Last week I visited Infiniti LAB HKG, the Renault-Nissan backed Accelerator hub, which served as the venue for a joint British and Australian Hong Kong Chambers of Commerce "Insurtech" event.
The breakfast seminar offered a fascinating insight into the development of digital technologies, such as connected cars, wearable devices and other smart objects (part of the so-called Internet of Things).
Indeed, this promo video foretold a remarkable future of autonomous driving the "connected car", simply another "device" in an individual's ecosystem, able to real-time monitor our health and other personal data.
In the auto-insurance industry, this has enormous disruptive potential for a business model built on individual drivers and personal ownership, i.e.:
- Who is in control of a driverless car for the purposes of accident insurance?
- Who will even want to own a car if sharing becomes the new norm in the Uber economy?
It's no doubt that "insurtech" is emerging as a big rival to the ubiquitous "fintech". According to a report by Accenture, investments in “insurtech” grew from $US800 million ($1.05 billion) in 2014 to more than $US2.6 billion ($3.41 billion) last year. Data from CB Insights show health insurance technology funding has more than doubled from US$570 million in 2014 to $US1.23 billion ($1.6 billion) last year.
Another good illustration of the disruptive potential can be seen in home and contents insurance. Just last week, Australia's own Suncorp announced its $US5 million ($6.56 million) equity investment in US-based technology developer Trov(as in treasure trove), an app that lets you create a digital inventory of your belongings on your mobile phone, complete with images and receipts.
A “world-first” on-demand insurance platform – Trov Protection – has now been integrated. Users can simply “swipe right” to insure individual items, for as long as they like. The claims process is just as simple, with a slick user experience adding to the appeal.
True, these technologies are expected to not only enhance the customer experience but offer insurers a new, rich data source, providing new possibilities for underwriting.
But the surge of "insurtech" will not be untroubled.
For example, might introducing swipe-app choice for millennials lead to underinsurance - Trov's website tag is, after all, "on-demand insurance for the things you love"?
And most insurers' business models are based on pooling risk, calculating average pricing and generating gross premium income. That requires good customer and claims data. But the Hong Kong seminar highlighted the need to assure data provenance & integrity, questioning the utility of data analytics in their absence.
And most single and multi-line insurers deploy old - and slow - back office technology, potentially diminishing their ability to keep pace with heightened consumer expectations.
With regulators already showing a keen interest in consumer protection issues, insurance providers certainly have a lot on their plate.
2 May 2016
Dominique Hogan-Doran SC is a barrister with a keen interest in consumer technology. She is a non-executive director of Australian industry superfund Club Plus Super and co-founder of regtech startup, Hemisphere Solutions, a Stone & Chalk resident.