Running late for work, you burst out of the front door and jump into the back seat of your car. Checking that the coast is clear, the vehicle pulls out of the drive and patiently glides down the street, pausing for traffic.
Meanwhile, your smartwatch, gauging your speed and accessing the latest traffic data knows you won’t be in on time. It contacts your office, apologising for your lateness and tells the kettle to delay your morning cuppa by ten minutes.
Science fiction? Barely. We live on the edge of a brave new highly technological world. Tech-driven innovation is becoming a thing of the present, with almost every major business sector undergoing serious technological upheaval.
Fintech, such as trading platforms, payment systems and blockchain have grabbed the headlines but, in the background, insurtech has been quietly making waves. And as insurance is a key part of the City’s global status, the companies hoping to overhaul the industry have the potential to become the next Great British success story.
So far, the innovators have been startups and entrepreneurs, companies not interested in pointless gadgets and which truly understand the importance of customer centricity. The changes being made by the new generation have the potential to force the old guard of insurance into retreat unless it quickly grasps insurtech’s importance.
While many willing traditional insurance companies are hamstrung by unwieldy, cumbersome legacy technology, the industry as a whole needs to face facts. Most customers don’t want to buy traditional insurance in the traditional way. Price comparison sites and telematics providers have already started the ball rolling, allowing quick access to hundreds of insurance quotes and helping drivers pay for cover based on their performance behind the wheel. However, modern insurtech providers are taking things further. Motor insurance startup Cuvva, for example, unbuckles drivers from standard 12 month car insurance policies, allowing cover to be bought in smaller, more convenient chunks.
As well as more flexible, pay-as-you-go style products, millennials want their claims handled more quickly and efficiently. Some insurers, notably American firm Allstate, has pioneered the use of drones to inspect storm-hit homes, allowing damaged to be assessed and repaired more swiftly. Customers also want more ethical, easy to understand, transparent products. American-based insurer Lemonade, which launched with great fanfare recently, claims that you can get a quote, and buy cover, in just 90 seconds through its app, and funnels money not paid out in claims to good causes.
These new products represent a shift in the way the industry thinks about insurance. More importantly, insurtech has the potential to make customers happier, make products easier to afford and, importantly for an industry that has struggled to gain the trust of the public, help rehabilitate its reputation. However, the one form of technology that has the ability to change the insurance sector, and potentially the world, more than any other is the driverless car. Autonomous vehicles will revolutionise our roads, making driving much safer, the risks associated with driving easier to understand, and ultimately driving down the cost of car insurance.
Axa is taking a major role in the government’s driverless cars projects and is working closely with Venturer in Bristol and UK Autodrive in Milton Keynes to help bring autonomous vehicles to UK roads.
Without insurance, it is unlikely that driverless cars can take to the road, and detailed data about drivers will ultimately feed into an autonomous ecosystem, which is self-sufficient and trusted by users. Unless insurance companies are willing to embrace driverless cars, and insurtech more generally, it could be a future where the industry has only a minimal role.
Put simply, it is this challenge that the insurance industry, and every other sector facing a similar technological revolution, must overcome – or else risk being left behind. Insurance companies that want a stake in the future of their industry have to take a stake in the insurtech startups of the present day.
It seems that some insurers are doing just that, with venture capital and seed funding for insurtech firms on the up. According to CB Insight, both traditional insurance providers and other investors have invested in 91 projects so far this year, securing $1.5bn for further insurtech developments – an increase from 61 projects in 2015. At Axa we are also investing in insurtech. Axa Strategic Ventures, a $250m fund, invests in both tech startups and growing tech business.
Our industry is ripe for disruption, and if it mistakenly believes insurtech is a fad and is not alive to the potential for disruption, there are younger, more agile startups willing to step in and give customers what they want.
In the future, motorists will not have to worry about the accelerator, brake and clutch. They will binge-watch the latest popular Netflix series from the back seat, while drones buzz overhead delivering packages and smartphones turn on the lights and heating before the key is in the front door. The future is coming, and if traditional insurance companies do not act, they risk becoming part of the past.