Growing numbers of SMEs are turning to online insurance to protect their business.
According to a new report from PwC, 36 percent of small business owners will interact with their insurers online in the near term. By 2022, it will be 48 percent of all SMEs.
SMEs want to buy insurance online
PwC’s new Digital SME Insurance Survey of 2,100 small businesses from 14 countries indicates that SMEs are interested in purchasing online-based insurance solutions as the sector begins to digitally transform.
Recently founded companies are the most eager to interact with their insurers digitally with 48 percent of companies under a year old saying they want to purchase their insurance products online. For companies over ten years old, it’s 37 percent.
The findings show that insurers who are already digitally transforming have a significant advantage when seeking new customers.
As more new SMEs are formed, they’re increasingly likely to choose an insurer with an online customer-centric service. This gives insurers a chance to overhaul their business and emerge as a leader in the digital sector.
Tailoring insurance products
PwC said the opportunities for insurers present an “open door” to new products.
However, the company’s Global Insurance Leader, Steve O’Hearn, noted digital insurance initiatives face several potential roadblocks before they achieve success.
One of the biggest challenges will be in replacing current operating models with more agile digital-focused alternatives.
“Insurers must have the capabilities to understand their customers and have technical solutions allowing them to rapidly evolve and adapt solutions as the market changes,” said O’Hearn. “They also should look at an emerging generation of startups not just as customers but as potential partners in providing new technology solutions and value-added services, creating more responsive, and targeted solutions.”
Cybersecurity Insurance Lags
The study also found uptake of cybersecurity insurance is very low, with just 16 percent of firms having active cover. Over 46 percent of the respondents said cybersecurity insurance could be applicable to their business.
Lloyd’s of London set for digital transformation after securing £300m
It’s never too late to start the digital transformation process — even if you are 330 years old.
Noted insurance market Lloyd’s of London has secured £300m and established a technology and transformation committee, with the goal of cutting costs and better streamlining services. It’s all a part of The Future of Lloyd’s programme, the company’s plan — named ‘Blueprint One’ — to build the most advanced insurance marketplace in the world.
When the company’s initial digital ambitions were released in May, CEO John Neal explained that traditional business models were being disrupted by technology and data analytics.
“Customers are facing new risks as their asset mix shifts from tangible to intangible and, consequently, are seeking new insurance products and services to protect their businesses,” Neal said.
On the docket for this digital transformation — set to begin next year — is a focus on accelerating product and service development to meet customer demand, namely simpler access to services and lower costs. A significant focus will be on the need to improve real-time data quality and capture.
Blueprint 1a is expected to arrive in February, detailing plans and key delivery points for phase one of the project.
“Since the launch of Blueprint One, we have focused on designing a carefully structured and managed approach to planning and execution to allow regular delivery of value to the market,” said Neal. “With robust governance and oversight now in place, and the funds for delivery secured, we have every confidence in the successful delivery of the Future at Lloyd’s.”
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Five insurtech startups to watch out for in 2019
The insurtech sector has grown rapidly in recent years, with a number of startups launching new products and making it easier for consumers to buy insurance. Many of these are products of startup accelerators. The most successful insurtech players, according to TechWorld, appear to be those who focus on building new products to address the changing needs of the customer.
The traditional model of an insurance company offering a standardized product to the customer is on its way out. Many customers, especially millennials, want more choice and a flexible approach to insurance products.
This flexibility to decide what to insure (“insurance as a service”) is being met by several insurtechs, who are offering insurance products tailored to the customer. An example is the company Valoo, which offers a straightforward way for customers to make an inventory of possessions. This can be via video or photographs. These items can then be valued by artificial intelligence scanning the items, and then short-term insurance being offered.
InsurTech startups are deploying blockchain technology to disrupt the insurance industry. One important application is using the technology to allow insurers and customers to verify the location of goods around the world in real-terms. This has helped to facilitate peer-to-peer operations in financial services.
An example of this service comes from Dynamis, which uses Ethereum, to offer peer-to-peer unemployment insurance, in the form of supplemental unemployment insurance.
According to Foresight Factory, Dynamis pays premiums into a de-centralised contract, setting up individual accounts for all its employees. If there are no claims, the premiums gradually go down. For employees, the account allows them to use the money while seeking employment and to transfer the details to their new workplace.
Big data analytics
Big data encompasses the massive amount of stored information on anybody who has ever had a digital connection and this data is of value to insurance companies. The startup Cystellar operates a cloud-based big data analytics platform. The aim is to offer insurance firms data-driven decision making.
Cystellar’s platform uses predictive analytics for insurtech firms. The main focus of the platform is on trying to predict and thereby avoid damaging events, such as natural disasters that might affect agtech and foodtech companies.
With traditional insurance, people pay in the same money (which often goes up) whether a claim is made or not. This model is challenged by the startup Laka. The company operates a community-based model for bicycle insurance. The monthly maximum is fixed at around £18. However, this amount can be reduced, depending on how many claims are filed by the wider community.
Cyberattacks are a feature of modern life. To help drive down insurance costs, many companies are keen to know how they can improve their systems and services.
An example of a startup in this space is ThreatInformer. The company provides cyber risk intelligence to the insurance industry. The firm creates tools for users to transform the way risks are written, using a security-as-a-service platform. The aim is to use analysis of security assessments and environmental factors to enable business users see the full risk picture.
Five emerging Insurtechs to take notice of
Insurance companies have been slow to embrace digital technology; however, signs are emerging that the industry is gradually opening up to the idea of alternative ways of providing insurance services.
The conservative nature of the insurance sector was summed up last year by Andrew Brem, chief digital officer at insurance group Aviva, who said, as quoted by TechWorld, that the sector is “not known for its incredible radicalism”.
Whether it is due to threats from startups or realization that startups can provide competitive advantages for big insurance companies, the major players are starting to engage with startups. The types of new technologies disrupting the insurance sector include mobile apps, investment in digital channels, process to hire technology talent and platforms for analyzing customer data.
Moreover, research from London accelerator Startupbootcamp and PwC indicates that 75 percent of incumbent insurers “believe the biggest impact to the industry will come from building new products in order to address the changing needs of the customer”.
Five Insurtech startups of interest
A number of Insurtech startups are causing interest in the industry, and helping to introduce innovative new technology into the business of insurance:
- The startup Cytora has produced technology termed Risk Engine. This software can be used by commercial insurers to target and price risk using artificial intelligence algorithms. The star-up was supported by the University of Cambridge’s Judge Business School Accelerate Programme.
- The company InMyBag came about as an answer to the gap in the insurance market for mobile workers who are reliant on portable technology. InMyBag insures mobile devices such as laptops, phones and cameras. InMyBag works with Amazon Prime and Apple to guarantee same day replacement of the devices.
- Brolly is a London-based startup that is deploys artificial intelligence to provide customers with a mobile insurance locker. The locker stores existing and expired policy documents. Also offered is an advisor, to suggest insurance coverage and an online shop.
- Digital Fineprint uses machine learning technology to provide smart insurance policy recommendations. This is based on the social media profile of the user data. As an example, LinkedIn data might be used to assess a person’s income and Facebook data provides an assessment of an individual’s appetite for risk.
- Digital Risks targets technology companies and provides a flexible, pay monthly Insurance-as-a-Service model. The scheme enables companies using the services to start off with insuring small items, like a laptop, and then gravitating to something like employer liability insurance or insurance against data breaches.
Healthcare4 weeks ago
IoT + Data = Healthcare Intelligence
Technology1 month ago
IoT + Blockchain = Product Intelligence: An equation that delivers secure monetization opportunities
Retail2 months ago
IoT + Data Analytics = Store Operations Intelligence
Technology2 weeks ago
What challenges face IT leaders in 2020?
Technology3 weeks ago
The 2020 outlook for artificial intelligence