbents can understand what part of the value chain they are trying to solve for, and what sort of tech solutions are available to them, and start-ups can understand the fundamentals and principles of Insurance, as well as the value chain, then there will ultimately be better opportunities to improve the customer experience.  In my opinion, it’s not really about us vs. them, and…

Partnering is key

Last week, I wrote about the announcement between Snapsheet and Keybank to launch Snapsheet Transactions.  There was another partnership announcement this week between Everplans and RGAx.  RGAx will become the primary distributor of the Everplans platform to all U.S. life insurance carriers.  In my conversation with Co-CEO and Co-Founder of Everplans, Abby Schneiderman, we discussed how the Everplans platform is a complementary service to traditional insurance offerings and how it can benefit a customer to have all of their important documents and wishes in one place.  In the event of something happening to them, their beneficiary can use this tool as a roadmap to their loved one’s life and wishes ,minimizing the burden of searching everywhere for documents.  Referring to my second review point above, a good and practical solution for the customer.

These are just two examples of non Insurtech companies, partnering with ‘Insurtech or Incumbents’ to provide better, holistic solutions for customers.  In addition to this, we saw drones at the event, Google Maps, Card Tapp and someone told me that they could now do underwriting based on a swab of the cheek.  For a more traditional type of announcements that you would expect from this type of conference, Qover, made an announcement with Munich Re, one of the more active Reinsurers in the space.  (See an exclusive interview I had with them here)

Bottom line is, in addition to the point I make on industry veterans above, is that collaboration is key.  It doesn’t matter whether you are a Fintech, Insurtech, Insurance/Reinsurance incumbent or some other technology based solution – we need to continue to look at things from a customer Insurance value chain perspective – and ask ourselves, is this really beneficial for them or not?  Because ultimately…

It’s not all rosy, and there a few things we need to look out for…

While there were a lot of good things from the event, as highlighted above, there were a few things that I took note of that need to be addressed.  It’s easy, when surrounded by such a buzz of an event, to have blinders on to potentially negative/risky things out there.  Here is the list:

  • There is a lot of data available now, and it can be scary.   With telematics, wearables and IoT, Insurance companies, just like Google, Facebook and your smartphone, will now basically be able to know every thing about you.  If Insurance companies were just going to use this for targeted marketing, that is one thing.  However, and rightfully so, there is a lot of talk about how data can be used in the underwriting process and pricing products.  This really needs to be handled with care.  Insurance and Reinsurance is a business of risk management.  If carriers have more data and get an idea of the customers that are really hurting their overall book, there is more of a chance that they won’t want to underwrite that risk at all.  Regulation can help with this, however, will regulators be able to pick this up and understand it quick enough?  Right now, it is still early days, so there are still opportunities to understand this before it gets out of hand.  
  • Risk Management and Customer Data Protection are not being discussed enough. Sure, they got touched on, but I didn’t see this as the focal point of many discussions.  All solutions that are being implemented, need to have a proper assessment of risk attached to it (this relates to my point on fundamentals and principles of Insurance).  What are the different risks associated with implementing these solutions – from a customer, company and market risk standpoint?  How is customer data being protected with the increased use of wearables?  How are we ensuring data is not being used improperly?  The amount of regulators present at the event shows the openness to working together with incumbents and start-ups to understand solutions and how they ultimately impact customers.  They will need to continue to be proactive in collaborating and start-ups and incumbents will need to be proactive in engaging too.  I touched on this a few weeks ago.
  • Global sharing is just starting.  48 countries were in attendance, which meant that many cross-border conversations and potential opportunities for collaboration were happening.  This has so much value, and needs to continue happening.
  • What about the other 5 billion? During the session Redefining the Insurance Value Proposition, Peter Gross, Director of MicroEnsure Labs mentioned that ‘there are 5 billion low-income people in the world, who wake up every day exposed to massive risk’. Some of the solutions featured during the event may be costly to a customer – especially one that falls into this low-income category. This infographic shows the percentage of people with Microinsurance from parts of the world that have higher concentration of low-income earners.  For these people, Microinsurance may be all they can afford.  While some of these numbers are a bit outdated and they would have increased over the past few years, they would still not be as high as some of the Insurance penetration levels we see in some of the more developed markets like the US and UK.  How do we as an industry help these people to get access to Insurance/protection?  
  • It is apparent that some are just trying to cash in on the Insurtech gold rush.  I get it.  There is a lot of hype around Insurtech right now and a lot of money flowing into it.  So, you want to take an opportunity to get into it.  That’s fine, but at least be honest about it. The amount of people I spoke to that couldn’t explain to me in 30 seconds or less whether their solution was for a customer or carrier was not encouraging.  And from the other side, the amount of people who told me they were now an Insurtech innovation lab or incubator, just because had years of experience in Insurance was also not good.  Unfortunately, I only found this article after the event, but I think it is a really good future guide for events when speaking with start-ups.  And for those trying to advise or consult start-ups/incumbents – please articulate what you do, have done and what makes you different.   If you don’t know exactly what you can offer, just admit this, and say ‘we’ve been in the industry for a while and can better help start-ups to understand it’ or ‘we have a pretty cool technology that we think can be applied to Insurance, but are not sure yet how’. Being sincere and honest will take you a long way.

My two recommendations for next year’s event

It’s easy for me to write about how great the event was and also give some critical feedback of the event, but I also want to offer two ideas to the organizers for next year’s event:

     1) Let’s crowdsource the best ideas/learnings from the event

It is impossible to attend all the sessions, visit all the booths and still have time for networking.  There were so many good things to learn from the event, and everyone should have the chance to hear it all.  As review based scoring is how a lot of us shop nowadays, a crowdsourced review platform from all the attendees would help people to see content and/or share ideas that they may not have been able to get exposed to at the event.  This may also help to find the solutions that may be ‘real’ vs some of the ones that are ‘hype’.

     2) Workshops for start-ups/incumbents

This one may be a longer shot.  Lot’s of people at the event were looking for something – partners, funding, a story, etc.  For some, they had problems they were hoping to get solutions from.  For incumbents – maybe it is how to go about their digital strategy.  Or, how to best identify a start-up to work with.  For start-ups, maybe they needed that final piece to work through to make their solution a great one.  

Right now, the options for these folks is to go to a consulting company or an accelerator/incubator/innovation lab (both of which are OK options).  Since there are so many people here with such a wealth of knowledge, it would be great to see some opportunities for them to work through these problems during the conference itself.

Summary

I spoke with one of my friends in the UK who attended the event last year.  He explained that he felt like the only non-American at the event.  He did not attend this year, but we spoke a few days after the event.  I explained to him that the intro slide from Caribou showed that there were participants from 48 countries in attendance, and it certainly did not feel like an American only event.  There are things happening all around the world, and at much different paces than others (primarily due to regulation).  Sharing these ideas and best practices globally, will be the next evolution of Insurtech, allowing the customer to ultimately benefit from the innovative solutions happening around the world.  

Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

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Links to other reviews of ITC

Oliver Wyman, the presenting sponsors of the event, had a nice summary here and here one too

Insurance Journal had one of my more favorite ones

CB Insights has if you like more data than words

Some really good ones here and here and here and here and here and here and other nice ones here and here and here and here

A good contrast from last year

And some top quotes from the conference

 

#ITC2017 carries on and two start-ups driving meaningful change – Haven Life and Snapsheet

ITC

Waking up at 4:30 in the morning for my flight on Monday, I did not expect to see the news that I did, when checking if my 6:50am flight was on time to head to Las Vegas for Insuretech Connect.  Receiving an e-mail from Jay and Caribou at 6:11am affirmed that I would be heading there and the event would be on.  It was a horrific and sickening event and I send my heartfelt condolences and wishes to those that attended the event or had family and friends that were there.

I was physically shaking when I arrived on the strip around 12pm.  I wasn’t really sure what to expect.  

While the streets were quieter than normal and there were police everywhere, Jay and Caribou’s statement in their e-mail ‘the people of Las Vegas are united in strength and resilience’ seemed to be true.  I walked into Caeser’s Palace, and people were happily gambling, drinking and laughing, as you would expect to see in Las Vegas.  

As I strolled across the casino and up the escalators to the conference rooms, I started seeing more and more business-casual dressed people, wearing a similar name badge.  #ITC2017 was on.   

The event, as with any conference, had some really good things, some that were ok, and some that could use some improvement.  For next week’s post, I will do a write up and summary of the event in total.   A quick thank you goes out to the organizers and all staff working the event. It was amazing to see so many people energized to talk about Insurance! 

For this week, I am going to feature two start-ups who made announcements this week (one at the event, one not).  These two announcements were not the ‘sexiest’ of announcements/solutions.  These are not drone powered chatbots feeding the blockchain.  However, these are solutions, and enhancements to existing solutions that make fundamental step changes for the Insurance supply chain for their respective business verticals (one is life and one is auto).  I also had the opportunity to speak with senior management from both of these companies and get some further insight as to how they view Insurance and how their companies are impacting the industry and enhancing customer experience.  

Haven Life

Speaking of customer experience, these two words were mentioned in almost every conversation, panel talk and workshop that I attended this week.  As it should be.  What is it that we can do to help with the customer experience value when it comes to Insurance? For Life Insurance, Haven Life may have the answer.  

Haven Life is a US Online only Life Insurance startup that is backed and wholly owned by MassMutual.  

On Wednesday, Haven Life made some big announcements, namely the introduction of a ‘real rate’, in addition to dynamic underwriting, optimization on all devices and some new UX and logo.  The ‘real rate’ is a real game changer as it relates to the Life Insurance purchase process in the US.

Ever applied for Term Life Insurance online in the US?  The first step in the purchase process always starts with a quote (regardless of sites like TruStage, AAA ExpressTerm, Fabric, Ladder Life or Quilt). This has been the industry standard for years and has worked for some time.  Even though some companies I just mentioned ask a few more questions than others, to make the quote a bit more close to the actual, the quote still remains, a quote.  This is OK if you are a non smoker, in great health, with no previous medical history and who never travels overseas.  However, for those that don’t, who have to go for a medical exam in order to get an actual rate, may be surprised when the rate comes back much higher than the original quote and in even more extreme circumstances, not even be offered a rate at all.  It would be nice to know upfront, wouldn’t it?  After all, doesn’t that help to positively impact the customer experience?

Haven Life sure thinks it does (and I tend to agree with them).

With the introduction of the ‘real rate’, Haven Life’s platform asks an applicant the underwriting questions first (and not just in a long form questionnaire form). A list of options is then presented to the customer both in terms of coverage term and amount. These rates are based on answers in the application, and industry standard third party data (such as identity verification, prescription history and motor vehicle records) that is collected on the applicant. This information is then analyzed in real-time using proprietary expert systems that the Haven Life team built in partnership with MassMutual.  In some cases, qualified applicants will not need to go for a medical exam to get their policy – they may simply purchase and their policy will be issued.  For others, they may need to go for a medical exam.  However, due to the emphasis on providing a ‘real rate’, it’s likely their final rate won’t be too far off from what they saw (unless they failed to disclose something during the application process).  

Below is some Q&A between Haven Life’s CEO Yaron Ben-Zvi and I.

Real rate vs. quote – Would you please explain to me the difference between the two?

It’s an industry standard to lead with an initial Life Insurance quote from the beginning, which is based on an applicant’s perception of their health without reference to underwriting guidelines. Starting with a quote made sense when it took a manual underwriting process several weeks to find out your eligibility and final pricing. However, because every company views medical conditions differently from a pricing perspective, the quote only provides a vague estimate of cost and often results in people being disappointed with their final price. If you were to price compare quotes across sites, it would be a general estimate that doesn’t factor in much about you as an individual. Therefore, it’s probably going to be pretty far from what coverage would actually cost you – especially if you have a more complicated medical history.

We see an opportunity to provide more transparency into pricing (and ultimately to build more trust) than there has been before. We have created the technology to take an application and underwrite customers in real-time. Why provide people with a quote when they can just answer a few more questions about themselves and know their real rate?

So, an applicant will only get a real rate once they have filled out the questionnaire. What happens once the questionnaire is complete?

There are three core experiences an applicant is met with when getting their real rate:

  1. They qualify for our InstantTerm process, which means they get their real rate and can instantly start coverage with no medical exam required.
  2. They get their real rate, pending a medical exam. In these cases they can start temporary coverage immediately and have up to 90 days to complete their medical exam.
  3. We can’t provide an applicant with a real rate or with temporary coverage, because we need additional information, such as a medical exam, to determine if they’re eligible for coverage. In this scenario, they won’t be able to start coverage immediately. Once underwriting is completed, we follow up with a decision on coverage eligibility and their rate. While this isn’t our ideal user experience, it’s still far more streamlined than the traditional application and underwriting process because the application was done online, and we’re able to utilize our algorithmic underwriting platform to analyze the medical exam results combined with the application data.

It’s worth mentioning that we find that most people schedule and take their medical exam within two weeks. We make it very easy to schedule and complete the medical exam from wherever an applicant prefers. As a result, many applicants complete the entire process, including the medical exam, within a matter of days.

For people who qualify for our InstantTerm, no medical exam process, it will be their real, final rate. For people who fall into scenario 2 that we outlined above, a medical exam will be needed to offer a final rate. With many applicants, the rate will be the same or very close to the final price so long as the applicant disclosed their full medical history and there are no surprises in the medical exam. The estimated rate we give them is much more personalized and accurate than a general quote.

Part of the reason we are doing this is because of pain points we saw in our own process. When we launched, we led with the upfront quote (but made it self directed and no-contact-information-required) as a way to give people an idea of how much coverage costs. What we found was that some customers were frustrated if their price was higher after the underwriting process. Understandable.

I agree with the points you make.  Customer education will be key here, right?  

While we’ve gotten a lot of positive feedback about our experience, it disappointed us to disappoint some people with their final rates. Coming out of those experiences, we saw an opportunity to focus our efforts not so much on a quick-win quote but on providing real, honest, personalized rates. That said, we do still provide estimates if people want to do high-level research in a few seconds, but we try to set their expectations better by actually showing them prices for a range of rate classes.

That’s great and makes a lot of sense.  If I understand correctly, only if an applicant is approved, then all the options of coverage/terms will be made available to them (under whatever limits they can be approved for based on the data you have collected). Is that correct?

Great question, and this is a nuance that is a big deal and that we’re very excited about. Traditional Insurance processes require that you select a coverage amount without having a real sense of what your premium will be. At Haven life, when you get your real rate, we are providing you with all the coverage options you may qualify for. Some clients already know upfront how much coverage they need, so we do allow individuals to include it in their application in order to confirm eligibility for a specific amount. But for many clients, it makes sense to make a final decision on coverage and term length once you know how much you’ll be paying. Clients can dynamically increase or decrease coverage based on their financial need and budget.

Additionally, now this page allows you to see how much coverage you qualify for and what the price difference is. So, if you maybe wanted more coverage but thought you couldn’t afford it, you now know that there is a small difference that fits in your budget between the 20-year, $400,000 policy you applied for, and the 20-year, $500,000 policy you actually wanted.

Currently, Haven Life coverage starts immediately, even if still need medical, will this still be in practice?

Yes, our aim is to provide as many people as possible with an instant decision on coverage eligibility and allow them to start their coverage immediately. For many people, we can. That was one of the aspects of the process that frustrated me most when I went to buy a policy years ago, and ultimately, that experience is why I created Haven Life. You give up all this time and information about yourself and then have to wait several weeks to find out if you’re even eligible for a policy. Life Insurance buyers – who are usually husbands, wives, parents – want and deserve the instant peace of mind in knowing they have protected their family.

How can Haven Life limit the questions and still ensure good underwriting results as to not disrupt their long term profitability models?

It’s largely due to a combination of the underwriting platform and the mortality model we built in partnership with our parent company MassMutual. The application taking and underwriting process were traditionally two of the most time-consuming aspects of the Life Insurance buying process. The problem was that the data being reviewed was not dynamic and personalized to the individual and was also being reviewed manually. This led to many applicants answering questions that weren’t at all relevant to their situation. We were able to streamline the application and remove questions that weren’t needed in the underwriting process. Also, questions in our process are reflexive, so we only ask applicants questions that are relevant to their medical history. Lastly, we use industry standard third-party data sources, including Rx history, in order to identify cases which are eligible for our InstantTerm process or which may need additional information (like a medical exam). This allows us to improve and shorten a customer’s experience by tailoring the application process to each individual.

Snapsheet

Snapsheet is a claims management solution for US Automobile Insurance that has been around since 2011.  Snapsheet is a virtual claims provider that integrates with existing carriers to make the claims process frictionless for the carrier, customer and adjustors alike.  Their solution is white labelled and is currently being used by carriers like USAA, Liberty Mutual and The Hartford.  From the notice of loss to repair, the process takes about 2.5 days.  

But that wasn’t enough for Snapsheet.

On Tuesday, Snapsheet also made a big announcement, that they have partnered with Keybank, to launch Snapsheet Transactions, to complete the final step of the claims process – payment to the customer.  The industry standard for the US Automobile Insurance market is to pay claims by check.  A major reason to this is due to carriers having legacy systems and the checks enable for better recordkeeping.  However, with Snapsheet Transactions, Snapsheet is able to integrate directly with the legacy systems so they still have records, but now the actual payments are digital.  

I had the opportunity to sit down with Dan Colomb, CTO of Snapsheet and Alex Meisner, Director of Innovation for Snapsheet, during Insuretech Connect.  Below is a snippet from our conversation.

Summary

A cynic may look at these two announcements, and say, ‘big deal, Stephen, the first one does dynamic underwriting and moved a quote from the beginning to the end and called it a rate – and the other one is just doing e-payment, which was only a matter of time anyway’.  And that’s the problem (cue the foreshadowing for next week’s post..).  Many people are so concerned about the latest, greatest and sexiest chatbot, AI tool, drone, blockchain, etc, that they tend to overlook the fundamentals.  Let’s be transparent and give customers money in a timely manner.  Don’t get me wrong; the other stuff is cool, real cool.  And it is going to massively change and transform our industry.  However, as mentioned in my first post, the ‘existing stuff’, is still around, and is still going to be around for a long time.  Customers of the ‘existing stuff’ need enhancement to ensure that their experience is a great one.  

Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

 

Can governments collaborate when it comes to Insurtech regulation?

partner

When I first started writing this blog a few weeks ago, I never, ever thought the first quote that I used would be from Donald Trump, but here we go…

Last week, during his speech to the UN, President Trump said the following:

‘All responsible leaders have an obligation to serve their own citizens, and the nation state remains the best vehicle for elevating the human condition. But making a better life for our people also requires us to work together in close harmony and unity, to create a more safe and peaceful future for all people.’

Daily Fintech is not a political site and I will focus on Insurtech and financial services regulation within this post.  Although I have used a quote from Trump, this does not make me a supporter of him or his policies.

There has been a trend recently in the world with countries looking inward towards expanding their own economic priorities (i.e. Brexit).  I’m not going to debate whether this is right or wrong.  Looking at the end of Mr. Trump’s quote ‘making a better life for our people also requires us to work together in close harmony’, I find this to be the most interesting as it relates to our industry.  

As mentioned in my first post, I have lived and worked in the US, Europe and Asia.  Each place I lived in had many differences, but a lot of similarities too.  Within the insurance and financial services industry, the differences between product offerings and services in different countries primarily comes down to customer preferences and savviness.  However, the high level concerns that customers have when investing in an insurance or financial product are quite similar in almost all markets exist:

  • Will the financial institution, either insurance company or bank, become insolvent? And what sort of laws are in place to ensure the financial institution does not do something irresponsible with my money?
  • How are brokers/agents remunerated and does this drive bad behavior?
  • What sort of data is being collected on me, how is it being collected and how will it be used?
  • Am I getting good value for money?

The answers to these questions may be different, depending on the market.  They do form some of the fundamental questions that customers will have before making a decision to purchase.

This is where regulation comes in.  Regulation is there to help give customers peace of mind in saying ‘I know this big financial institution I am investing in has some rules governing it, and even though I may not understand this annuity/Insurance policy/ETF/fund, etc, I feel safe in knowing that there are laws that protect me.’  

When I was living in London, the Retail Distribution Review (RDR), was coming into effect.  While in Malaysia, the LIFE Framework was announced, which had a lot of similarities to FAIR in Singapore.  Not too long after this, the DOL Proposed Fiduciary Rule was released.  All of these were aimed, in some way shape or form at protecting consumer’s interest and enhancing the industry proposition in these respective markets.  I remember thinking at that time, ‘if these regulators just got together to discuss this, find out where the commonalities and differences are, then maybe they can help each other within their own regulations and probably gain from some lessons learnt in countries who have walked this path before them.’

Then, this week, I saw some news which gave me some hope:

FCA strikes third fintech pact with Hong Kong

Financial Regulators Of Japan And Abu Dhabi Global Market Cooperate On Fintech

U.S. and EU Sign Covered Agreement on Insurance Regulation

While I do have my reservations on the US and EU agreement and the statement regarding reinsurance to ‘eliminate collateral and local presence requirements for EU and U.S. reinsurers operating in each other’s markets,’ all of these collaborations represent a growing interest by regulators to understand quickly growing disrupting market forces, in an effort to protect the customer.  

Many of the innovations we are seeing in both Fintech and Insurtech are amazing, and will provide for a differentiating proposition and experience to customers than we see today.  However, many of these technologies are advancing at a speed much quicker than regulation can keep up with.  Depending on the market, and existing regulation in that market, new offerings can come to the market without even the need of being looked at by the regulator; meaning new financial solutions could be available to customers that have no protection to them whatsoever.  There have always been these kind of alternate solutions available, however in the age of accelerations and digital economy we are living in, these can be launched, marketed and distributed faster than ever before.  As such, it is important for regulators to not look inward only to what they are experiencing in their home market, but also what is happening abroad.  The International Association of Insurance Supervisors, could help with this.  From my experience, regulators are learning about innovation and are generally quite open and receptive to it.  Now the real question is what are some of the tangible first steps that can be taken to enhance and promote innovation?  This can help to avoid an Uber type situation in insurance where startups are forced to look for loopholes and other ways to do it, in spite of regulation.

With platforms like Open Source Initiative, people can collaborate and share ideas worldwide.  As such, it would make sense that regulators stay on top of developments in other countries, so from an Insurance and Financial services standpoint, we can, as Mr. Trump so eloquently puts it, ‘create a more safe and peaceful future for all people.’

Look forward to seeing many of you next week at Insuretech Connect!

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Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Tropical storms pour flurry of topical Insurance news in advance of Insuretech Connect

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I do not want the title of this week’s post to upset anyone who has been affected by any of the recent storms we have seen hitting the US or Caribbean Islands.  My thoughts and prayers do go out to those and their families that were caught in these awful storms.

These storms have been in the headlines for weeks, not only for the devastation that they are causing to people’s homes and businesses, but also, how insurance will play into the process of rebuilding in these areas.

In parallel to reading the various articles about this, I have also been preparing to attend my first Insuretech Connect in a couple weeks time.  As I have been reading through the various topics and speakers that will be available, along with other current news relating to Insurance and Insurtech, I wanted to list out some of the things I’ll be looking to learn about more and discuss with those of you attending Insuretech Connect.  

(This is also some foreshadowing to some more detailed topics I will discuss in future posts!)

Catastrophes – reminding us just what is important about Insurance

Doing a quick Google news search of the terms ‘hurricanes insurance’, the other day, a variety of headlines came up, a sample of which included:

Flood insurance rates impacted by hurricanes

How to get the most from your insurance company following a natural disaster

Hurricane Irma will hammer insurance industry — up to $65 billion in damage is projected

As an insurance professional, these articles bring to mind the 3 pillars of Insurance. These three pillars are critical in the Insurance supply chain, and wherever you sit in that chain when it comes to Insurtech, you need to understand these 3 fundamental things (these pillars are applicable to all types of insurance, not just catastrophe insurance).

  1. PricingWas the policy I purchased priced properly to take care of the costs of the insurance company running their business and will they have enough
  2. Reserves – to pay my
  3. Claims – in a timely manner.  Cue…

Smart contracts are the future of Insurance (and everything else)

AXA has launched a new travel insurance product last week which will utilize smart contracts based on the blockchain to payout claims.  AXA is not the first to launch an Insurance policy with a smart contract, but it does represent a trend for both the Insurance and financial services industry as a whole to migrate to blockchain.  The blockchain and it’s uses and benefits for the Insurance industry are a completely separate topic that I will write on in another post.  This trend is so important because of the third pillar, claims.  

In a conversation I had last week with someone influential in the Insurance industry, we agreed that the key inflection point for a customer in the Insurance supply chain is at the point of claim.  While many Insurtech startups and Insurance incumbents are focusing on the purchasing experience of Insurance for a customer, I don’t see enough focusing on the claims process.  Claims have many areas to think about:

1) How do you respond to a policyholder the moment you know they have to make a claim?  Making a claim means that you have just had a potentially devastating moment in your life (health procedure, car accident, death of a loved one, etc).  What is the first reply an insurance company gives to a policyholder when they find out they make a claim?  How do they demonstrate empathy with this customer, who may be dealing with tragedy?

With AXA’s product, a policyholder doesn’t even need to file a claim.  That’s the best reply an insurance company could give me when needing to make a claim…’We realize that your flight was delayed and we’ve credited money into your account as part of the claim for the coverge you have bought.  There is nothing else you need to do now…enjoy the rest of your travels.’  Brilliant!

2) How was the assessment of the claim done?  Was it based on a predetermined set of rules that was clear and transparent or was a decision made by some claims adjustor without any reason?

3) How quickly will the claims get paid?

There are many solutions that are in the market now which address these questions in silo.  Further, it is much easier to address these questions in more common, smaller-sized claims.  As full stack Insurtech moves more into the life and health space, these questions will need to be more closely analyzed and carefully addressed.  

The next topic does not relate to the recent news on Hurricanes, but was in the news last week and are very interesting when it comes to Insurtech, and is a common theme we have covered here in Daily Fintech before

Insurtech doesn’t need Insurance incumbents, right Reinsurance incumbents?

Last week, Metromile announced their partnership with JLT Re.  Since I have been following Insurtech, I was amazed by the amount of work being done by Reinsurers in this space (particularly Munich Re and Swiss Re).  I say I was amazed, because once I thought about it more, it made complete sense as to why they are.  In the most basic of explanations, Insurers use Reinsurers to pass on some of the risk it takes on from the business it writes.  However, if Insurtech, and the various benefits that can be brought to an Insurance incumbent in terms of more efficient and dynamic pricing, better claims ratios with less fraud and less expense overhead with use of digital (to name a few), will those same incumbents still need to pass on that risk to Reinsurance?  Well, it seems to me that Reinsurance incumbents don’t want to know the answer to that question, and that’s why they are so keen to enter the Insurtech space with authority and dominance – to ensure their relevance in the future.  

Speaking of Reinsurers and travel insurance…

I look forward to seeing many of you at Insuretech Connect in a week and a half to discuss these topics and more!

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Stephen Goldstein is an experienced Insurance executive and Insurtech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world.  Ride the Fintech wave by reading us daily in your email