Insurance disruption in 2016: how the global insurance industry is evolving

It’s widely recognised that consumers and businesses are increasingly demanding simplicity, transparency, mobility and speed in insurance transactions. More and more insurance is ‘bought’ by customers rather than ‘sold’. How can an intermediary adapt to this ever-changing world? We sat down with Matt Connolly to unpack the 2016 Insurance Disruption Report published by his company, Tällt Ventures. This report paints a fascinating picture of the exciting changes happening in the global insurance industry, the user-centric technology that’s emerging, and the start-ups that are transforming the industry.

Matt’s company tracks over one-million start-ups worldwide to identify trends, interesting business ideas, and draw insights as to why change is happening. They then provide businesses with strategic direction and help them build new partnerships. 

Tell us a bit more about the disruption report.

“The 2016 disruption report was the first of its kind for Tällt. It was created in collaboration with researchers, industry practitioners and accelerators from around the world. The result was a summary of the key emergent themes within insurance disruption, the latest investment data, trends and insights into some of the start-ups that are poised to disrupt the entire market.” 

What sparked the rise of #InsurTech – why is insurance disruption taking place?

“When an industry has barely changed for hundreds of years, there’s bound to be disruption. We saw it first with #fintech – the emergence of challenger banks and thousands of start-ups. Insurance is very simply the next in line. The industry is riddled with over-complexity and underpinned by antiquated technology. A millennial market – your current and future customer base – is used to everything being convenient and immediate. As mobile users, they are already connected to services in many ways, whether it’s food delivery, taxis or banking. Everything is controlled by the push of a button. It’s now time for the insurance industry to play catch up.”

Can you highlight a few trends you’ve spotted in your report?

• “‘On demand’ is a big trend – we’re seeing lots of new players offering insurance that can be bought on mobile and underwritten in seconds. E.g. if you are borrowing a friend’s car, something like Cuvva can give you a few hours’ insurance cover within 10 minutes, from your mobile.”
• “Social solutions, either using the Peer-to-Peer (P2P) insurance model (where groups of policyholders pay premiums into a claims pool) or the Bought by Many model (where groups of people with specific insurance needs club together to get cheaper policies or policies better tailored to their needs).”
• “Internet of Things (IoT) and the use of big and small data in insurance. Over the coming years data will start to play an even more critical role within the insurance market. Access to data from wearables, connected homes, connected cars, Smartphone apps, social networks, text, voice and video – and the ability to analyse it effectively – will make the automation of complex underwriting processes online a possibility for providers.” 

Which of these trends do you envisage hitting the SA market soon?

“We are already tracking a number of start-ups in the P2P market. South Africans are a very well-connected nation, so the ‘group buying’ model may well have traction here. I think there will also be a lot of examples of on-demand insurance offerings soon.” 

There are over 30 inspiring examples of international disruptors in your report. Can you highlight a few of your favourites and how they turned the industry on its head?

“One of the many favourites of mine is a company called Brolly,  an insurance concierge service, powered by AI. HeyBrolly will provide a single place to hold, store and organise multiple insurance policies. It will also map the cover you have against your needs, identifying gaps or any duplication. Users will ultimately be able to buy directly from the app at the push of a button if they wish to switch or renew on the advice of the AI. And then of course Cuvva, which lets you take a picture of a car number plate to buy coverage on an hourly basis.” 

What can intermediaries do to keep up in this ever-changing environment?

“It’s important for them to be aware of disruption occurring around them, but it’s not a necessity that they are tech-savvy themselves. There is loads of intuitive, user-centric technology popping up that’s designed to support intermediaries in their line of work, whilst improving the customer journey – e.g. Mass Up & Ask Kodiak. Modern day consumers are now equipped with the digital tools to compare and contrast insurance policies like never before. If insurers and intermediaries want to stay mutually relevant, it’s important that they play to the customer demands of transparency and choice. If these relatively simple demands are managed correctly, both insurers and intermediaries can thrive in the wake of industry disruption, and help each other create a journey that the customer wants to be part of. 

Don’t be intimidated by these new start-ups. Don’t think it’s a ‘young man’s game’. Intermediaries have so much going for them: decades of experience, a solid customer base that trust their expertise, capital to invest in new ventures, and business sense. It’s a case of taking the next step. Immerse yourself in new technology, invest in software, embrace social media and new ways of marketing, and don’t just rely on insurers to innovate your business.”  

Gary Hamel said: “Innovation is the only insurance against irrelevance”. Do you agree?

“The quote has always rung very true for me, but seemed even more pertinent when we came to researching disruption in the insurance industry. If you fail to innovate effectively, there will be someone else hot on your heels, that’s able to make your company irrelevant almost overnight.” 

How can your company help South African businesses?

“Tällt helps companies stay relevant in insurance regardless of their geographical location. Insurance is being disrupted on a global scale, and for that reason it’s imperative that it’s managed from a global standpoint. At the same time, it’s worth remembering that some insurance cultures remain very traditional and geographically unique. What works in one country might not work in another. 

In the short term we help clients by educating them about the world of disruption through workshops, reports, diagnostic assessments and strategic recommendation. We also facilitate mergers and acquisitions or partnership opportunities where appropriate. Looking slightly longer term, we help clients stay abreast of global market change and plan for the future. This can manifest itself in many different ways from strategic consultation, right through to the design and implementation of new digital products and services.” 

The full list of 2016 Insurtech trends, along with examples of disruptive start-ups, can be found in the report which can be requested via the Tällt website.