Those who read me regularly know that I often talk about a decomposition of the value chain to come. Indeed, I believe that it will be necessary tomorrow for insurers to go further in their response to the needs of their policyholders at the risk of being supplanted in the commercial relationship. The example above is symbolic for me of this situation! Subaru, automaker, intermediates the insurer in the proposal of a motor insurance. This is obviously not new, but it raises again the question of the role that can play the trademark of the insurer in this if it no longer assumes the distribution to the client.
The blockchain is dead, live Hashgraph
Links: Article from Journal the net – Hashgraph .
When it comes to blockchain, it happens quite quickly that we fall back on the technical difficulties of scalability and performance. A new technological solution would make it possible to overcome a number of these constraints. The proposal seems interesting and the subject promising, but we are obviously still far from a concrete applicability. All you have to do now is read white paper to get an idea ( Note: I have not read it yet! )
There is a lot of talk about affective computing or how artificial intelligence could move us on the path of emotional intelligence. However, so far, few reliable sources allow to see more clearly what happens. We knew the solution of Affectiva , we can now add Cogito. This solution is based on sociometers, developed by an MIT team. It’s about detecting subtle signals in speech, tone and body language, regardless of the words used.
Innovation in insurance is not only new technologies that come to transform the business, they are also new risks . We talk about cyber risk very often, but here’s another, quite unexpected, but still difficult to manage.
Karl Heinz Passler is one of the leading influencers in the insurance innovation market. He is very active on the social networks , and a little less frequently on his blog, but the article above presents some often simple ideas for boosting car insurance!
Oxbow Partners is a UK-based consulting firm dedicated to the world of insurance. More specifically, they are specialized in topics that are changing the world of insurance, through 3 entry points: strategy, digital, and M&A. They just released a report called “ The 25 insurtechs Oxbow 2018 ” .
I share the point of departure of Oxbow Partners, according to which there is no reliable criterion of comparison of insurtechs currently.
Some are interested in raised funds. However, I think financially speaking, raising money is not necessarily a positive criterion for a startup. Indeed, if it is necessary to pass caps, it can mean that it can not finance its growth alone.
I decided to classify them according to their contribution to the business value chain, but it is just as debatable because I do not take into account their economic sustainability.
In short, Oxbow Partners made its selection according to the following criteria:
In addition, they take up a concept now commonly accepted: insurtechs today are not only distributors (B2C), but are facilitators or accelerators in B2B.
Last interesting element, represented under the diagram below, they consider that after the abandonment of a phase of competition, in favor of the collaboration between big groups and insurtechs, one should see reappearing soon a competition of another kind . This could be explained, according to Oxbow Partners, in the event of insufficient commitment by insurers.
Selection of 25 insurtechs Oxbow 2018
The selected startups belong to 4 categories:
Distribution: These players are looking for end customers and need insurers or reinsurers to provide them with products
Data & analytics
Claims and fraud
These last 3 categories are actors who need insurers as clients.
Here is the selection presented differently.
The last pages of the report present a summary in 1 or 2 pages for each of the selected solutions.
When we look at the connected objects of vehicles, or more technically what is called telematics, a major problem appears: the exploitation of data! The startup Otoconnect focuses on this segment and is working on the provision of multiple connectors, around a first target, the portability of contracts under the GDPR regulation. Continue reading “Otoconnect – Vehicle’s data platform”
The question of personal data and above all health data is really sensitive in France. Market players are also very focused on these issues in the context of the arrival of the GDPR regulation. However, this is the moment chosen by the Social Security to try an initiative really out of the ordinary. In an attempt to fight absenteeism, the Social Security has communicated to companies, whose absentee rate was 4 to 5 times higher than the average, the reasons for work stoppages, and first those related to MSDs ( Musculoskeletal disorders) and those of the PSR (Psycho-Social Risks).
The stated objective, in agreement with the trade unions, is to encourage the company to question the practices, and to consider prevention solutions upstream.
We are here in a very interesting process of exploitation of health data for the purpose of prevention! Crossing sources now allows this type of analysis, and it is interesting to note that neither the French CNIL nor the unions have opposed the approach, which shows the quality of the exercise!
Case to follow in a few months, with the first results of the test and an extension of the companies concerned.
Expanding Google’s artificial intelligence in Paris
Following his visit to Paris on the road to Davos, Sundar Pichai, CEO of Google has announced its desire to strengthen, in Paris, his team dedicated to artificial intelligence. France is positioning itself as a real actor for the future on the subject.
More interesting, it turns out that Google’s offer tends to a SaaS offer, on the shelf, intended to be accessible to everyone, even without knowing how to code. This is the goal of Cloud AutoML vision (ML for machine learning).
Note: There is a free trial, I note in my todo to go try for you! If you have a specific use case (why not the pictures during claim’s FNOL), let’s do it together!
Emotional intelligence, or the complement to artificial intelligence
A reminder of what is emotional intelligence and how it is now essential! In a context where artificial intelligence seems to take more and more space, it is interesting to follow a subject for which the role of the human seems to remain necessary!
The event to be
Novarica and the IOT insurance observatory offer a webinar on their research on February 28:
Matteo Carbone is an opinion leader in the insurtech industry today as one of the most prominent on the market. He created the Connected Insurance Observatory, an international working group, first in Europe, then in North America, dedicated to insurtechs. Matteo participates in numerous conferences around the world throughout the year. He unfolds his theory of 4P’s of insurtechs, and I wanted to make a presentation for a long time.
The 4P’s of insurtechs
First of all, you can listen to Matteo Carbone in his presentation at the 2017 Global Insurance Symposium in Des Moines.
You can also find slides at this link, if you are an aficionado of his prose, without listening to his wonderful English accent!
Key points to remember
According to Matteo Carbone, insurtechs can intervene on 4 axes:
Productivity : be more efficient
Profitability : get a better technical result
Proximity : to be closer to the customer and his needs
Sustainability of the portfolio (the term it uses is “Persistency” which means persistence over time, and therefore no attrition): Build a profitable portfolio on the long run term, with a small rotation.
In the absence of these objectives, there is no interest in innovating because the solution will not bring anything useful.
The second subject addressed in this presentation is telematics, because it is one of the key topics of Matteo Carbone. The Swiss Re report which I was echoing a few months ago is directly worked with him, when it comes to the Italian example.
3 topics to consider:
The connected object : often a black box connected to the vehicle
Insurance coverage : and the notion of incentive reduction associated with it
Associated services : access to a set of additional services that can be provided for a fixed fee.
Under the arguments that telematics allows of itself and of course a selection of the best risks ( Note: it is questionable ) and a better controls of the compensations ( Note: that on the other hand, I share ), he comes to the conclusion that the financial result of the insurer is improved thanks to this technology.
It is also possible to rework the customer experience on all of its use of the vehicle and the different needs that might be relevant. Note: this aspect is absolutely essential, because it is from the use that one deduces the exploitation that one can make technologies.
Finally, the figures it presents show that attrition will be lower with telematics than without (11% instead of 14%).
In short, that positive points!
I share a lot of Matteo’s conclusions.
By reading, you will understand that the questions of use and business need interest me first. The 4P’s of insurtechs are a key to reading that is interesting to keep in the lead.
On the Telematics side, I am also convinced of the short / medium term prospects for the subject. I invite you to read again my note on it . Let’s discuss if you want to consider a deployment!
Mutli-line / Multi-year approach: which reduces volatility
D&O (Executive) policies continue to evolve and adapt to changing risks. The tailor-made is put on this profitable and dynamic market (new regulations, cyber risks, etc. which increase the risks for managers).
There is growing interest in combined fraud / cyber collateral, although these mounts do not always yield the best proposals. Note: It is understandable that customers are always looking to hedge against an unknown risk, but perceived as critical .
Kidnap & Ransom products are in full swing, because of an international geopolitical context that is sometimes hazardous.
Conclusion: My opinion
This report is a mine of information, very technical, but essential to a good understanding of the complexity of heavy risks. A disadvantage on the bedside table, but imperatively under the elbow!
In hollow, one sees there appear, as often, the insurance products which could be generalized tomorrow. The trends observed, especially on cyber, fraud or regulatory aspects are in this sense good indicators of the future.
Here is a little overview of articles that caught my attention and deserve to appear in the “press review January 15th, 2018”!
O’Reilly offers books on data and artificial intelligence
The famous publisher of computer science books has a library of 80 of its publications on big data, artificial intelligence and data science, published between 2012 and 2016. Essential detail: the download is free, in pdf, epub or mobi.
Remember: when it’s free, you’re the product! O’reilly asks for your name, first name and email to download, but nothing forces you to enter the real …
Not so accidental road accidents
Mathieu Grossetête is a researcher at the university research center on public action and politics. We propose in the Diplomatic World a reading interestingly, accidentology by car.
It appears that the prevention policies of Road Safety may now reach their limits because they are poorly targeted! Or when the art of data analysis becomes essential to better control a phenomenon, and treat it correctly!
Exciting article to read, which makes us rethink the notion of risk analysis, the perception of events. Finally, it simply invites us to change our way of thinking.
Typologies of wearables
Evan Kirstel, one of the leading thought leaders in connected health, offers us a panorama of typologies of connected objects for health, aka wearables. This one goes a little further than the usual dichotomy watch and bracelet vs balance!
Deloitte: human collaboration – machines
A visual of a Deloitte study, found on Twitter, gives an interesting reading of the symbiotic relationship that can develop between humans and machines. All thanks to the service rendered!
Axa and telemedicine
Jacques de Peretti, CeO of Axa in France announced this week the launch of telemedicine in companies and openness from service to experts.
The second service is the extension of the current service (which I had the opportunity to test personally and which is very good). On the other hand, the first one supposes major investments and questions around the model chosen by Axa.
The question of danger, posed by Olivier Harmant, is in my opinion not relevant.
However, what is the return on investment of this model for a complementary insurer? Indeed, a teleconsultation at the expense of the complementary supposes a cost support higher than the usual part. In order to be financially attractive, such a service needs to be either cheaper than normal consultation or to reduce risks. For now, teleconsultation is a vector of brand image and carries a demarcation line with respect to the competition. However, when everyone will do it, it will be necessary to consider the business model that goes with it!
Finally, should not this be the role of an intermediary platform? The latter would make this service available and look for the insurer who answers it. On the contrary here, it is carried directly by a complementary insurance? What does this say about our public health insurance? A lot of questions, few answers for now!
A conjunction of elements led me to reflect lately on the link between insurance, innovation and behavioral evolution! It is an opportunity to give you my point of view on the issue.
Insurance is often considered reactive. Indeed, it reacts to events called claims to compensate for the residual loss.
Campaigns, sometimes famous (I think about road safety), are intended to transform behavior upstream to reduce downstream losses. For the insurer, it is an initial investment that finds its ROI in reducing the indemnification. We are here in a model in which the insurer is a preventer and no longer just a compensator.
However, a lot of debate has taken place in recent years to give the insurer a more proactive societal role upstream to reduce risks and thus change behavior. The embedded telematics (with Pay-How-You-Drive offers for example) has often been seen as an incentive for good practice: if you drive better, I make you pay less. Ditto for connected bracelets of health: if you play sports, you will have a reduction.
However, we note that these approaches do not always work or that they are not effective. However, do not we say “chase the natural will come back at a gallop”? The challenge is therefore twofold:
Find new ways to influence behavior.
Adjust offers to better stick to individual behaviors rather than standardizing responses.
Nudges at the service of behavioral change
It will probably not have escaped you that the last Nobel Prize in economics (2017 ) was awarded to research on the so-called behavioral economy. To learn more, read here . This is also called benevolent manipulation.
I will not attempt here to detail fully the possibilities offered for insurance, because it deserves to think seriously about it. Anyway, I invite you to read the very good article from one of my competitors on the issue. Here is the example cited:
For some American motor insurances, the declaration of the mileage achieved in the year (n) conditions the premium for the following year (n + 1). The average rate of under declaration is estimated at 15% compared to the Km actually made. A Nudge has been tested to try to improve the statements. Instead of signing the declaration on honor at the end of the document, the researchers put it on the heading of the document, before the declaration. This simple change results in a 10% increase in the number of Km declared, a gain for the insurer of $ 48 per insured. The simple reorganization of the structure of the document, the architecture of choice, makes it possible to modify the behavior of the insured and thus to increase the income.
Some examples of nudges for insurance
Here are some examples of nudges that are or could be relevant to insurance depending on the objectives:
Reducing risks: The incentive to drive better.
The solution implemented by Liberty Mutual and relayed here consists of a mixture of gamification and information to drivers. Thanks to embedded telematics, the solution allows everyone to consult their driving information and to consider how to drive better and therefore how to reduce their premium, the discount rate being updated live every day for 3 months before being fixed.
By extending the exercise outside the pure scope of intervention of the insurer, we can note that tracing, on the road, shorter white stripes gives the impression of going faster and encourages you to slow down without even realizing it.
The incentive to subscribe:
A study relayed in the book above (London Economics and YouGov in 2013 for the FCA) showed the impact of the presentation of the insurance offer in parallel with another product. This is the case for example when buying the insurance when buying a mobile or cancellation insurance.
Beyond the questionable ethical aspect, this shows the influence of the distribution strategy on the choices of insured.
Segmenting the populations can be done according to a probability of underwriting. By identifying 3 segments (low, medium and high effort) using artificial intelligence, we can then determine who has the strongest probability of traveling the last mile to the subscription. These populations, for which the effort is small, will be treated differently and maybe receive, when the time comes, a little nudge! This can be a text message, a small message on the screen or a welcome email when giving the little extra that will be enough to convince them.
I will come back to these questions later with other detailed use cases to imagine more precisely how to use these methods.
Most of the current offers are very standardized. They take into account a need considered identical for all insureds. At the time of individualization, why could not we consider adapting the coverage more finely according to the real risks of the insured. I can already hear the reactions: “This is the essence of our job”, “We already do it”, the contracts offer options and choices of levels to ensure according to his needs. “Very good, but in truth, can one think otherwise?
The Wilov speech is very interesting on this point. Most auto insured drivers drive less than 50 days a year. Yet they are covered full time. By inventing the “Pay-When-You-Drive”, their starting premise is to charge drivers only when they drive! The price is not necessarily much lower, however, the feeling of the insured is much better (provided that the user experience is the appointment of course!).
The approach of Inspeer goes in a similar direction. Starting from the premise that changing the behavior is complicated, Emmanuelle Mury and her team are working on the notion of affinity groups that go around the use. Clearly, they identify similar behaviors, and create the corresponding supply. I will come back to this in a dedicated article!
In short, the notion of supply is still too much seen today as unique, identical for all. Indeed, IT systems did not allow to easily and quickly deploy variants and customization, or the illusion of personalization was at the marketing level. It’s time to move to a higher level!
And you what do you think? When do we start to revamp your offers?