Insight and Intelligence on the London & International Insurance Markets 24 Apr 2018
Little Donkey, Little Donkey
- 12 December 2017
Last week I was on the road chairing our second InsiderTech New York event. I then hopped over to Bermuda to chair a roundtable and attend the EY Global (Re)insurance Outlook.
It had been easy to put on the first InsiderTech event at the beginning of the year.
For the opening conference it was enough to explain what a lot of the potentially disruptive technology was and how it might be applied to the world of global wholesale, specialty and (re)insurance.
So the challenge for version 2.0 was to find a way of moving the debate on.
Happily, a huge amount had happened since the last encounter and many theoretical models were fully funded, staffed up, licenced and beginning to be tested in the real world.
One highlight of many bright spots in the day was a keynote from CEO of Insureon, Ted Devine.
The former Aon senior exec and tech trailblazer was incredibly frank and dismissed many InsurTech start-ups as "donkeys" (as in "dead donkeys"). Donkeys could be easily identified as those that used the word disruption a lot, had a lack of seasoned insurance personnel in their ranks and usually peddled solutions to insurance problems that didn't exist.
My other key takeaway for the day was that no one, even the most evangelistic technologist, believed that there was anything fundamentally wrong with insurance as a product.
Closing keynote Andrew Robinson, of venture capitalists Oak HC/FT, explained that the real key to success was not to reinvent the wheel but to find ways of improving the insurance combined ratio by hacking away at all of its components.
Anything that directly targeted loss costs, loss adjusting costs, acquisition costs or admin costs was likely to be a winner because it would immediately present a return on investment and would therefore be quickly adopted to gain competitive advantage.
Let us not forget that in insurance the winners ultimately win big because they can charge less premium for more coverage than their competitors. They are simply much better value to their customers.
This thought was echoed over in Bermuda, where keynote speaker Albert Benchimol implored the industry to improve efficiency and work smarter so that it could write to a much higher loss ratio.
This suggestion was not out of charity, but out of business acumen and a recognition that a product that only pays out roughly half of its cost back to the consumer is consequently less likely to be valued, purchased and recommended.
Benchimol foresaw that whoever could get many more cents in the dollar back in the hands of the customer would create a virtuous circle that would fuel massive growth and all but eliminate the protection gap.
I rarely travel in December and it was a treat to see the contrast in how different places prepare for the holiday season. As one would imagine New York is all lights and action whereas, despite its wonderful 75 degrees and a guaranteed lack of snow, Bermuda has a more traditional feel.
The Hamilton Princess hotel had a very typical, almost life-size crib in its lobby, with the ox and the ass playing their customary part in the nativity scene.
As I rushed past on my way to the conference it struck me as paradoxical that the most advanced centre of innovation in our industry of the last four decades should have a donkey in the lobby of its flagship meeting point.
Knowing the entrepreneurial spirit and enormous capacity for reinvention and hugely progressive stance of Bermuda and its inhabitants, I'm pretty sure it was not a bad omen for that great (re)insurance island.
However, it served a poignant reminder of Devine's prophetic words from 48 hours earlier:
If we don't embrace the tech changes that are coming fast down the track, we are going to be dead little donkeys.
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