In 2017, Lloyd’s of London made a loss of $2 billion dollars, which has led some to speculate that the writing is on the wall for the world’s oldest insurance market. However, there is much hope to be found in the technological solutions being developed by insurtech start-ups, which can be harnessed to turn London’s fortunes around and preserve its pre-eminence long into the future.
I went to the recent Insurance 3.0 conference to find out how insurance companies can work with insurtech to solve the critical challenges faced by the sector.
Re-focusing on the customer
Customer-centricity is the phrase that carried the day, and for good reason. Katrina Beckwith, Head of Business Development at payments technology company Optal, told the audience of her neighbor, Bridgette, who forked out thousands of pounds for the treatment of her sick dog, despite having pet insurance. She was later able to reclaim the costs from her insurance company, but at a time of intense stress for Bridgette, Beckwith pointed out it should have been the insurer that paid the vet directly. Technology, such as the payment service provided by Optal, allows insurance companies to do the simple things, but it is these things that can go a long way to strengthen relationships with customers.
In this instance, Bridgette had a miserable time and insurance cover did little to alleviate her stress. Unfortunately, this example is not an anomaly. The industry has a decidedly mixed track record on customer experience. Fortunately, insurtech can play a vital role in helping insurance companies change in ways that customers have been crying out for.
Setting new parameters
Still a reasonably recent addition to the insurer arsenal, parametric insurance automatically pays out compensation in response to a pre-defined trigger, which could be level of rainfall, hurricane wind speed or any number of other indicators. Parametric policies demand extensive modeling so these have only come about due to the advent of highly advanced technology.
But now that it’s here we’re likely to see a lot more of it.
Organisations will take up parametric policies in swathes given the increasing frequency and intensity of adverse climate events. Global reinsurance powerhouse, Swiss Re, is putting these policies to practice with a new product that seeks to protect coral reefs and coastlines from hurricanes. Mexican local government, conservationists, and hotels are working together to insure the Mesoamerican Reef, which draws in tourism and defends coastal communities. It demonstrates how the proper application of technology can help mitigate even the most complex risks.
The future of insurance
If Insurance 3.0 was anything to go by, there is an abundance of ideas and tech talent to supercharge London’s insurance market. And the most forward-thinking insurance companies are constantly on the hunt for partners to help them navigate digital disruption, making insurtech an increasingly exciting space to be in.