(Whose?) Data and the trust divide

Time has moved on. Discussion pieces like this are no longer about connected living becoming a “thing” at some point in the future, it’s a reality now.

Even in the last 12 months the ability to avoid being “always connected” to some branch of the internet has become much more difficult. Whether it’s through fitness trackers, smart speakers, home hubs, connected appliances, smart thermostats, smart alarm systems … whatever it is, more and more of our seemingly routine, hum-drum activities are now being “assisted” by things connected to the internet.

Of course, when they (and we) are connected to the internet, communication – an electronic conversation – occurs, and that conversation is made up of data. At first glance, that data might appear to be quite uninteresting – I mean, how sensitive is it to share what temperature you like to keep your house at?

Scratch just one layer down from that statistic though and ask “at what times of day do I like my house at 21 degrees Celsius?” and suddenly the data being shared takes on a whole new meaning. Suddenly “someone” could reasonably deduce when you’re at home and when you’re away, and that leads to all sorts of other considerations.

The kind of data, then, that is being shared every single second of every single day by the terabyte-load is rich in all sorts of information that we may not have considered. Even if we have, do we know exactly what is being recorded and passed back to the provider (and who else?) of a connected device?

In January this year, Canadian Underwriter magazine revealed in this article that Intact’s My Driving Discount program can detect “different levels” of phone usage. This is an app not even designed to monitor phone usage, its primary purpose is to monitor driving behaviour and reward the good with discounts (in certain provinces). While monitoring “distracted driving” through mobile phone use is absolutely laudable from a safety perspective, how many drivers either realise that general phone usage is being tracked and how do we know exactly what data is involved in that monitoring activity? Are phone numbers being captured, for example? What about repeat patterns of usage, are they being checked? What on earth does “different levels” of phone usage actually mean?

Outside the world of insurance, Google has in the last few weeks had to make a public apology for not revealing that one of its Nest smart security devices had a microphone in it that they forget to let users know about. They go on to explain that the microphone was never enabled (it has just this month been enabled so that it can work with Google Assistant) and that it was an oversight for not disclosing the microphone’s presence on the product specification.

While the world seems to have accepted Google’s apology, it does give serious pause for thought as to how our daily lives are (literally) being recorded in absolute minute detail by the plethora of devices we now use every day.

We are all accustomed to (if not entirely comfortable with) our data being tracked and used when we use an internet browser. Many of us have grown used to running additional software like VPNs and ad blockers to maintain as much privacy as is reasonably possible.

But do we really consider where our data goes and who sees it from devices around our wrists, fixed to the walls or sitting on our counter-tops and tables?

In a world where news of hacking is a regular event, and data breaches of unimaginable scale happen with increasing frequency, is it just a matter of time before someone sends you an email, with a recording of a private conversation you were having with your partner near a smart speaker in your home, demanding a ransom to keep your conversation private?

Or what about someone knowing where your regular fitness run or cycle route is?

If legitimate apps and hardware are already delving deeper into our daily lives than we realise, how can we trust that even our most mundane details are safe from those who would seek to exploit them with criminal intent?

Failure generates success

A couple of weeks ago, I was fortunate enough to have the time to attend the StartUp Grind 2018 Global Conference, sponsored by Google (and other big names), in San Francisco. It was a congregation of a few thousand delegates made-up of tech business-starters and entrepreneurs alongside a collection of well-known tech founders and pioneers up on stage from companies such as Tesla, Canva, PayPal, Fitbit among many others, giving some fascinating insights.

I was there for 2 reasons. One, I have a new homeowners proposition that I am working on at the moment. Having not started a business of my own in 15 years, I wanted to see the various ways I could bring a new tech proposition to the market first-hand. Secondly, a lot of the clients I work with at Arun Bay are considering some kind of “tech” solution to help drive new business, to become more efficient or to drive higher customer satisfaction levels and maintain retention. I wanted to see, among all the exciting stuff breaking new ground in the consumer world, where insurance, a grudge purchase, might sit.

Insurtech ranks low

Not surprisingly, not a huge amount of airtime was devoted to the consumer-facing application of tech to insurance (the back-end use of AI and machine-learning did feature though). While those of us in the industry are excited about the opportunities that data, analytics and technology might bring, in the context of a broader consumer tech space, our profile is quite low. Yes, there was some crossover with other fintech applications that might spin-out into insurance but, as for pure insurtech, not much was said.

The other, perhaps surprising, theme that was referred to time and again by the speakers, was that of failure. More specifically and although easily said, not to regard failure as something to be afraid of. Each of those, now, very successful individuals speaking on stage referred to the numerous occasions on which they had failed, and the high ratio of failure to success when venturing something new. There was an audible sigh of relief from newbie founders around the hall as one after another speaker reinforced the theme of not being afraid to try something new. In fact, they confirmed that the only way to succeed in delivering something new and different is to try and fail, sometimes on numerous occasions, but to learn from failure, keep trying and eventually succeed.

Bringing the low appeal of consumer insurtech together with the theme of failure got me thinking. Engaging new and existing clients in an intangible product that is generally an unwanted purchase is hard. Over many years, the insurance consumer has become imbued with cynicism as to the motives of the insurance market, the value of the product, and its service, they’re reluctantly spending money on.

Opportunities to wow

But it is precisely in this cynicism where those speaking at that recent conference would say the opportunity lies. You don’t have to be radical, but why don’t you try something new? Give your customers something they’ve never experienced from brokers before. That could be as simple as reaching out to them at a time other than when you’re asking them for money. It could be something more complex like offering new and more convenient ways for them to do business with you, a new product, report a claim or to let you know that they’re thinking of leaving you before they actually do.

Whatever the “it” is, don’t be scared-off trying “it” by the fear of failure. It might not work, in fact first time around it probably won’t, but keep trying and, above all, learning, and you will see success eventually come.

“This is for everyone”

The famous phrase that has its roots in the “invention” of the internet in 1991. It was also famously tweeted by the internet’s “creator” Tim Berners-Lee at the opening ceremony of the London Olympics in 2012.

But what does that have to do with insurance?

Money flowing in

Insurance, possibly not a huge amount. However, when we talk about the new tech emerging in the consumer-facing insurance space, whether you want to call it insurtech or not, it becomes more relevant.

We’re at a moment in the evolution of consumer insurtech where reality hasn’t yet bitten. Billions of dollars worldwide are flowing into all sorts of tech startups, including insurtech. Many of them promise a vision of an inter-connected, inter-dependent relationship with insurance customers the like of which we have never seen before. Trust will be built, cynicism eroded and, therefore, long-term loyalty will naturally result.

The premise of a closer, more open, efficient relationship should, of course, deliver more loyal customers. They’ll be so overwhelmed by such an utterly pleasant insurance-buying experience how could they even contemplate going back to the dark ages? Except for two rather important factors.

Firstly, and I hate to burst any insuro-phile’s bubble, this is insurance we’re talking about. Probably about the least welcome annual or one-off purchase anyone “wants” to make. Firstly it’s not like buying a new gadget, or booking a holiday or sending a loved-one a romantic message. Insurance is something that often, if the law didn’t require you to buy it, or you didn’t have an irrational fear of something going wrong, would be way down the list of what you’d actually want to spend your money on.

So you’re starting from a pretty weak point in the first place.

Secondly, this new cosy relationship you’re going to build with a customer who doesn’t really want to buy what you’re selling … what is it you’re actually selling? And this is where the “This is for everyone” mantra comes into play.

Who is getting it right?

With very few exceptions, no insurtech proposition out there currently looks after every aspect your traditional insurance package currently provides. There are one or two “full” motor insurance tech solutions I can think of and a similar number of home insurance offerings too. The vast majority though can only offer you cover for an individual item, or a select number of categories of items that you would otherwise insure under, for example, a regular Buildings and Contents policy. So not only do you have to be lured into insurtech’s loving clasp enough to try it out, even when you’ve tried it out, you still have to deal with 20th century ways of buying, renewing or making a claim through what has become your “main” traditional insurance provider. Even worse, you now probably have to get in touch with them to cancel the cover you’ve just bought through the bright shiny app on your phone.

That, is most definitely, not for everyone. I’m not going to laud the one (US-based) clear example of getting it right because even they, in their carefully choreographed pilot and roll-out programme are very clear to point out that what they offer isn’t for everyone. However, if what they offer is right for you, then at least you can ditch your old insurance provider and focus 100% of your love and attention on a new relationship via the medium that is your smartphone.

For everyone else that is relying on good will, early adopters or just plain old curiosity to drive their insurtech business plan, good luck but, for me, there’s very little light at the end of that tunnel.

The invention of grudgetech – part 2 of 2

In part 1, I looked at how most of the current wave of insurtech compares with “convenience tech” like Alexa, Uber and Nest. Is it possible to turn what is a grudge interaction like insurance into something usable and accepted by the mass consumer through an insurtech app or service?

I then went on to propose the new term “grudgetech” to represent the tech that has to overcome “grudge” transactions. But grudgetech has actually been around for years …

Curiosity only gets you so far

Apart from insurers, what is one of the other institutions that most of us don’t like having to deal with?


And yet if you think of how most of us now conduct our day-to-day banking, the vast majority will use either a handheld app, or online banking, or both. That’s grudgetech – and it’s been around for almost 10 years.

However, until banking grudgetech meant that you could do everything you could previously have done in a branch, take-up of online banking was consigned pretty much to early adopters.

Partial solutions to everyday problems, like being able to view your account transactions online but then not being able to go on and make payments easily, are messy and confusing for the end user. Human nature dictates that we are much more comfortable with the convenience of a single point-of-access for getting things done, than having to go various routes to achieve the same thing.

Early adopters and tech nerds will be curious, but scalable, sustainable success can’t be built on curiosity alone.

Likewise with insurtech.

The whole enchilada, please

Where we have seen early success in terms of consumer take-up and financial performance* is with products like Lemonade. In what is de facto grudgetech, where they have won is by enabling customers to bite-off the whole of their home insurance needs in one mouthful.

So many other insurtech apps out there only allow their customers to “nibble at the edges” by restricting them to insuring only certain items, certain categories of insurance or offering only certain services. Those customers still have to maintain another insurance relationship with someone else to take care of their “full” buildings and contents requirements. As a result, the relationship is fragmented, and surely there’s only one thing worse than having to deal with an insurance company, and that’s having to deal with two … right?

Although by no means perfect, Lemonade wins by being able to offer the full set of buildings and/or contents insurance. It doesn’t claim to try and accommodate everyone. However it does offer everything its target customers need from home insurance. There’s a big difference.

There’s no need for a Lemonade customer to maintain a relationship with any other home insurer, in contrast to almost any other current insurtech offering out there.

Just like with online banking – offering the full service is what has attracted paying customers. And once you’re in, why would you want to leave? As soon as you start to look around, you’re back into the land of “oldtech”. I’m sure the publicity around the claim that Lemonade paid in 10 seconds is also a lure, alongside the tech-hipster-attracting “AI Jim” bot sitting behind it, but the product wouldn’t be anywhere near as appealing if it only insured your phone, or your laptop or some jewellery.

So the idea of a framework for early insurtech success that we introduced in part 1 is clearly defined for now. Find a genuine customer need and then offer something that solves that need in its entirety. Don’t break off a piece, wrap it up in a new tech coat and expect customers to stay for the long-term.

Let the tech be complex and invisible, the customer solution has to be simple but complete.


* Financial performance of the operation, not underwriting performance of the book

The invention of grudgetech – part 1 of 2

“Anna’s” work and home life is made so much easier by the tech she uses, according to an article I read here yesterday. If only there were space for a smattering of insurtech …

(Too) trusting of tech?

I imagine that most of us recognise elements of that fictional day in our own real daily lives. Using smart speakers like Amazon’s Echo or Google Home, while not yet ubiquitous, is becoming more prevalent. Of course the depth to which we connect those boxes to the fabric of our daily life is entirely personal choice, and possibly reflects our individual level of trust in an always-listening, always-reporting device (or simply possibly our individual tech skills!).

Similarly, with apps and services like Uber, how many of us have now scrubbed it from our devices now that we know about the huge data breach in 2016?

Anna’s whole day is peppered with health trackers, smart lighting and heating, data filters etc – all of which she has “allowed” to learn her daily routines so that, in return, her day-to-day life is made easier.

And that’s the point. Knowingly or unknowingly, millions of us are prepared/happy(?) to trade/compromise our personal data in exchange for “things” that make our lives run more smoothly. They allow us not to have to think about such mundane things as putting the heating on, for example. Let’s call them “convenience tech” for now.

Even when we become aware that the systems sitting behind them (Uber and many others) have let us down by leaking our personal data, we simply change our passwords and keep ploughing on with them … don’t we?

For goodness sake, as of February 2017, 225 million people still have an active Yahoo mail account!

Clearly we are prepared to sacrifice a lot for the perceived benefit convenience tech brings.

So what does this have to do with *insurtech?

Mistrust of insurers

I guess it could mean one of two things.

Either it could mean that mass consumer adoption of insurtech is going to be a straightforward inevitability and that we’ll all incorporate it into our daily lives just as we do Uber and countless other data-reliant services.

Alternatively, as we’ve covered in a previous article, in a world cynical of insurance and insurers’ motives, insurtech is going to struggle to achieve the same trust that so many other non-insurance providers have already won.

The difference between the convenience tech that we have already adopted, and insurtech, lies in the product, service or benefit that sits behind them. Alexa saves us from having to get up and turn the lights on when we’re already comfortable on the sofa. Likewise with Nest or Hive and heating. They can also “protect” the home when we’re not there by making sure that the lights are on when it gets dark. Or, for example, by making sure that the heating keeps everything to a certain temperature. Uber helps us to get somewhere we need or want to go quickly and efficiently, and we don’t even have to worry about having the cash in our pockets.

They all contribute in some way to our daily well-being, and we are seemingly prepared to sacrifice (trade/compromise) something for that contribution – our personal data.

Introducing “grudgetech”

By contrast, what contribution will handheld or wearable insurtech make to our daily lives?

Trust issues aside, can the current wave of insurtech really compete with the kind of convenience that all of the other tech we’ve discussed here brings?

Assuming that the answer to that is “no”, can insurtech instead magically transform a grudge purchase into something convenience tech delivers? I’m afraid that’s a “no” too. “Grudgetech” will always have to deal with the “grudge”! (More on that in part 2)

Does that mean that insurtech is dead before it even starts? Absolutely not.

However, what it does mean is that for such a nascent technology, ironically the framework within which insurtech can be developed with a reasonable chance of mass adoption is already quite clearly defined.

In part 2, I take a look at why some insurtech is already gaining mass acceptance, grudgetech that we all use daily and how they can help future insurtech pioneers …

Continue to part 2


* In this instance, I’m talking about insurtech as retail, customer-facing apps and services, not the invisible AI or machine-learning that might sit behind insurers’ pricing or operational systems.

Parallel battles – but who will win?

Think of an electric car, you think of Tesla. Right now though, the world’s motor industry’s opinion of Tesla is divided in the extreme.

There are those who see Tesla as the great new upstart that will take on and vanquish the fat, lazy, combustion engine-led incumbent manufacturers. In the other corner there are those that regard Tesla as a prelude, an appetiser, an overture to the main act that will feature those same incumbents who, through their scale, presence and experience will inevitably own the electric car space in the very near future. 

Is it scalable?

They view Tesla as a short-term tease that has shaken the industry out of its fossil fuelled torpor but, once roused, they expect that industry to fight back and claim the eco-friendly crown.

Many would say that a Tesla is the electric car most of us would WANT to own, but the truth is it’s most likely to be an electric car made by Ford, Toyota, VW or BMW that we’ll ACTUALLY be able to afford in the next few years.

Now let’s look at the world of insurtech.

Over the last couple of years there has been a proliferation of tech being brought to the market that has showcased some unbelievably clever talent and products. Some of the intelligence sitting behind this early innovation could not have been imagined even 5 years ago. 

Is it scalable?

Naturally this tech has appealed to anyone tuned-in to the industry – whether that be insurers keen to learn and benefit from such bright minds, or others in the supply chain eager to see how costs could be reduced or services improved.

And then there’s a segment of the consumer-base for whom technology is a passion (I’m one of them). They’re happy to queue up to try something that might save them time or money or that is simply different to the humdrum way they’ve always been forced to work with motor or home insurance until now.

But will it be the intelligence of the tech alone or how easy, accessible and useful the end product is that decides whether one vision of insurtech wins over another?

Where does the true value of insurtech lie?

Is it in the column inches of adoration for the hugely sophisticated algorithms or AI that have gone into its creation, or is it, like Apple did for the smartphone, in the fact that, in the hands of the user,




Like Tesla, there is some very bright and enticing insurtech out there, kicking up a storm and seemingly turning the world on its head. But for my money, it’ll be the ones that harness all that intelligence and turn it into something that people immediately recognise as addressing a real need or shortcoming in their lives that will win out.

Innovation in insurance is incredibly exciting and there is no doubt that insurtech is invigorating an industry that has lived for too long on the profits of a world long left behind. However, true longer-term success lies squarely in the hands of the end user ACTUALLY using it, and so just like Tesla, it is the accessibility and relevance of the product or service rather than solely the intelligence behind it that will ultimately forge the winners and losers.

(Same old) Breaking news: Connected homes utopia – no thanks, not for now…

(Written by someone who is a certified nerd, the earliest of early adopters and married for 17 years to a long-suffering tech widow…)

Another week passes and yet another article on insurers pinning their hopes on the Internet of Things (IoT) making a worthwhile contribution to loss ratios and the bottom line in an article on 16th December on ft.comInsurers hope for a smart future from the connected home

With every article I write, every opinion I express, I try really hard to stay constructive, advance the discussion forward and reach a positive outcome. However, when it comes to the IoT I struggle. It’s been a term that’s been batted around the insurance market for more than 5 years as some kind of holy grail. For home insurers it’s their equivalent of telematics – something that will give some divine insight into the inner workings of their customers’ lives and enable better risk pricing. More than that, it’s been seized upon as not only a game-changer for insurers but also something that will fire the imagination of the consumer at the same time.

That’s not just a holy grail, that’s utopia, surely?

The trouble with utopia, as we all know, is that it’s not realistic. Even when it first appeared in text in 1516, “utopia” was an “imagined place” that served as some kind of escapism from the reality of the time and, unfortunately, this romance with IoT is, in my opinion, exactly the same … for now.

Having served customers and clients for the last 20+ years across various sectors of the home insurance market, one generalisation is almost invariably true. It’ll come as no news to anyone reading this that customers want to spend as little time and money as possible on their home insurance. At the same time, however, they still want to believe they’re getting as much value for their money as they can. While the perception of value might differ between the highly-commoditised 90% of the market that is amply served by the aggregators and the 10% at the mass affluent/HNW end where product differentiation can make a meaningful difference, still the unwavering truth is that home insurance is a grudge purchase. Nobody wants to spend a single second longer on it than they absolutely have to. 

Asking the right questions … and being prepared for the answers

So if you ask any customer whether they’d like to spend less time and/or money sorting out their insurance every year, like anyone else I’d expect a resounding “yes” to be the answer. However I am also sure that if you asked someone whether they would be interested in an insurance product that “actively” protects their home, like a connected home could potentially do, I’m sure there would be quite a few “yes” responses from certain profiles. The idea, at least, that something you’ve never really seen the value of could actually “do something” while you’re out, sleeping, or away on holiday must sound like you’re climbing a rung up the value ladder, right? The “predict and prevent” of a smart home vs the “repair and replace” of a traditional one. What’s not to like? Surely this “smart home” thing has to be a winner for insurers and customers alike?

The trouble is, when you scratch even gently beneath the surface of what that might mean a customer actually has to do for themselves, their engagement with the “active insurance” idea falls away immediately. Having to spend longer getting a quote, answering more and different types of questions, paying just as much for insurance, if not more (in my quote experience) than buying from elsewhere, arranging for installation, learning to work with new software, dealing with false alarms/getting sensor sensitivity right for your home – these are the realities of setting-up an insurance-backed, endorsement-enforced suite of technology.

(I’m not going to start down the path of contemplating the associated real-world risks of being hacked, as separating fact from fiction muddies the waters too much for this discussion.)

And then the thought that, a year, 2 years later – what if my renewal quote isn’t quite as keen as 20 or 30 others I can see quoting out there? Should I stick or twist? Have I got to return all this kit or not?

Furthermore – like a worrying proportion of smoke alarms up and down the country that spend 364 days of the year with the cover hanging off and the battery disconnected because it keeps going off when you cook the toast – will people stop bothering to maintain, set or pay attention to half the detectors once the novelty wears off? 

Sustainably smart

Psychologically is the best “connected” customer for an insurer one who gets their home kitted out because of a new kind of insurance policy? For real-world sustainability, should these people not already have connected their homes for their own reasons and it therefore be second nature to them? Insurers could then instead find an acceptable and agreed way of tapping in to a branch of their “connectedness”.

The trouble is, to fit in with the effort customers are prepared to invest in buying their insurance, connecting in a smarter way with their home insurance has to be invisible. Similarly it has to be of no effort and with no feeling of being bound-in. The world, the tech, just isn’t there yet and, personally, I can’t see anything that’s going to be invisible enough while contributing something worthwhile for at least the next 5 years.

Conversely there are already, and will continue to be, “things” that we carry with us or keep in our home that we could “invite” or allow our insurers to be part of. In exchange for that, we should get something we value, whether that be a much more intuitive journey, lower premium, lower excesses, reduced endorsements or simply better cover. 

Empathy is a tradable commodity

In my opinion, connecting customers or, for now, their behavioural and other indicative data, more closely to insurers is definitely the future. It will not only help insurers to understand their customers and the actual risks they pose more intuitively, it will also mean a much simpler, less antagonistic pre-sale, post-sale and claims journey for the weary, disengaged consumer.

In turn, simplifying and speeding-up those journeys automatically lifts insurers up the value chain, bringing the consumer closer to their insurer and so starting a virtuous cycle that begins to break-down age old cynicism and separation. I certainly don’t see a utopia, but where both parties are closer and understand each other better, I do see a world in which customers and insurers are mutually more engaged with all the benefits that brings to all concerned.

We as an industry have to bend towards the customer. We can’t expect the customer to move closer to us by promoting some technology that is tangential to rather than seamlessly integrated with our lives, too much hassle or too expensive to the vast majority. By finding acceptable ways of working with what almost all of our customers already have or use every day, we can demonstrate an empathy and understanding that customers have never seen from their insurer. As a result, their engagement will be far more powerful and, more importantly, sustainable than any shiny new bit of tech gear could hope to achieve.

The thorny issue of business valuation

Against a shifting regulatory landscape, increased cost of doing business and dwindling customer loyalty, it may be that you are considering selling all or part of your business. It may be a decision you’ve reached recently as a result of something beyond your control turning against you, or one that you have planned for a few years and are now entering the final stretch. 

True differentiation reaps rewards

As with anything you’re selling, timing is everything, and the good news is that multiples for good businesses are still strong. There are definite challenges coming up over the next 12-48 months with political uncertainty within and outside the UK not the least of those but, for now, buyers are plentiful. The difficulty for insurance businesses is how to convince a potential buyer to value your business on the most attractive terms. Valuations are usually based on a multiple of brokerage income, and if you are a traditional insurance broking business it’s difficult to argue for it to be valued on any other basis.

At its simplest level, displaying the ability to differentiate yourself from your peers is the entry-point to enabling the value of your business being viewed differently. 

Demonstrating your identity

Let’s look at skills and resources you might have. For example, if you have moved on from merely “re-selling” insurer rates to being a business that analyses performance and flexes commission to optimise income and retention, you are already taking steps to creating your own space within the market.

Similarly if you have enriched an insurer’s product offering by incorporating your own product or service elements (not just the traditional add-ons) that suit your particular market or customer segment, again you have started to create your own identity. The key is that you can demonstrate that you have shown understanding of the market, made changes to improve your offering, and that those changes have produced a discernible (and, ideally, the expected) improvement in your results.

While enhancing value is not all about technology and data, the truth is that the more you can demonstrate a track history of using data, analysis, analytics and insurtech to help drive growth in or increase the profitability of your business, and why a future that includes those elements will continue those trends further, the greater the likelihood that a potential buyer will view you more as a tech business, rather than an insurance business.

Conversely, in a world where most buyers will view engagement with tech and data as “the norm” and a pre-requisite for a robust future income stream, can you demonstrate that not possessing or deploying those skills will keep you resilient to market development over the coming years? If you can’t, why would a buyer be interested in an asset that will probably dwindle faster than they perceive the “average” to be? It will either make your task of selling the business that much harder, or force you to accept a lower valuation than you were hoping for. Either way, you start on the back foot, which is never a good way to enter a negotiation.

In some cases sadly, that will be an inevitable outcome. 

Taking your first steps

However, the good news is that even if you haven’t got a track record of business differentiation, analysis or data integration, you probably possess all the basics to be able to make a start. If you have already embarked on that journey, as you’ll know, it can be difficult to decide just how far to go in balancing investment with return.

So if you are considering exiting soon, please consider carefully how you might put your best foot forward, how you entice a potential buyer to be more interested in your business than the dozen others that might, on the face of it, look exactly the same, and force them to pay more for it as a result.

Having been through the process a number of times ourselves, we can walk in your shoes and help you answer the kinds of questions you’ll be asking yourself, and take the steps relevant to your business to help drive its value higher.

What’s good for the goose isn’t necessarily good for the gander …

You’ll find us talking on here about insurtech and digitalisation, and there’s no doubt that the leaders of the pack will have been heavily investing in both over the past few years.

However, you’ll also see us constantly focusing on the underlying principles behind both as a practical, reasonable, scalable and therefore affordable way for you to help your business cope with today and thrive tomorrow. 

Make the right choices for you

While we are great believers in the positive outcomes that can flow from intelligent and appropriate use of the most up-to-date techniques, it’s very important to realise two things. Insurtech is not some monolithic enterprise that requires the kind of investment that only richly-funded outfits can muster and, secondly, what one company might view as intelligent and appropriate doesn’t mean it’s the right thing to do for your business.

I’ll give you two examples. One company, which already has an online presence and trades via the aggregators decided to invest in the technology and resource to analyse (not in real-time) the tens of thousands of quotes they saw a month across a range of conversion and retention rates by various quote elements. That investment cost around £40k to set up but enabled on-going analysis to be run in-house through existing resource and software. As a result, they were able to fine-tune their commission for individual categories of business to optimise for longer lifetime value and will see their investment returned within 9 months.

The second company, while being able to offer quotes online, does so through its own website rather than through aggregators, and writes as many policies offline as it does online. Quote and policy data exists, but they weren’t routinely extracting that data to be able to scrutinise results in order to make informed change.

Using only Microsoft tools as part of their Office package, we were able to help them better understand the business they were writing and, just as importantly, the business they were writing but that actually cost more to write than they could earn over their chosen return period.

Conversely, they had an idea of what kind of business they were losing, but the analysis was able to help them pin-point the reasons why they were losing it, and they have now started to make some changes to help plug the gaps. Their next step is to look at true mid-term cancellation rates and the main drivers behind them and apply the same thought process, to focus them on retaining the right business for longer. 

Insight driving growth

While the solutions were significantly different in each case, and each example required quite different approaches, with the appropriate application of technology, those businesses were able to improve processes and results. In anybody’s book, they are both successful examples of insurtech being used to make positive change for both the client and their customers, regardless of the very different methods, and investment, being used to drive that change.

The other element that both businesses now have in common is a new confidence that flows from seeing what an intelligent and appropriate use of technology can do for their business, how simple it can be to implement, and the beneficial change it can deliver. With or without our help, they are both continuing to examine how best they evaluate ongoing performance in other areas to help themselves and their customers even more.


Nudge theory and insurtech – happy bedfellows?

Richard Thaler’s Nobel Prize-winning “Nudge Theory” is finding its way into tech and, specifically, insurtech.

His contention is that positive reinforcement and indirect suggestion can affect the way humans think and behave, and therefore the outcomes of that behaviour. Insurtech is defined as being the use of technology and innovation to help drive savings and efficiency. It now seems that some insurers are bringing these two nascent disciplines together in an effort to drive better outcomes and reduce cost, in this case, claims.

Two examples of this fusion of new ideas were referred to last month in this Reuters article.

Aviva are quoted as looking at working with a health app, Tictrac, as a corporate healthcare plan add-on which tracks employees’ sleep patterns, exercise and weight. The app then suggests (presumably physical) challenges to help prevent the onset of what might become costly conditions – “nudging” individuals to do something before a problem occurs.

The second was a derivative of telematics which looked at how it might prompt real-time intervention. The example quoted was a telematics-fed app that, if it detected voice patterns that suggested the driver was getting tired, would recommend pulling over to grab a coffee and take a break. The insurer would even be willing to pay for the coffee in the hope of offsetting a costlier accident. 

But what about the world-weary insurance customer?

Insurers dabbling in trying to help customers avoid something that they, the insurers, would eventually end up paying out on is always something of a cleft stick in a consumer market already cynical of insurers’ motives.

It’s possibly even more tricky when, despite assurances to the contrary, the consumer might feel like their personal life, in the case of the health-related app, is being pried into and monitored 24/7. Telematics evolving to listen out for speech patterns is likewise surely another step up the “compromising of personal privacy” ladder? 

The point being missed

For me, widespread consumer interaction with, and benefit from, insurtech has to be a natural, transparent, consequential occurrence, not something that requires the installation of a device, or a leap of faith that your personal habits and motivations are not somehow covertly being tapped-into.

I have no doubt that insurtech will provide the layer that helps consumers and their product/service providers understand each other at a level that will inevitably result in better product design and lower operational costs.

However, in my opinion, that requires the “tech” part either to flow seamlessly into established methods of transaction, or to wash away convention completely and establish an entirely new, open and much more intuitive way of interaction between the parties. 

Where we need to go

We seem to be in that “in-between” stage at the moment in many cases which results, at best, in lower take-up rates of new tech, affecting the potential for benefit longer-term or, at worst, a prejudicial consumer scepticism that tech is taking advantage of data to the sole benefit of the service/product provider rather than a shared benefit to both parties.

That perfectly sums-up our approach to how we evaluate any opportunity, tech or otherwise, that you might be able to take advantage of in your market. Does how you might capitalise on that opportunity result in benefits for all relevant parties and, if so, what is the most practical, business-led way of achieving it? Just as importantly, how do you go about understanding customer satisfaction, and how do you build in the capability from the start to make changes based on the feedback you get?