It's that time of year: You unwind (in my case, get a cold!), reflect on the year that was and look to the year ahead. Last year, my "2018, a view through my looking glass" gave 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 on 2018, then jump into what I see in store for 2019. As always, I'd love your feedback. Here goes!
2018 - Marking my homework - how did I do?
- Our first driverless journey — As reported in November, Oxbotica said it would complete tests that week. Oxbotica is on a great journey, from the partnership with AXA XL and newly formed partnership with Addison Lee. Marks 1
- 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
- The deathly fear of Amazon and other GAFA/BAT companies.This one always draws debate and ensuing huge headlines and here. given their history in disrupting markets and attaining significant market share. Nothing launched directly in the U.K. from these organizations, despite much speculation, but they have filed for an Indian Insurance Licence. Marks 0
- Re-bundling/Orchestration/Insurance. I thought we would see much more of this in 2018 than actually emerged. There was lots of talk, but we still seem to innovate in silos. I think 2019 will see this change; see below for my consolidation predictions. Marks 0.
- 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
- Regulation.With IFRS17 delayed a year, more time was handed for insurers to get ready — these continue to be long, complex and costly programs for many. How they will be leveraged, only time will tell. Marks 1
- 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 organizations. Marks 1
- 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 U.K. lags, for example) with many new insurtech startups across the globe now established to fill the gap, including Tapoly, Zego, Dinghy and many more. Marks 1
- Speed to market still seems to be the #1 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 products in weeks, not months and years, with some great success. Many other platforms are out there that can do this. See my new piece on "Are all insurtechs solving the core system challenge?", which I will post shortly.
- Scale. Once you are in the 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 what"s going on with the fintech scene and how the likes of Monzo and Starling (new U.K. challenger banks) have 1.5 million 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?
- Artificial intelligence. Probably the most overused term of the year, AI will continue to be the most overused in 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 three to five years ago, that adding the word "digital" to anything was a surefire way to secure budget. Is AI this year's equivalent?
- 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 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 is up to -- listen to the interview with Mitch Doust here. 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 straightforward; don't use it, get money back. What's not to love? Maybe a combination of this and the value-added services (see below).
- Getting to grips with the SME sector in insurance. It's been talked about enough. Many have started already. Our work on Frank and Guru makes it feel like this sector is truly coming of age here and will find new 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.
- 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 four predictions in one):
- First — Product consolidation. We have already seen a few small moves here, the original multi-car policies, then multi-product (car and 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, which 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 while often providing a better deal.
- Third — Insurtechs consolidate and 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 digital offerings and 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 organizations will spend 2019 seeking out the benefits.
- Oliver Ralph, FT – Funding will get tough for insurtechs. 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 startups providing a packaged service.
- Me - Finally get to grips with SME – the untapped middle -- plus the emergence of platforms and consolidation, as I have talked about above,
