A rise in shared car ownership, COVID-19-inflicted changes to commuting, and the growth of the gig economy are opening up prodigious opportunities for a wave of insurance upstarts. These pay-as-you-go or on-demand insurtechs are quietly forging market share by tapping into the current demand for flexible insurance models. 

"Zego, for example, which provides cover by the hour for drivers and riders contributing to the gig economy, now insures a third of the UK’s food delivery market and recently underwent a multi-million pound fundraise to fund its European expansion.

Cuvva, the first firm to provide hourly motor insurance in the UK, sells 4.5% of all motor insurance policies in the UK by volume, according to industry figures."

John Reynolds Fintech Times May 26th 2021

The main thrust of this article is that insurers lag far behind banks in the digital transformation stakes. 

Adrian Rands, founder and chairman, Quantemplate, a start-up that provides data solution for insurers, said: “If you look at the way the industry operates, there is still a long way for it to go.

“Insurance is roughly 15 years behind the banking sector with regard to automation and digital comms.

“If you see where payments and banking is today, that’s where insurance will be in 10 years. It will probably catch up a bit quicker, so it won’t remain 15 years behind. But it’s still not at the forefront of digital transformation.”

You would expect insurtechs to make such statements but on the other hand banks started a long, long time ago. The Revolute, Starling and Monzo new model banks are not a recent phenomena- thy have been a long time in the making and along the way been a catalyst to enterprises like US Bank. 

Worth a read of the full article ( link below) to challenge the strategic planning by the C-Suites of insurers. The  Zego example is no flash-in-the-pan nor Lemonade. Commentators may point out the comparisons of financial ratios of Metromile, Lemonade etc and say "They'll never make a profit".  That is exactly what incumbents said about Amazon before Jeff Bezos stile their lunch. 

How many people foresaw the dominance of AWS springing out of an online bookstore? How many customers reliant on Amazon during the pandemic now expect similar fleetness and logistical excellence from their insurers?

Disruption comes in many forms and insurers have been protected by many factors not least the willingness of many customers to automatically renew policies at inflated prices. Price comparison websites offered a low cost way of acquiring new customers especially in the UK and USA. Well that's changing in the UK with the FCA banning such practices in the UK from Jan 2021.

Work-from-home will stay as a major factor whether just 2/3 days a week or more and the continued rise of self-employment and gig workers means customers demand more flexibility and agility. Customers have seen their banks innovate and expect more from insurers.

Frederik Bisbjerg in Insurance-Next provides a clear blueprint of the need for and ways to digitally transform. Maarten Ectors goes even further arguing the case for a new CEO 3.10 and leadership team to anticipate the disruption that is still hidden below the surface but nevertheless, like a tsunami, gathering momentum and energy to crash on the unprepared in the future.

Most insurers are talking about an Insure 2.0 transformed model whilst Ectors says planning for Insurance 3.0 must start now as disrupters are already at work with Decentralised Finance (DeFi) models. He practised that in the staid environment of Life Insurance at L&G so this is not academia!

Well worth reading the article linked below ( just 6 minutes) and then Bisbjerg and Ectors.