The (re)insurance industry’s self-flagellation with regards to technology is misguided
The (re)insurance industry has for a long time beaten itself up for failing to adapt to the times when it comes to technological innovation and revolution.
Back in the heady days of 2008 when I first started covering the market, I remember heading from London down to Brighton for the Xchanging Insurance Market Conference, where all manner of technological ideals were discussed. Phrases such as straight-through-processing, single data entry and electronic claims handling were bandied about.
It may have taken the best part of decade for some of those plans to come to fruition, but with the adoption of electronic placement and utilisation of PPL in Lloyd’s, there is considerable cause for the industry to celebrate the innovation currently within the sector.
Further afield, there are yet more reasons for the industry to be cheerful when it comes to technology.
While Lemonade founder Shai Wininger admitted he and his colleague Daniel Schreiber had “screwed up an entire quarter” in reference to the company’s results for the final three months of last year, the business still enjoyed remarkable year-on-year growth.
As a business, Lemonade continues to prompt considerable debate in the industry. There are those who look at its combined ratios and scoff at its apparent success. But that is forgetting that many start-ups, especially those operating in a high-volume, low-premium sector such as renters’ insurance, are likely to see their numbers thrown asunder by just a handful a sizeable claims.
Others argue Lemonade is not a true InsurTech business at all, insisting it is a regular insurance company with a lot of data sitting behind it and some fancy marketing.
Regardless of whether any of that is correct or not, what cannot be denied is that Lemonade has changed the face of the industry. As perhaps the highest-profile of the InsurTech platforms, Lemonade wields considerable influence. Although it has its naysayers, the firm now covers 425,000 homes in the US and is the largest provider of renters’ insurance in the state of New York.
Numbers like that can’t be scoffed at, but while there will be those who scrutinise Lemonade’s figures and question whether its business model is sustainable, one has to look at the wider picture. Through smart marketing strategies and simple-to-understand explanations, Lemonade has introduced a plethora of people to the insurance industry.
Now, Lemonade may not be around for ever – indeed, one suspects that Wininger and Schreiber would sell up should a reasonable offer come in – but its entry-level customer base will likely want to broaden its own insurance purchasing horizons and will look beyond the platform to the more established market. And so for that, I believe Lemonade deserves its plaudits. It may not end up becoming an industry behemoth, but there is little to deny that it has, and will continue to have, a strong influence on the market going forward.
On the subject of innovation, the past week has also seen those behind cryptoasset experts BlockRe unveil plans to launch a managing general agent (MGA) and, they hope, ultimately a standalone insurer.
BlockRe is now in the process of raising funds for an MGA which will offer protection to those investing in cryptoassets such as cryptocurrencies and utility tokens. Those behind the business – HG and Raymond Zenkich – understand the current marketplace for their potential offering is limited, but they fully expect it to grow and want to be ready when demand increases.
Again, the launch of BlockRe is a prime example of the innovation at play within the wider (re)insurance industry. Sure, it may not actually lead to anything, but pushing the industry’s limits of what is acceptable or even understood is important.
As the old saying goes, nothing ventured, nothing gained.