We asked earlier in December for predictions from across the insurance sector, and you delivered! So in no particular order let’s get into it;
The pandemic has accelerated the adoption of “Blueprint” initiatives and digital technologies across the London Market. The market has had to move very quickly from a model dominated by face-to-face business to one that is entirely digital. This enforced move to digital has provided a real-world proof-of-concept environment. With many now more convinced by the effectiveness of the technology, we would expect to see wider scale adoption of digitalisation across the market in 2021.”
Cyber Threats Go 5G
Cyber insurers and buyers must scramble to be ready for 5G in 2021 says Jonathan Franke, Tech, Media & Cyber Broker, New Dawn Risk
2021 will see the scaling up of the worldwide roll-out of 5G networks, with North America, Europe and East Asia leading the way. 5G’s importance has grown since the onset of the pandemic, with much of the world switching to remote working and requiring faster, more reliable data speeds and network management in order to continue operating efficiently.
As we continue to transition to a progressively cloud-based society, when it comes to data transmission and storage, the majority of the developed world will swing towards 5G, which brings with it a brand new cyber threat landscape which is yet to be understood.
The roll out of 5G will continue to enhance the expansion of the Internet of Things Age in almost all industry sectors and many homes, as more and more smart devices connected to the internet become essential everyday equipment. This poses an explosion of vulnerability avenues for criminals to exploit seemingly secure networks almost undetected.
Both B2B and B2C companies must prepare to invest in more sophisticated and increased levels of monitoring of their networks, controls and technology. They will place more and more reliance on IT experts to ensure adequate protection is in place, in spite of a widening IT skills gap. And they will have to do so at speed – planning for the increased risks associated with 5G should already be well developed. Those who have taken their eye off the ball, perhaps distracted by adjusting their operations to cope with COVID-19, run the risk of increased vulnerability.
The same applies to cyber insurers. They have a responsibility to be 5G-ready too, in terms of making sure that their cyber insurance offerings are up to speed and they are providing their clients with adequate protection. In 2021, we will see cyber insurers and buyers scrambling to be ready for the roll-out of 5G; wordings are likely to change, coverage could be challenged, and we should expect some related upheaval.
Digital Means Speed, Convenience & a Better Customer Experience
As we enter the new year, the uncertainty of 2020 will persist—and that will require boldness from insurers to survive. Rick Fox, VP of Agency Networks & Associations at Vertafore, shares his predictions for how the insurance industry can succeed:
“For 2021, the agents and carriers that will thrive are the ones that are most willing to evolve and accept technology to solve critical issues. Today’s modern consumers have become ‘Amazoned’, meaning they expect tasks to be solved quickly with a single click, so they must provide more personalized and faster service than ever.
Success will mean forming deeper and more meaningful relationships with partners and customers by demonstrating a willingness to go the extra mile in an uncertain market.”
From Those Legal Eagles at Clyde & Co
E-scooters pick up speed in 2021 – Vikki Melville, Edinburgh
Smart motorways will be called into question – Kate Hargan, Manchester
Directors and officers will face increased exposure for cyber related incidents – John Moran, Kate Boomer & Jennifer Robbins, Sydney
Re/insurers will be on green-watch in 2021 – Simon Konsta, Partner, Clyde & Co London
Disease and diversity will drive US D&O claims in 2021 – Katelin O-Rourke Gorman, Partner, Clyde & Co, New York
Next Insurance Sees Insurtechs Scaling Up
“Despite the economic uncertainty brought on by the pandemic, insurtech players like Next Insurance, along with Lemonade, Hippo and Root, have all had a banner year of growth, significant investments and notable milestones (IPOs). In 2021 I predict we’ll see an equal rate of growth at the same pace, but on a much larger scale. Therefore it will be key for insurtech companies to master the delicate balance of operating businesses at this new accelerated level while mastering the art of scaling. It’s easier to grow revenue figures from $10M to $20M versus from $200M to $400M, or foster a tight company culture with five employees versus 500.
Scaling business growth to meet increased customer demands, recruiting needs, investor expectations and delivering a high-impact company culture, all during a remote work environment, is a balancing act and will be an ongoing challenge in the new year. There are two aspects that I think will lend to the success of scaling in 2021: 1) Leveraging the technologies necessary to increase and ensure positive digital and online experiences; 2) Prioritizing a CEO’s role in maintaining a strong and highly productive company culture. Together, these areas all ladder up to the same end goal: keeping customers and employees satisfied.”
Fujitsu Looking at Tech and WFH Impact
Manan Sagar, CTO, Insurance for Fujitsu UK and Ireland’s top predictions for 2021;
1. Covid-19 will help the insurance sector catch-up on digitalisation
2. Predict and prevent models powered by data will become more common
3. How we work has, and will, change forever
4. Tesla will drive change in the car insurance market
Leakbot Sees a Data Driven Quid Pro Quo
Craig Foster, CEO LeakBot, the smart water leak alarm company offers these insights;
- Insurtech will continue to shift from ‘nice-to-have’ to ‘necessity’
“There has been a greater openness towards insurtech solutions in 2020 from a wide range of insurers – household names like Hiscox and Direct Line Group have been among the brands that LeakBot has announced partnerships with this year, for example. Insurer/insurtech relationships are constantly evolving and will continue to evolve in the coming year as insurers reassess priorities and partnerships, particularly in the wake of the pandemic.
What we anticipate in 2021 is an accelerated ‘sorting effect’ among insurers as they more actively seek to distinguish which technologies will drive long-term value and are worth their time and investment. Insurtech providers have been steadily proving the business case for their solutions for a number of years now, and 2021 will be the year that insurer focus shifts increasingly towards those providers who have demonstrated measurable results in real-world use cases. Technologies which solve real, high-value problems for insurers have always been seen as ‘nice-to-have’, but in the coming year the needle will continue to shift towards ‘need-to-have’ instead.”
- ‘Smart telematics’ will bring increased proactivity, decreased underwriting costs and greater insurer/customer dialogue to the personal lines space
“The pandemic has meant significant disruption for both insurers and policyholders in 2020, with greater uncertainty leading to greater risk – and, in some instances, increased costs and underwriting losses for insurers. That’s why 2021 will be the year for those in the personal lines space to begin seriously considering smart home telematics as a critical proposition for managing underwriting losses and mitigating future risk and uncertainty.
“Telematics products will deliver excellent underwriting results for insurers in 2021, allowing them to gain more granular insights into customer policies and their individual risk level. These devices will enable proactive monitoring to pre-empt high-value claims drivers – a leak detector, for example, can spot a small, hidden leak that would otherwise turn into a costly damage-causing issue if left undetected. Potential costs and prospective risk will both be significantly mitigated, with proactive monitoring also encouraging more positive behaviour from the policyholder, giving them the opportunity to take a much greater stake in their own cover in exchange for savings on premiums.
“This approach will also foster more frequent dialogue between insurer and customer with regards to policy costs and savings on premiums. 2021 will see the beginnings of more two-way interactions and greater insistence from the customer side that a direct cost benefit is attached to their telematics-based policy. We have seen this in the past with energy-generating technology in and around the home, such as the feed-in-tariff scheme which gave homeowners reimbursements for installing solar panels on their properties. As insurers continue to benefit from risk mitigation as a result of telematics products, expect customers to want to increasingly engage with their insurer about reductions in their premiums.”
- As insurers and customers see mutual benefits from insurtech, more insurers will make them a mandatory part of policies
“IoT has allowed personal lines insurers to adapt their offering and implement new models of insurance for a few years already – for example, the telematics-based approach first seen in the automotive space and increasingly being adopted in a smart home context. It’s becoming more widely accepted that there is mutual benefit to be had from installing these smart devices in homes – not only is it a smarter, more efficient way of underwriting and preventing claims, but customers can also benefit from reduced premiums and enjoy greater peace of mind that their homes and personal effects are being proactively protected.
“What we’re going to see in 2021 is a new appetite among many insurers to make these devices compulsory at point of acquisition or renewal. While it’s not yet mandatory for any homeowner to install devices that monitor risk in the home – people have a choice about whether they install a device and receive the associated benefits as a result – there will be calls in 2021 to make this a condition of certain policies, particularly in high-net-worth properties where average claim values are higher. Many consumers are already well accustomed to the role of data insights in their daily lives – the data-powered recommendation engines of Netflix, Spotify and Amazon, for example. As such, it will be fairly natural to accept the idea of data-driven insights informing their insurance policies, particularly if they see a significant reduction in the cost of their policy premiums.”
KASKO Sees More Cherry-Picking
Nikolaus Suhr, (pictured) CEO of KASKO offers these insights;
Focus on flipping existing demand vs new business
1. Insurtechs (and incumbents alike) will focus on helping brokers and agents to more easily switch their existing product to their own. NB: if you are looking for someone who is writing the playbook here, check out One Insurance.
2. Large commercial brokers with large and diverse offline portfolios of SME and retail (via their employee benefits programmes) customers will engage with tech-savvy insurers offering the following deal: You can cherry pick from my existing profitable portfolio with current premiums and updated wording in exchange for digitising my entire portfolio. NB: if you are looking to connect to pioneers in this field I suggest to engage with Mailo for SME and Neodigital for retail.
3. Price comparison sites and large digital brokers rather than simply comparing what the market offers will co-design products to optimise for unserved customer segments or leakage.
4. In order to finance their digital transformation efforts, incumbent insurers are looking to sell off and monetise non-core business legacy portfolios at a much larger scale. NB: Legacy Portfolio Partners by Swiss Re and core system provider MSG is one concrete example.
5. Incumbent insurers will take a page from the B2B2C White-Label playbook from players such as Wakam, Element, Neodigital and Ottonova and offer their own products and services to other insurers and big brands alike.
The rise of the MGA-stack as a true change and innovation engine
6. Big brands will look to establish their own captive MGAs to better orchestrate various insurers and their offerings and to reduce dependence from a single insurance partner.
7. Insurers conversely will also establish their own MGAs to better orchestrate the various products within P&C, health, life and assistance to provide one interface to their large distribution partners and (where possible) source other insurers’ products whilst keeping pipeline control.
8. Existing brokers and MGAs will partner with insurtechs to offer MGA as a Service (or MGA incubation services) to allow insurers and big brands to easily access this market without breaking the bank.
2020 has been anything but predictable, says Lucas Ward, CTO of Kin Insurance.
As we wrap up the craziest year of all time, industries and businesses across the globe are preparing for a more foreseeable year ahead. The insurance industry, in particular, expects some major changes ranging from advancements in automation to a large focus on financial literacy and more opportunities for startups — posing some key considerations as we say farewell 2020, hello 2021:
- It’s only a matter of time before self-driving cars become a reality, impacting home and auto bundling as a result.
- More investors are realizing there’s a wealth of technology innovation happening outside of Silicon Valley, where are the next hotspots for the startup community?
- The incoming administration is set to bring massive changes to the insurance industry.
- Right now, 37 percent of Americans do not have a fund to cover a $1,000 emergency — how will financial literacy make headway within the insurance space in 2021?
- It’s expected that we’ll see more integration between the home insurance and home maintenance space because it just makes sense.
- Catastrophe exposure is only getting worse and it’s affecting insurance markets everywhere, and we’ll continue to see insurance companies make sweeping changes to adapt.