It's that time of year, you unwind (in my case get a cold!), reflect on the year that was and look ahead to the ensuing year ahead. This is somewhat of a tradition. Last year, my '2018, a view through my looking glass' marked my previous year predictions giving me a 60% score for my 2017 thoughts. I'm going to keep the format going and start with a quick look back to see how close I was and then jump into what I see in store for 2019. As always, would love your feedback. Here goes!
2018 - Marking my homework - how did I do?
1. Our first Driverless Journey - As reported in November, Oxbotica said they would complete tests that week. Oxbotica are on a great journey, from their partnership with AXA XL and newly formed partnership with Addison Lee. Marks 1
2. API 's / Insurance as Service - I'm torn on this one. The vision and ambition are still valid, I just didn't see as many folks get there as I thought would. That said, there have been some notable and clear moves including Slice ICS, Coverwallet, Lemonade, GoCompare and many more across Europe. Marks 1
3. The deathly fear of Amazon and other GAFA/BAT companies. This one always draws debate and ensuing huge headlines & here given their history in disrupting markets and attaining significant market share. Still nothing launched directly in the UK from these organisations, despite much speculation - however, looking to the global market - they have filed for an Indian Insurance Licence - Marks 0
4. Re-bundling / Orchestration / Insurance. I thought we would see much more of this in 2018, than actually emerged. Lots of talking about it, but we still seem to innovate in silos. I think 2019 will see this change, see below for my consolidation predictions. Marks 0.
5. Voice continues to be talked about. Lots more talk, more examples - still no scale. I maintain my position, now more than ever - it will have its place, but very rarely will it be quote-to-bind. Claims, updates and more - quite possibly. Marks 1
6. Regulation. With IFRS17 delayed a year, more time was handed for insurers to get ready - these continue to be long complex and costly programmes for many. How they will be leveraged, only time will tell. Marks 1
7. InsurTech Investment - 100% bang on with my prediction here 'it will slow down'. In our recent report - InsurTech entering the second wave, we identify that while investment remains strong in the industry, this has moved from seed to more mature series B, C and later rounds with a lower number of organisations. Marks 1
8. New Business models. I didn't know at the beginning of the year we would collaborate with Lloyds of London on this for our Squaring Risks in the Sharing Age report. The net summary of this was there is huge global need and opportunity for insurers here as we change the way we live, work and consume things. Some countries are way ahead of others (the UK lags for example) with many new InsurTech startups across the globe now established to fill the gap including Tapoly, Zego, Dinghy and many many more. Marks 1
2018 Score: 6/8 - 75% - an improvement on last year!
2019 - so what does the year ahead look like!
Like everyone else, I don't have a magical crystal ball - the below views are based on what I see and hear from the market, day in day out and the pace at which I think they will surface in the market going forward. In 2017, I talked about pace and speed - I still feel this is something the Insurance world needs, but hasn't yet grasped fully. Part due to the nature of what we do and part down to the speed at which our customers are prepared to make the change in what and how they buy.
1. Speed to market still seems to be the number one question. How we do launch something new, or get something out there to test. There are so many ways to do this, we for example have partnered with Instanda to help launch new products in weeks, not months and years with some great success. Many many other platforms are out there that that can do this. See my new piece on 'are all InsurTechs solving the core system challenge' which I will post shortly also.
2. Once you are in market, and now that we are awash with experiments - the next question is how do we get to scale. I was thinking of this in line with whats going on with the FinTech scene and how the likes of Monzo and Starling (new UK Challenger banks) have 1.5m and 400,000 customers respectively. or Bulb a new challenger in the energy space with 800,000 customers, grown by 600,000 in 2018. Why do people care about these things more than their insurance provider? I do not know a retail based InsurTech startup with the same volume of customers (outside China)? Anyone?
3. Artificial Intelligence. Probably the most overused word of the year, will continue to be the most overused word of 2019. We spent a good part of 2018 helping clients break this down into manageable parts, what it really means and where it can be applied and where it shouldn't be applied. I expect this to continue through 2019 as there are genuinely so many great opportunities, however also sometimes - just no. It feels like Digital of 3-5 years ago, that adding the word Digital to anything was a sure fire way to secure budget. Is AI this years equivalent?
4. New Business Models. Last year we saw an explosion of startups in the sharing and gig economy space, and in my view hugely valid. The way we buy, consume and use services is changing and will continue to do so. Our work with Lloyds of London validated the opportunity, I expect more in this space. A good example is also what Cover Genius are up to - listen to the interview with Mitch Doust here and how they are enabling this. From a business model perspective - I'm still a believer in what Tobi and the team at Laka have unlocked as well as Dylan at SoSure. These both change the dynamics of what we know - both will have to find scale. SoSure is more straight forward, don't use it - get money back. Whats not to love? Maybe a combination of this and the Value Added Services (see below).
5. Getting to grips with the SME sector in Insurance. It's been talked about enough. Many have started already. Our work we have done on Frank and Guru feel's like this sector is truly coming of age here and will find new found attention as the markets on either side of this get harder. This includes a huge new push into the Cyber space. Again, many have started. Watch out for our report on this later this year.
6. Finally, Consolidation! This is a big one for me and I think will see a number of sub categories. Here how I see this breaking down (this is like 4 predictions in 1):
First - Product Consolidation. We have already seen a few small moves here, the original Multi-Car policies, then Multi Product (car & home), then most recently Aviva + was launched. Will we finally start to move away from the product silos? I expect so.
Second - Value Added Services. What we buy is about to change in a move to make Insurance more relevant and engaging. This feels like the long overdue debate and I see a gap emerging in an adjacent space of home bills/management. Partly enabled by whats going on in Open Banking (PSD2), partly aggregator technology being applied to the next available area. Services such as Flipper, Snug, Bill Shark and Labrador along with services such as OneDox who can already connect to my Insurance providers to consolidate everything into one place. These will threaten the 'who owns our customer debate' (always the customer!) and I genuinely expect this area to explode. It saves time and money and makes life more convenient whilst often getting a better deal.
Third - InsurTechs consolidate & are acquired by carriers. Many of the folks who have been hunting for distribution individually will come together to broaden their portfolio and frankly look for survival while others will be acquired by traditional carriers and baked into their ongoing digital offerings & efforts. It's not going to get any easier out there.
Fourth - Carrier Consolidation. I expect to see many more carriers come together as the market seeks benefits through scale or broadening portfolios. 2018 was a good year already for this, and many of those organisations will spend 2019 seeking out the benefits of doing that.
2018 was really great, from more InsurTech Insider podcasts (we were at episode 6 this time last year and we closed out 2018 with our boxing day episode, number 31! Thanks Sarah, Pet, Laura, David, Alex and all the team) through our partnership with 11:FS, as well as joining many other shows including rebank (Insuring the Gig Economy with Harry Franks from Zego) & InsTech London, the Great InsurTech Debate, the Big Fat FinTech Quiz with Ali Paterson, our collaboration with Lloyds of London on the Sharing Economy and the global roadshow that followed this. But most importantly all the great work we did with our clients. From launching new products, driving new experiments, creating new partnerships and importantly delivering new and existing initiatives with them.
If you had a chance to listen to our final podcast of the year, each of us also made a bunch of predictions for 2019, a quick one line summary below. You will have to listen here to find out the full details. No surprise, mine are in line with the above too!.
Oliver Ralph, FT – Funding will get tough for InsurTech's. May be a shake up in the market here as investors seek returns.
David Brear, 11FS – resurgence for the bancassurance model. New and bigger distribution model.
Sarah Kocianski, 11FS – Value Added Services – insurer and start-ups, provided a packaged service.
and finally mine, which was - Finally get to grips with SME – the untapped middle. Although I added 2) the emergence of platforms and 3) consolidation as I have talked about above!
As the year rolled on, InsureTech Connect in Vegas doubled again to attract over 6,000 people, thanks to the hard work from Jay and Caribou. Will it hit 10,000 this year? I don't think so but it will be close, especially as the global market, understanding and appreciation continues to mature.
I've not even touched on regulation, Brexit or so many other areas that we will continue to weather - these are not optional.
Heres to a fantastic 2019, I expect an evolutionary year as opposed to a revolutionary year - but we are working on that one too! I can't wait to dive in together.
Nigel Walsh | @nigelwalsh