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The insurance industry is one of the oldest in the world. The first evidence of elementary forms of insurance can be found in the laws of the Babylonian king Hammurabi, who ruled in the 17th century BC. e. The law provided for collective sharing of losses when a trade caravan, for example, was attacked by robbers. Or, say, pirates implemented their own insurance schemes that relied on mutual assistance and resembled today's model of online p2p lending. Today's insurance companies are the most influential players, managing more than 20% of all global assets.
In the US, insurers collect € 1.152 billion in insurance premiums annually, in Europe - € 1.169 billion. But despite the scale of the industry, it remains one of the most conservative and non-technological.
History knows many examples when companies in large markets failed to catch changes in the market and maintain their position. Many have heard the story of Kodak, which turned from the largest seller of photographic equipment into a company "in the tail" after the digital photography revolution. Everyone remembers the path of Nokia: in 2007 the company occupied more than 50% of the global phone market, and today it is not even in the top ten. A more recent example is the agony of Yahoo, which missed all the trends important for the Internet industry and was sold to the American cellular operator Verizon at a price 10 times lower than that offered in negotiations with Microsoft in 2005. With the penetration of new technologies into the financial industry, the insurance industry may also have its own stories of failures.
Why do startups have a chance to squeeze out old players? First, in insurance, there are high costs for marketing, selling and distributing financial products. In Germany alone, 250,000 insurance brokers received more than € 15.8 billion in commissions for services from insurance companies in 2014 (this is 8.7% of the total amount of collected insurance premiums). Moreover, for a number of products, the cost of attracting a client can exceed 20% of the price of the policy. This is despite the fact that the profit of insurance companies is on average about 10% of the amount of collected insurance premiums.
Of course, such "cheats" do not suit consumers. Secondly, the insurance industry as a whole is known for its disgusting level of service - customers are dissatisfied and ready to switch to alternative products. Thirdly, the entire industry actually exists offline and avoids the transition to digital technologies, and without them there is nowhere in the new era.
The inefficiency of the insurance market can also be explained by the fact that insurance companies prefer not to make changes internally, but to grow extensively through acquisitions. According to a survey by E & Y in 2015, 66% of insurance companies put M & A deals in the place of the main driver of business growth, for 43% of them M & A is the main priority. There were no companies that chose internal changes as the main focus.
What innovations are insurance giants not noticing yet? One of the growing segments is the services of "digital brokers". On average, one resident of Germany, for example, has 5-6 insurance policies. By the way, men have even more insurance contracts at their disposal - they often also monitor the insurance policies of their relatives. To purchase each policy, you need to choose one of the offers from more than 500 insurance companies, calculate the most suitable tariff, sign a lot of documents, send it. And it is also advisable not to miss the date when the policy expires. All this takes effort and time. Today, many mobile insurance brokers are appearing that relieve this headache. The user can compare insurance products, buy them or refuse them through the application, the contract is signed on the smartphone display. The application automatically updates the policy, you can get advice without leaving home. The benefit for the user is clear. For insurers, in addition to convenience, there is another plus - such applications are able to collect and additionally use a huge amount of data about their users, which means that each request can be approached individually.
Another promising segment is “crowdsourcing” services in insurance. Let's imagine a situation: Petya, Kolya and Vasya are very good friends, and also professional drivers with a long accident-free experience. They want to be insured, but they don't want to overpay. P2P platforms like the American Lemonade or the German FriendSurance allow you to solve this problem - with the help of insurance that can be used together with friends and acquaintances. Platform users get the opportunity to bear collective responsibility within certain groups, and if the risk does not materialize, they get back part of the previously paid insurance premium. That is, Lemonade and FriendSurance distribute both insurance risks, contributions, and premiums. Unlike P2P platforms such as Kabbage or Lending Club (it is precisely because of regulatory risks that Lending Club's capitalization fell by almost 70% in a year), P2P startups in insurance are exposed to less regulatory risks. For example, Lemonade's reinsurer is a company Berkshire Hathaway owned by Warren Buffett. FriendSurance has more than 60 partner insurers. Lemonade announced a round of financing from insurance firm XL Innovate, and FriendSurance has raised $ 15 million from several venture funds with big names.
There is a great demand for express insurance with more reasonable tariff calculations. For example, some drivers own several cars at once and rarely drive each of them. Many families have several cars that drive out in turn, again, some cars are in the garage for a long time. In both cases, the car owner could come up with something if he could insure the car only at the time of the trip. This is what startups Cuvva and Kasko have proposed. The user installs an application that tracks the distance traveled by car, payment is made for each kilometer traveled (on-demand insurance). "Fast" insurance - when anyone can get behind the wheel of a car, having bought a policy through an application in less than an hour - is a common trend for the entire insurance industry. For example, the American company Troy offers customers to insure any thing through a mobile application.
Inventors of new business models for the insurance industry are actively looking at the development of the "sharing economy" - the company Slice Labs offers insurance policies to Uber or Lyft drivers, Airbnb has its own insurance products. The "sharing economy" has already changed the passenger transportation market (growth of the taxi and car sharing markets), the labor market (active development of various project and temporary work), and many other industries are on its way. New digital insurance products can be born in all these segments.
The main advantage of startups in insurance is that they are more creative in assessing risks, forming data panels in a new way. Until now, few large insurance companies think about how much information about themselves a modern city dweller leaves on the Internet, how much their devices can tell about them. Analyzing all this data provides enormous value for more effective risk assessment, and for new companies it becomes a competitive advantage.
Soon we will brush our teeth, and the insurance company will be able to use this data to calculate the possible costs of visiting the dentist.
However, even among the giant insurers there are companies that keep their finger on the pulse and are already working with startups to maintain leadership. Berkshire Hathaway, Allianz, AXA and AIG have begun to actively invest in venture funds and directly in companies. However, it is difficult for insurers to compete with venture investors, especially for the best projects, where the size of investments from those wishing to invest is often larger than the size of the planned round. Reinsurance companies are no less active in the venture market, for which startups allow them to gain direct access to clients. For example, MunichRe invested in the Plug & Play accelerator; Swiss Re - in its own accelerator, Hannover Re - in the Finleap venture fund. These are the top 3 players in the global reinsurance market.
Source: forbes.ru
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