“Anyone from outside of our world will find it unbelievable how slow we in the London insurance market are in making changes to our technology. For those of us inside, the pace is quite exhilarating.” Justin Emrich, Chair of the London Market Innovation Council, introducing another evening of tech talk and innovation insights on 29 November 2016.
We were back in the Steelyard railway arches, on the edge of the City of London for the third in the Instech London mini series of 'SpeedTech', this time to hear about IoT (Internet of Things) offerings for insurance.
In this, the first of a short series of articles reviewing the event, I’m looking at three new companies that have recently launched products that monitor our homes and quickly identify possible sources of damage.
With over 1,600 signed up members by the end of November, Instech London has established itself as the biggest individual Insurtech group in the world. After six events this year, the members are getting to know each other well. Once again the evening had a buzz about it rarely seen at insurance conferences, and it wasn't just because we were gathered in a nightclub.
Organising the 200 connected devices in your home
Patricia from Domotz was up first. It’s a testament to the success of the StartUpBootCamp (SBC) accelerator but also an indication of the shortage, until recently, of good start ups in this area, that almost every Insurtech conference in Europe this year has had at least one member of SBC’s 2016 cohort presenting. Seeing the Domotz business proposition play out over the last 12 months has given a sense of the evolution in thinking of how insurers are seeing the value of IoT in the connected home. CEO Domenico Crapanzano started the company aiming to build a device that would enable him to manage all 200 of the connected devices in his home. The original proposition has now morphed into three business solutions: managing risks in the connected home, cyber monitoring and device insurance. That one person could own 200 connected devices may seem rather unusual today but Domotz estimates that by 2030 there will be 26 billion IoT devices in the world. The cyber assessment option is a smart addition. Most companies offering cyber solutions to the insurance market are targeting corporate risks. Expanding the Domotz offering to include systems monitoring, penetration testing and other threat assessments for the home provides a potential pivot in what is already becoming a somewhat crowded connected home IoT market. Domotz is establishing itself as a credible player in this space. The company is already building devices and building them cheaply. It is diversifying beyond insurance into retail with an agreement to sell its devices through Best Buy, which could potentially open up a new channel for insurance sales. Domotz is in partnership with Swiss Re, a highly respected partner for any company, although with a reinsurance focus it may not have the same access to the markets for piloting and revenue generation as offered by an insurance company. Domotz is offering a free trial of its devices for 21 days.
Finding the leak - then fixing it
As the trains rumbled overhead, Craig Foster from LeakBot took to the stage. LeakBot is the first product to come out of HomeServe Labs, part of HomeServe PLC the FTSE 250 company that provides emergency repairs and insurance in the UK, mainland Europe and the US. Water damage claims cost the UK £629 million in 2014, and water leaks rank second for home insurance claims. The team has been fixated on solving the problems of finding and stopping leaks. Until now, finding leaks relied on placing sensors around the house to measure moisture, but leaks can occur anywhere and frequently out of sight. Like the best entrepreneurs HomeServe Labs had a clear goal: create a single device, to fit on a pipe, sensitive down to a few drops a minute and cheap enough to be given away free. LeakBot is the result. Aviva is now shipping to customers and HomeServe Labs is in trials with other insurance companies. Reducing the cost of insurance claims is only one part of solution: HomeServe’s ability to tap into its network of emergency engineers to fix the leaks soon after they are detected also ensures that damage is minimised. During 2017 we are likely to see an increasing number of insurers creating partnerships and branding that emphasis their role in preventing losses, not just managing claims. Computer Weekly covered LeakBot in some detail a couple of months ago and I caught up with the team at Fintech Connect Live this week.
Matt Poll of Neos, completed the trio of IoT connected home insurance solutions presenting. Neos is funded from the recently set up Eos Ventures and has established a pilot project with insurer Hiscox. Neos want to provide a whole range of home protection devices (smoke detectors, web cams, water flow monitoring etc) to insurers' policy holders for free. This is a bold goal. A member of the audience asked how this would make commercial sense for someone like him with an annual insurance policy of only £200. Matt explained that the product is targeted at what he called the “mass affluent”, who typically pay higher premiums. Partnering with Hiscox is a smart move for Neos. The insurer has a history of providing innovative online insurance solutions and has successfully grown both its high net worth business (maybe what the “mass affluent” aspire to?) and its SME (Small Medium Enterprise) business. Hiscox also has no qualms about ruffling feathers in the traditional Lloyd's, UK, European and US company markets where it operates. Although not as visible in the innovation space as companies such as Aviva, AXA or XL Catlin, Hiscox is working away behind the scenes developing new opportunities. It generally prefers to pilot with companies that can present a viable business proposition rather than get involved at the concept stage. Neos announced a strategic investment from Zoopla Property Group the day after presenting.
Whilst not quite the Great British Bake-off, hearing from three similar start ups in fairly rapid succession was an opportunity to get a feel for what is happening in IoT for the home. Ultimately I expect that we will end up with a couple of companies that will be leaders in this space, and developing partnerships with insurers and other service provides like HomeServe will be critical. The bar is set high. Nest, backed by Apple, is well established as the provider of high end connected smoke detectors, integrated into its thermostat and web cam products. Nest is working with insurers such as Liberty and American Family to provide rebates to policy holders in the US. There are also some human behaviour characteristics to overcome. Most of us do not give a very high priority to risk reduction unless we are required to, or have personally experienced a loss. For more on this see my earlier article on why the rate of fire fatalities hasn't changed in 40 years.
Up next at Instech London was a company that works with every insurer and motor manufacturer and sees 97% of claims, but which very few people have heard of. The report on this, some of the other companies presenting, and a lively debate I observed between two reinsurers during the break will follow later this week. In the meantime, videos of the presentations are now available for Domotz, Neos and Leakbot.
This article was first published on LinkedIn.