IoT, AI, Telematics and…Lemonade?

​Insurance is no longer the domain of just a few choice investors: the competition is fierce, the valuations high, and the multiples, in some cases, are eye-watering. But how is disruption affecting an industry so traditionally change-resistant? In the first of two articles for La Fosse, La Fosse’s Emma Roderick interviewed one of the industry’s most distinguished tech heavyweights, Kevin Findlay, to find out some of the most disruptive factors to enter the insurance arena in recent years.

Kevin Findlay is a product and business-focused CTO, with over 20 years of experience in technology and strategy. He spent 9 years at PwC, advising Venture Capital and Private Equity on the TMT sectors, before moving to Hosted Analysis, a data analytics focused strategy consultancy, where his clients included rightmove, Channel 4, Vodafone and Pricewaterhouse Coopers. He was engaged in the transformational arena as the Digital Transformation and E-Commerce Technology Leader at Waitrose before moving into the Insurance industry as the CTO/CIO at Complete Cover Group. He is currently engaged as the Interim CTO at Vitruvian-backed CFC Underwriting.

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AI and Neural Networks

Artificial intelligence and prediction algorithms have been the staple diet of insurance actuaries (data scientists by another name) for years. What’s new today is the introduction of additional data and the emergence of cheaper hardware and software platforms, thus making the tools more accessible.

We’ve also seen improvements in the core AI/Neural Network algorithms. Neural Networks are computing systems which mimic the brain’s physical structure and information processing, with a web of interconnecting elements which allow it to process decisions in a more ‘human’ way.

These developments have customer-facing implications, with the opportunity to optimise sales and improve customer interactions. They also provide the opportunity to improve back office operations, enabling processes to be streamlined and automating internal activity like risk calculations and broker reports.

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IoT

The spotlight on the Internet of Things has led to advances across several areas of insurance – for example, marine insurance, where companies are experimenting with new sources of data and real time systems to reduce and understand risk.

Closer to home, personal devices are being used to store and provide a lot more data around people’s behaviour, enabling new possibilities – consumers can now carry automated holiday insurance policies on their phones with geolocation tracking which activate when their owner travels outside their home country.

Time-based Insurance Policies

Building on the possibilities of data aggregation, insurers have started to offer time-based car insurance policies, which provide discounts on insurance for safe drivers by collecting data from a device stored in the car itself, or even from an app in the driver’s phone.

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Cyber Insurance

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Unsurprisingly, the rise of data-hackers, particularly the proliferation of high-profile cases in mainstream media, has meant that cyber-insurance is growing very fast – CFC Underwriting is leading the way in this area.

Lemonade

The core insurance markets have tended to see less disruption. However, this is beginning to change, with several insurance companies experimenting with new business models. The poster child for this type of company is Lemonade.

Whilst traditional insurers make money by keeping the money they don’t pay out in claims, and therefore lose profit when they make a payout, Lemonade takes a fixed fee out of the monthly premiums and donates leftover money to charities in their ‘Giveback’ programme. As their interests are not in conflict with those they insure, they can therefore purportedly approve claims more quickly.

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Kevin Findlay | LinkedIn