In the first of this series of reports published on 7 December, I reviewed the three connected home IoT ompanies that presented at Instech London on 29th November: Domotz, Neos and HomeServe.
Next up on stage were two companies that have been established for a number of years, providing data and analytics to the insurance industry, and now branching out into IoT. They were followed by news of a recently launched UK government initiative to help start ups.
New uses for motor data exhaust
Audatex (part of US based Solera) is one of those established companies, highly successful in a niche market, but which few of us are aware of. The company already has relationships with every motor manufacturer and insurer and sees 97% of vehicle damage claims in the UK. Its traditional business has been helping insurers calculate the correct claims payout for motor accidents. A couple of years ago Audatex realised that it possessed massive amounts of data about how accidents were caused and how cars performed during collisions, but had never put this “data exhaust” to good use. Paul Davies, on stage at Instech London, joined Audatex last year to lead a team tasked with turning this data into practical ways to further reduce losses. Davies is not only looking at how to improve resilience of cars but also wants to understand and influence driver behaviour. He didn’t give much away about the current plans, but with such a large share of its core market, diversification is clearly critical for Audatex. At the same time start ups such as Rightindem in the UK (another SBC alumni) or ClaimDi in Thailand (great pitch at DIA Barcelona this year) are bringing fresh perspectives to the motor claims market. Audatex is well positioned to partner and support start-ups with great ideas and talent. I wouldn't be surprised if they start making investments and acquisitions in this space too.
What next for the geo-referenced 60%?
Esri has been around since 1996, providing GIS (Geographic information systems) to many industries. Its core product family, ArcGIS, is widely used by insurers for identifying aggregation of properties vulnerable to natural perils. Richard Brocklebank was representing Esri at Instech London. He believes that 60% of all data can be geo-referenced and with the release of over 40,000 free data sets by the UK Government there is now a lot of data to play with. We are moving from a time where only fixed assets, such as property, were recorded, to a new focus on tracking moving assets, in real time. One example, given by Brocklebank, is accessing the AIS (Automatic Identification Systems) now being used to track ship movements with the aim of preventing collisions. Each ship of over 300 tons and every passenger vessel must be registered with AIS. Esri software tracks 165,000 vessels. Potential insurance applications include setting up alerts by pre-defined zones to manage real time concentrations of shipping and to check that the correct premium has been paid for a ship if it is sailing through dangerous areas such as Straits of Hormuz. Until recently marine insurers had been a lot slower than their cousins in the property catastrophe markets to adopt data and models. Events such as the massive explosion in Tainjin, China in 2015 revealed how little was know about the value and locations of marine cargo and attitudes are changing fast. Esri has the advantage of a strong presence in the insurance market and could be well positioned to offer solutions to the marine market, although products such as Vessel Tracker from Genscape have been around for a few years. Esri would seem to be another strong potential partner for startups. The company made three acquisitions in 2011 and 2012 to expand its capabilities. Brocklebank wasn't able to comment on whether the Esri has any plans to get actively involved in supporting start ups either directly or via any of the accelerators that are springing up.
Lightening the regulatory overhead
The FCA gave a brief update on Project Innovate, set up to encourage innovation in financial services. The initiative provides a “regulatory sandbox” to enable companies to test new ideas in an environment that relaxes some of the normal rules of regulation. The aim is to speed up the testing and development time for new ideas, identify where the market is and overcome some of the barriers for consumers accessing these services. Most of the initiatives to date have been orientated towards banking, but this could be a way to help insurance start-ups understand, and overcome, some of the regulatory challenges associated with writing insurance in the UK. There have been 69 applications so far of which 18 have been accepted. The sandbox will go live from 19 January 2016. More information is available on the FCA Innovation Hub website
We’ll pause here as the audience retire to the bar for a short interval to pick over what they had heard in the first 6 sessions of the evening. Not that everyone has totally bought into the concept of insurtech. I observed an impassioned debate between two reinsurers. One was very excited about the 20 different ways she could see blockchain improving the reinsurance settlement process, the other, a casualty reinsurer could see no benefits from any of the latest insurtech offerings in how he underwrote his 120 casualty contracts each year.
I’ll be back shortly to cover the final sessions where we had our first chance to view some of the opportunities for commercial insurers with IoT. In the meantime, if you want to get a flavour of the event, check out Henry Burton's video of the Mannequin Challenge on the night.
Matthew Grant is founder and executive director of Abernite and the Abernite Consultants Network, launching early in January 2017. Matthew has over 25 years of experience of successfully helping re/insurers and brokers adopt complex technical products. Abernite helps companies grow revenue, get access to key market information and find investment.
If you've found this article interesting please feel free to share it. If you agree, disagree or just want to express an opinion, please do comment below.
To get a gentle monthly nudge for future articles as they come up, you can now sign up here.