10 insurance innovations for 2019: XL Innovate
Article Synopsis :
Martha Notaras, a partner at venture capital firm XL Innovate, has drawn up her top 10 innovations she expects to pass in insurtech in the coming year.
1) Tech giants will dip their toe into personal lines
Companies like Amazon and Google will leverage their vast store of personal data within the financial and insurance sectors.
Amazon is both funding and acquiring insurtech companies in the US and overseas while seeking partnerships with carriers.
Carriers will be keen to access this customer base, with 95 million users in the US alone, with online payments already secured.
2) Don’t be surprised at some of the partnerships
Don’t be surprised to see some interesting partnerships. Notaras suggests a few what-ifs: Tesla and insurtech Metromile after poor reviews of Liberty Mutual’s ‘Insure My Tesla’ plan; Google integrating PolicyGenius directly into its search function and bypassing organic search results from carriers; and Zhong An and Lemonade partnering to share technology, user experience, and AI.
These are all theoretical but indicate the kinds of hookups we can expect to see in the very near future.
3) AI will spread rapidly and incumbents will unlock massive data sets
Insurers are already seeing a return on investment, but they need to reach the next stage that introduces efficiencies in workflow and determine how to use AI-powered underwriting and claims data.
4) The role of blockchain remains unclear
Insurers are struggling to work out how they can leverage blockchain, but that may change if it takes root outside insurance. Unless that happens, we may be asking the same questions about blockchain in 2020.
5) Insurtech is going global
Insurtech has seen huge levels of investment, but there are two distinct markets developing. One is in Europe and the US, while the other covers most of Asia, Africa, and South America.
Developing economies will be able to avoid legacy problems, and build digital-first infrastructure and technology that is suitable for products in these markets. These countries have less stringent data privacy rules that will allow insurtechs to experiment with more invasive strategies in order to learn more about their customers’ lives and risks.
6) Increasing crossover between fintech and insurance
Fintechs will seek to widen their horizons and revenue opportunities through new products and a re-bundling of traditional offerings. Some incumbents will compete with insurtechs by offering products through fintechs, while some fintechs will begin acquiring insurtechs to integrate insurance capabilities.
7) Greater transparency for insurance
Customer-centric product design shows users why insurance decisions are made, even if they do not favour the customer. However, customers will appreciate the transparency and seek to have more of it, leading to others following. Better data and usage-based insurance will allow the production of personalised policies that the customer understands better.
8) Commercial insurtech will gain momentum
Commercial insurtech grew in 2018 and this will gain momentum in the coming year. Insurtechs will be able to answer more challenging questions about risk and loss prediction. This will allow them to move further into the value chain and solve more complex problems.
9) Large-scale ventures will be internally funded
In 2019, incumbent-grown teams and companies will raise large funding rounds and make some noise in the marketplace as they become established.
10) Insurtechs will crack the SME market gap
Traditional brokers have long neglected SMEs who see the commissions as too small to be worthwhile. Insurtechs using digital tools will solve this market gap. Insurtech in this market is developing but it will receive momentum as industry leaders emerge.
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Digital Insurer's Comments
The coming year will be an important one for the growth of insurtech.These themes coincide with The Digital Insurer’s own thinking and will prove a useful benchmark for assessing the success – or otherwise – of insurtech making some ground in 2019.
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