|By Kevin Benedict||
|May 19, 2014 04:22 PM EDT||
In this article, my colleague Peter Abatan shares his observations on digital transformations within the insurance industry.
The Insurance industry has traditionally been slow to change, but that is changing as crowd and social insurance models are beginning to emerge.
Companies like upstart BoughtByMany connect people with similar insurance requirements who are able to aggregate demand for products that insurance companies have hesitated to insure on an individual basis in the past.
Another start-up, InsureMyFriend embraces P2P to form a network with friends and family to lower the individual’s insurance premiums. Each approach has its benefits and both lend themselves easily to social media. They have the potential to reduce insurance claims because consequences impact the entire group and social pressures are predicted to make people think twice about risks.
These two companies presented their business models at the London Insurance Disrupters meetup held at the end of April this year in London.
BoughtByMany has about 18,000 members in about 180 interest groups. Overall, the average discount negotiated has been around 18.6%. The attraction to the insurance companies that BoughtByMany brings, lies in the fact that the cost of acquisition is much lower relative to the other channels these insurance companies use to acquire customers, this also applies to InsureMyFriend.
Typically, 90% of their traffic is driven through Facebook in which customers join the group for which they are interested in. Once joined, they can invite friends.
InsureMyFriend makes it possible for you to link up with friends and family that you trust and provide a way of managing the “pot of money” that you are all setting aside when a claim needs to be made. Since the syndicate is made of people who trust each other, the claims are likely to be very low.
However, if your network has too many claims, a certain percentage of the premium that everyone puts into the pot will be paid to an insurance company to cover larger than expected claims. In the case where there are no claims, premiums are reduced in subsequent years.
This type of insurance lends itself to smaller items like smartphones and gadgets, as these are easy and cheaper to replace. Motor insurance for young people is another possibility for the BoughtByMany business model with the benefit of getting a 50% rebate or more on their premium if they can stay accident free after a whole year. Such incentives are thought to change behaviours and encourage safe driving.
Even though social networks are the means by which groups are formed to buy insurance, this process does not lend itself to fully assessing the risk that members are exposed to. In other words the person who goes on holidays twice a year assumes less risk relative to the person who takes 5 holidays a year. Social media is less of an exact science compared to a person’s actual lifestyle and buying behaviour. Hence, while it may be that Facebook is the platform from where social and crowd insurance are promoted and grow, it will be platforms like Amazon, eBay, Walmart and JohnLewis.com where these types of insurance may flourish because they have more personal information (read more on Code Halos) on the individual and their lifestyle.
I wonder if these models alone will really disrupt the insurance industry to the extent that its current business model needs to change? I am not convinced it will. It may require many more players in the market for the insurance sector to sit up and take notice. The biggest benefit at the moment is the low cost of acquisition for the insurer. For customers it is the potential to get reduced insurance premiums and customized policies.
The disruption to the insurance industry may not come through crowd and social insurance alone, but through many changes that are impacting the industry at the same time:
- Quantified self
- IoT (internet of things)
- Mobile technologies
- Big data
- Crowd sourced policies
- Social insurance models
In developing countries where the insurance industry is not as mature, one could see the opportunities for the growth of social and crowd insurance where uninsured liabilities are very high and possible pay-outs for a non-fault accident are very low. It may be insurance co-operatives are formed to cover risks, rather than mainstream insurance companies. Members will own a stake in the co-operative encouraging them to take less risk in order to minimize payouts.
Today, the regulatory environment is holding back the insurance industry from going through the disruptions that has shaped other industries. It won't be long, however, before smart start-ups will begin to find ways to work around those barriers to provide a better service to the customer and in the process change the way we relate to insurance as a whole. One thing for sure, is that very soon the way we source insurance will change from how we know it today.
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Feb. 25, 2017 08:00 PM EST Reads: 13,545
In his session at DevOps Summit, Tapabrata Pal, Director of Enterprise Architecture at Capital One, will tell a story about how Capital One has embraced Agile and DevOps Security practices across the Enterprise – driven by Enterprise Architecture; bringing in Development, Operations and Information Security organizations together. Capital Ones DevOpsSec practice is based upon three "pillars" – Shift-Left, Automate Everything, Dashboard Everything. Within about three years, from 100% waterfall, C...
Feb. 25, 2017 08:00 PM EST Reads: 11,317
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
Feb. 25, 2017 08:00 PM EST Reads: 1,911
SYS-CON Events announced today that Addteq will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Addteq is one of the top 10 Platinum Atlassian Experts who specialize in DevOps, custom and continuous integration, automation, plugin development, and consulting for midsize and global firms. Addteq firmly believes that automation is essential for successful software releases. Addteq centers its products an...
Feb. 25, 2017 07:45 PM EST Reads: 421
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Feb. 25, 2017 07:30 PM EST Reads: 1,799
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Feb. 25, 2017 07:00 PM EST Reads: 8,810
SYS-CON Events announced today that IoT Now has been named “Media Sponsor” of SYS-CON's 20th International Cloud Expo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. IoT Now explores the evolving opportunities and challenges facing CSPs, and it passes on some lessons learned from those who have taken the first steps in next-gen IoT services.
Feb. 25, 2017 07:00 PM EST Reads: 1,674
SYS-CON Events announced today that WineSOFT will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Based in Seoul and Irvine, WineSOFT is an innovative software house focusing on internet infrastructure solutions. The venture started as a bootstrap start-up in 2010 by focusing on making the internet faster and more powerful. WineSOFT’s knowledge is based on the expertise of TCP/IP, VPN, SSL, peer-to-peer, mob...
Feb. 25, 2017 06:45 PM EST Reads: 1,933
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.
Feb. 25, 2017 06:30 PM EST Reads: 1,385
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.
Feb. 25, 2017 06:30 PM EST Reads: 2,167
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it m...
Feb. 25, 2017 06:00 PM EST Reads: 7,689
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
Feb. 25, 2017 05:45 PM EST Reads: 2,935
With billions of sensors deployed worldwide, the amount of machine-generated data will soon exceed what our networks can handle. But consumers and businesses will expect seamless experiences and real-time responsiveness. What does this mean for IoT devices and the infrastructure that supports them? More of the data will need to be handled at - or closer to - the devices themselves.
Feb. 25, 2017 05:45 PM EST Reads: 2,216
Updating DevOps to the latest production data slows down your development cycle. Probably it is due to slow, inefficient conventional storage and associated copy data management practices. In his session at @DevOpsSummit at 20th Cloud Expo, Dhiraj Sehgal, in Product and Solution at Tintri, will talk about DevOps and cloud-focused storage to update hundreds of child VMs (different flavors) with updates from a master VM in minutes, saving hours or even days in each development cycle. He will also...
Feb. 25, 2017 05:15 PM EST Reads: 2,681
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
Feb. 25, 2017 05:00 PM EST Reads: 2,918