`Is there anything happening in insurtech outside of London? That was the question casually thrown our way at a press launch near the Thames earlier in 2019. The answer – which may well surprise many Londonistas – is yes, there is plenty going on. Insurance Edge caught up with the rapidly growing Aquarium Software, just outside sunny Manchester.
IE: You’ve made great progress since being founded in 2006, especially in pet insurance, tell us a bit more.
AQ: The ABI say the average claim for pet insurance is £790. Now what this figure tells you is new technology in vet surgeries and life-enhancing procedures is giving pets longer, healthier lifespans. We are working with insurers to deliver a platform which is end-to-end, providing everything an insurer needs to create and maintain a profitable pet insurance business, or improve what they are already doing to maximise their investment.
IE: So insurers new to the pet market aren’t simply jumping in, making mistakes and burning time; they can learn from Aquarium’s experience?
AQ: What’s happened in the last few years is that insurers who have stuck with legacy systems and call-centres are realising that they are being left behind. Those ways are inefficient. The beauty of online platforms is that they offer a truly streamlined customer experience, that’s faster, presents the products better and produces a better return on your investment in IT.
IE: So how can an Aquarium powered website replace the human touch people have been getting from say badgering a call-centre employee for the cheapest car insurance once a year?
AQ: You know, it is archaic that anyone goes through that conversation anymore. Customers want a journey that presents them a range of product option and allow the customer to zero in on the right option with a few clicks.
The insurer is gains insight into the customer. For example, knowing someone insures a fairly big dog suggests they might be fairly fit as the dog will require walking a couple of times a day – so they can cross-sell other products such as life insurance with some confidence.
As an insurer you already have a stack of data on that customer, so you can constantly refine the relationship with the consumer, in a way that goes way beyond a 1990s call-centre approach.
IE: Is technology going to help improve the bottom line for insurers, as it cuts admin costs, settles claims quicker and so on?
AQ: Investment returns for insurers have been under pressure, growth in GI is pretty low, and insurers will probably look into niche markets that have the potential for growth, as well as savings via technology. Things like pet, travel or travel related services such as medical assistance for example. The cost of repatriation claims can be very high, say six figures, so if there’s a way that Aquarium can help insurers and underwriters understand those specialised lines and service the customer to a higher standard, then the bottom line is likely to improve too.
It may be that in the future claims below a certain level will not require any human intervention, because it isn’t cost effective. That ultra-fast settlement isn’t just good business sense; it also offers an improved customer experience.
IE: Within insurtech there’s a lot of talk about data insights, and the battle for data – how does winning that data help insurers in practical terms?
AQ: We are building platforms that feature robotic process automation, AI and big data insights – which is a crucial part of it. If you look at the 02 Drive product, you get a glimpse of the future. A phone company wants to harvest the data from every car journey, not only from the in-car systems, but wearable tech, the smartphones being used by the driver and passengers etc.
The benefit for insurers is potentially huge because you can analyse that data, then become more agile in terms of your product offer, extras, rewards schemes and partnerships. The trouble is that in the long term there may be headwinds for the industry as companies cherry pick the best insurance prospects, based on that sifting of data streams. Once you have truly personalised quotes, with granular level risk analysis, then you won’t benefit from the average rates being set for critical illness, life, motor etc. – you could make entire swathes of society uninsurable, so the industry needs to look at how to deal with that in the future.
IE: Is technology effectively the key factor in driving future ROI for insurers then?
AQ: It is a big part of it yes. Our software can help insurers slim down back offices; develop more `sticky’ relationships with their customers, offer new products like Pay-As-you-Drive cover for example. Aquarium can offer insurers the chance to make more everyday processes truly digital, more efficiencies, improve the customer experience at every step of the journey; from initial quote, to inception, claims etc.
Our platform is a modular system, which is continually updated. Clients are able to change system configurations to create or update existing product and flows. That makes it easier for the insurer to build products cost effectively and to connect data pools that help drive far more dynamic pricing. That’s how we see the future.
IE: You’ve blazed a trail with the pet sector over the last few years, what’s next?
AQ: We are looking at travel and in particular how different niches are growing, or might offer unique challenges for insurers. For example there has been a boom in the last decade or so in cruise holidays and the insurance industry has traditionally been reluctant to offer medical emergency cover to the over-70s. But times have changed, many 70-somethings are fairly fit and want to spend money, see the world. Technology can help offer older travellers more attractive rates for visiting North America, where medical treatment costs can be extremely high.
So dynamic pricing can assess that risk more accurately and open up that market and that’s where Aquarium can help insurers make it happen. We are expanding rapidly and plan to quadruple in size over the next few years, new modern offices in Altrincham just outside Manchester, and looking to attract lots of IT talent coming out of the Manchester/Salford Universities.
IE: The thing about building insurtech platforms is that they can be deployed anywhere, so you have potential globally, but where do you see really exciting opportunities?
AQ: We are opening an office in the USA, we have a Canadian client and are talking to potential customers in Australia, South Africa and other countries. In the next five years we plan to double our staff headcount, and expand our products in key markets. For example we think that in the US pet insurance will grow by about 20 percent every year in the next five years, in the UK pet cover will grow at about 15 percent per annum.
Here are some stats for you: About two thirds of all dogs are not insured in the UK, which is incredible when you think about it. Probably a higher figure in the USA, where you imagine a dog bite can lead to a potentially expensive lawsuit – so we see fantastic growth for us, and the industry, over the next few years.
Another specialised area we want to look at is gadget insurance. The typical smartphone user might have multiple cover; from their provider, home contents, and perhaps with a bank account, so that market is due for a shake-up we think. Then there are electric bicycles, which are getting older people back onto two wheels, especially at weekends. In France they are seeing electric mountain bikes being used in the Alps at weekends, and people who would never normally venture onto challenging trails are having accidents – again, that medical evacuation can cost a substantial amount of money, so insurers need to look at all the data to gauge the true risk.
IE: So lots of growth ahead for the insurance industry, and Aquarium too?
AQ: Very much so. We have strategic partnerships with EY, and several other companies, which is very important for us because it gives us a physical reach around the world and no small company can expand quickly without partnerships. Insurance now is all about joining up streams of data, making sense of it, and offering the customer a share of the benefits. We want to help insurers develop new ideas, streamline existing products to maximise efficiency and make the most of their partnerships too.
IE: Interesting times ahead, thank you Aquarium