Insurtech Chat is a Twitter chat hosted by Minh Q. Tran, Managing Partner of Odysseus Partners. For more information, please contact minh@odysseuspartners.com.
Q1: What makes you think that insurance is in a deep transformation phase?
A1: A series of factors are converging to make insurance change: technology and how it affects behaviors as well as the way insurance is processed, the evolution of societies (new economic models, new ways of working…), the global warming problem…
Q2: What are the major changes to expect in insurance?
A2: There are 2 main categories of innovation: one addresses the relationship between the insurer and the insured and the other tackles new ways of managing and processing the products and services. They are equally important.
Q3: Starting with customer relationship, where should it be going?
A3: In today's world, customer expectations have been redefined (I summarize them as TIPS, for Transparency, Immediacy, Personnalization and Simplicity) and insurer yet to meet them. This is where InsurTech is definitely taking the lead (Luko for simplicity and immediacy, Lemonade's Policy 2.0 for transparency), although some insurers are also doing well (eSurance during the Harvey hurricane).
Q4: What about the products and services?
A4: There are a few important trends: automation is one, especially with the aid of data science or AI (and it also helps with the TIPS), the focus on prevention, new products for new behaviors (the increase of frelancing, ridesharing, autonomous driving…) are other examples. They touch every part of the business: marketing, sales, risk modelling, underwriting, fraud management, claims, indemnification.
USAA (with Google) for analyzing damages
Q5: In the long term, where could this double evolution lead?
A5: I deeply believe that insurance, as a supporting service, will reach a point where, thanks to the technology available, will be embedded in our everyday actions, always present when needed but (almost) invisible. Look, for example, at the "automatic" travel insurance offered by Revolut or how Tesla sells its cars with an all-inclusive financing option.
Q6: You mentioned global warming before, what is your take on that?
A6: It is now taken seriously and it is obviously a critical challenge for insurers, since it will increase the frequency of unpredictable events. It has been said (Ernst Rauch, Munich Re) that not everyone will be able to afford insurance in such a future. At least, it will require to completely reinvent the existing models, for example putting the emphasis on prevention, with a direct link to protection and compensation.
Q7: We are now in a very peculiar period, what do you make of the COVID-19 pandemic for insurance?
A7: I think this is a perfect opportunity to learn about what it means to be an insurance company during completely unpredictable times, which, as I said before, will happen more and more frequently. What we can see so far is a lack of imagination in front of the pandemic: companies are providing financial relief but they are very slow to design and deploy actual helpful innovations.
Q8: Everyone seems to think the future is about collaboration between startups and incumbents, do you agree?
A8: I think there are 2 different issues there. On one hand, insurers have to rely on technology partners, even early stage companies, this is not new and it is working quite well. However, the "real" insurtechs, those addressing the new customer expectations with an optimized user experience, are another story: most incumbents are just not ready for this kind of shift and these kinds of partnerships are often doomed.