Keynote by Louis de Bruin (IBM) / Panel – Fintech Insider: The Pulse of InsurTech. Featuring Bohumir Zoubek (Profinit), Jochem Davids (Risk Ventures and InsureApp), Hamza Jap-Tjong (CED-European claim experts) & Louis de Bruin (IBM), and moderated by Conny Dorrestijn (Shiraz Partners).
What are the big challenges facing the insurance industry? According to panel moderator Conny Dorrestijn, they may not be what you think. Unlike the pensions industry, where convincing customers to engage is an ongoing struggle, Conny argues that the Dutch are totally over-insured. She argues that we should:
“Go back to the core, insure only what you cannot afford to miss, and make it cheaper fairer, easier.”
Given this statement, one may think that the insurance industry faces no problems at all. But this is not the case. In his keynote, Louis de Bruin argued that consumer engagement is a major problem. He argued that most insurance companies consider customer engagement to be achieved when the customer signs an insurance policy.
But from the customer’s perspective, the most important moment of engagement is when something goes wrong and they need to make a claim. Claiming money back from an insurance company involves multiple pain points. First, the claim process is bureaucratic and time-consuming, and sometimes impossible. Second, customers are often unsure as to whether their insurance company will actually reimburse them.
Louis de Bruin argued that blockchain can potentially help solve these problems. To explain blockchain to the audience, he used the example of stone money in Micronesia. For the uninitiated, there is a group of islands in Micronesia where residents use large stones as money. According to Louis, for hundreds of years they moved these stones from place to place in order to complete transactions. At some point, a ship transporting one of these giant stones between two islands sunk. The stone was lost on the bottom of the sea.
What to do? Was the money lost forever?
The islanders had a solution: stop moving the stones around, and instead mentally track transactions. Hence the stone at the bottom of the sea remained valid money, and in the process the islanders invented a kind of distributed ledger in which all islanders knew who owned what. The knowledge was distributed – much like data is distributed among all nodes of a blockchain today.
This story illustrates an important point: that blockchain is not a technology per se, but a way of working. It is a set of core principles that people have already used for hundreds of years. Some people are still a little unsure about blockchain and don’t trust it completely, but there are many large projects under way to develop it, such as the Linux Foundation’s hyperledger fabric, sponsored by IBM. Insurers are working together to use it, and so is the logistics industry.
The advantage is that it makes transactions transparent: nobody can hide anything and if something goes wrong, everyone can see exactly where the error occurred. The problem of the proverbial stone at the bottom of the sea is solved by distributed ledger technology.
The panel
The panel, moderated by Conny Dorrestijn, addressed a range of human and technological questions. It kicked off with the question of whether we should make insurance “sexy,” a topic that was also discussed in the Personal Finance & PensionTech panel.
Jochem argued that this is definitely not the right approach. Nobody cares about insurance, but that doesn’t mean they don’t see it as relevant. You need to insure certain things, such as houses, to offset risk of loss.
Conny’s next question dealt with artificial intelligence and roboadvisors. Will brokers still be needed in the future?
Jochem responded that it depends on the kind of insurance we need advice for. Right now, roboadvisors might be useful to give consumers advice about more general insurance products, such as car and bicycle insurance, but it might not work for insurance geared at larger issues, such as life insurance. He stated:
“Definitely tech is ready to do that, but are people ready to accept advice from a robot?”
“And are regulators ready to accept that?”, added Conny.
Conny then addressed Bohumir Zoubek. She stated that we tend to think of insurtech as being about disruptors, but a lot of the changes taking place involve digitising existing processes. Then there are the true distruptors who changed rules of the game. Where are we now?
Bohumir responded that optimisers are presenting solutions in a similar way to roboadvisors and solving particular problems. For example, until recently it was too expensive to insure a short term car rental of a few hours because companies sold insurance by the day. But today there are products that will insure for shorter times. This is an example of a disruption:
“a completely new product created because of those fintechs or insurtechs who came up with new ideas.”
Connie added that a lot of these developments emerge from companies harnessing personal data. Today it is possible to track your entire family, to know where their cars are and how fast their heart rate is. To some people this is an unacceptable invasion of privacy; to others it is exciting.
Bohumir said that, as a father of two small children, he can imagine wanting to trace them up to a certain age to make sure they are safe – but there are limits. And it isn’t always easy to decide how personal data should determine insurance, anyway. For example, is running a marathon good or bad for you?
The next debate statement was “It is a good thing that my personal lifestyle data (think fitbit) is used to offer me a ‘pay as you live’ insurance.”
Hamza Jap-Tjong, co-founder of InsurTech Holland, explained that this personal data can save a great deal of time and hassle, especially dealing with insurance claims. But data use can certainly compromise the “principle of solidarity,” the idea that as a society we co-insure each other. For example, when everyone pays for health insurance, those who are not sick tend to subsidise those who are. Using personal data to set individual insurance prices will raise the cost for those who are most at risk. Focusing on prevention is not the answer, because people will always encounter problems.
The session ended with Conny asking the panelists to share key takeaways for the audience to take home with them. De Bruin urged companies not to wait and see how the landscape changes. Instead, they should act now, and begin to embrace new technologies. Hamsa advised the audience to focus on customer satisfaction and clear communication. Bohumir advised people:
“Think about what happens with the data from your fitbit or any other device that monitors your activities.”
Jochem said:
“I would say much more in line with the opening of the event….. to take action, to go from talking about innovation and talking about insurtech and how you could benefit from it … to actually having goals and actions and just do it.”
While there are many critical issue to consider, he certainly has a point that testing out new technologies and ways of working are likely to force us to take action to protect consumers more so than simply discussing hypothetical scenarios.
Live blogged by Erin Taylor, senior researcher at Holland FinTech. Read more about InsurTech & IoT in the article Industry Game Changers, part of our Fintech Vortex series. Join the conversation with us @HollandFinTech on Twitter, #FintechVortex.
Meet the Speakers
Louis de Bruin
Blockchain leader, IBM
Louis de Bruin is blockchain leader Europe at IBM Digital Operations. He has 25 years of experience in the tech industry, notably as consultant for IBM. He is currently working for the adoption of blockchain throughout Europe, counselling businesses on how to adopt a technology he believes able to impact deeply the financial sphere and beyond.
Bohumir Zoubek
Services & Products Director, Profinit
Bohumir Zoubek is Services & Products Director at Profinit since January 2016. Headquartered in Prague, Profinit are a consulting, software services, product development and outsourcing company. Previously, Zoubek taught at the Czech Technical University. Follow him on Twitter @BohumirZoubek
Jochem Davids
Risk Ventures and InsureApp
Jochem Davids is CEO & co-owner of InsureApp and Director of RISK Ventures. InsureApp is a SaaS platform that offers a revolutionary approach to customer engagement for the insurance industry. Davids is also co-founder of InsurTech Holland, a community for insurance innovation enthusiasts. Follow him on Twitter @jochemdavids
Hamza Jap-Tjong
Corporate strategist and business developer, CED
Hamza Jap-Tjong is a corporate strategist and business developer at CED, a European claims experts company. He is also a co-founder of InsurTech Holland, a community for insurance innovation enthusiasts.
Radboud Vlaar
Founding Partner, Orange Growth Capital
Radboud Vlaar is Founding Partner at Orange Growth Capital, a venture capital and private equity company based in London. Vlaar was formery a partner at McKinsey and holds an M.A from the University of Groningen.
Conny Dorrestijn
Owner, Shiraz Partners
Conny Dorrestijn is the owner of Shiraz Partners. Recent projects include roundtables on FinTech Bank collaboration at the American BAI Payments Connect event, presenter @Money2020 Europe on Women in Fintech 2016, and associate and co-founder of the Digital Insurance Agenda. Follow her on Twitter @RubiconFinance.
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