Watch: The growth of on-demand insurance 2020

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We hosted a webinar with insurtech experts Leon Gauhman, Elsewhen’s Cofounder & Director of Product and Strategy, Mark Huxley, Chairman & Founder of Cognitive Risk, Matt Carter, Cofounder & CEO of Cognitive Risk, and Patrick Smith, Founder & Executive Director of Tribe Advisory, Acumen Advisory & Deliveroo’s global risk and insurance leader.

In the insurtech webinar, the panel discussed whether they believe on-demand insurance is a sustainable business model in the long term, what its relevance is to customers, and the potential for growth of this model into other insurance verticals.


Matt Soczywko: Well, thanks for joining. So guys, today we're talking about the on demand insurance market in the UK, but more specifically, we're talking about the sustained sustainability of on demand as a business model and the potential for future growth in on demand insurance. Patrick, perhaps I'll come to you first. So one context for the growth of on demand insurance, as you started to hint at there, is the gig economy and on-demand insurance, you could say grew out of having to serve this emerging gig economy. With that in mind, do you think that the gig economy is here to stay? Is it destined to grow? You mentioned you work closely with Deliveroo. Perhaps you could talk about that.

Patrick Smith: Yeah, so. So good question. And, you know, the short answer is, in my opinion, 100%. Yes, but I think it's, I think it's worth sort of pulling back and then trying to decide what the gig economy really is. Because it's a relatively new phrase that we, we're very we're very used to now talking about the gig economy, like we know exactly what it is. But of course, you know, the concept of people doing gigs and being freelance is very established. And for example, you know, one of our clients at Tribe is a community of surveyors, many of whom are running their own businesses, their sole practitioners, you know, single firm directors, and as well as the kind of more modern type of gig economy worker, you know, that has emerged over the last few years, such as food delivery with the likes of Deliveroo, Uber Eats JustEat and so forth. And obviously, Amazon you know, as emphasised, I suppose, by our current COVID 19 experience, that now everything comes to me I don't have to go anywhere. Because I'm not allowed.

So, and I think, you know, scoping the gig economy is an important thing to do. And recognising some very established traditional trades are actually in that group. And what I'd also see is, even with the current challenges, the appetite for flexible working, and being in control of one's own portfolio, I don't see has been diminished the appetite isn't diminished the challenges of at what cost for that freedom?

Obviously, the challenges are being highlighted at the moment. And, but I think also in in considering the growth of the gig economy. And, you know, I think for many years now the concept of an employee having a job for life. That's a long gone. And I think, you know, when we read the headlines this week, last week, and no doubt next week, we'll find legions of people who had the kind of blanket of employment to support them being removed either by by virtue of furlough, or, or reduce salary for a period of time, voluntarily, but, you know, follow up voluntarily, in inverted commas. And, of course, you know, many, many thousands of redundancies, as announced and coming down the line. So, you know, I think conceptually the societal move towards being in personal control of what we do, I don't see that diminishing and I don't see there being a reduction in the kind of platforms or organisations who would seek to rely on freelancers rather than employed staff.

So from from my perspective, I think one of the positive outcomes of COVID-19, for example, will be increased potential volume for some gig economy workers, tempered with the challenge of actually running your working life as a business rather than as a, you know, dare I say it as a paid hobby. So I think shining the light on our gig economy worker protects themselves is going to be critical. And I think demand on demand insurance clearly has its part to play.

MS: Yeah, in terms of, so if we if we sort of take it as a givena bit of an echo there. So if we take it as given, especially with what's going on now, the gig economy is kind of here to stay and set to grow, and many people who perhaps don't count themselves as part of it now, you know, increasingly employers are going to shift to these kind of models. What is, do you think, the relevance to the customer for on demand insurance?

Mark Huxley: Yeah, I suppose it's the kind of specialist over generalist, I mean, many people that are running existing businesses, and they have the, the traditional infrastructure, Cognitive for one, Tribal would be another, you know, Elsewhen and is another, that the kind of insurance policies go out are really quite broad and general to cover quite a wide landscape of activities that you'll do. People that are working freelance, and if they're, by nature, they're going to work in one single line of business, the insurance needs that they're going to have have to really reflect that one need that is going to exist. So if you are a Deliveroo driver, quite clearly a lot of what you're going going to have in there is kind of carriage risks of, you know, taking, taking food around. So Road Traffic type type things.

Now, if you're a freelance creative, then you're probably going to end up much more thinking about IP and some of the design work that you're going to do. You know, copying and plagiarism. Consultancies, like Matt and I run with Cognitive, there are a lot of what we're doing is intellectual thought giving in and your boards and making decisions off the back of it. So the kind of, I think the specificity of the insurance, I think, is one thing, but it's also the turning on and turning off and I think, you know, kind of Matt touched on it. There is a lot of people out there that they want to work for the freedom of working.

So actually, when I just want to work three weeks a month, they don't really want to buy a policy that's going to be on all of the time. Yeah, the the ability to be able to turn policies on and turn policies off is going to be very much now to the fore so you don't feel like there's a wastage of insurance risk getting in there.

MS: Totally. So I mean, it's so it makes perfect sense, right? It's enormously important to these types of customers that they they don't have to buy, like you say, long term premiums to cover themselves for insurance. And clearly, there's demand now that these emergent types of businesses that are looking to employ people within the gig economy. If we take it sort of think now because everybody spoken about the incumbent insurance world, what's the sort of the call to action, if you like, for the big guys who perhaps are not used to pricing and selling insurance products in this way? Do they understand this market? Is there an appetite to serve this market? Is it being sort of forced on them? Matt Carter: Yeah. So I think it's, the reality is, is that whilst, as Pat said, the gig economy in its in its truest sense, it's been around for a long time, but through the lens of an insurer or an incumbent, it's relatively new and and what you're having is the platforms, you know, in much the same way that the credit cards held inordinate amount of data over and beyond the, the supermarkets and the retailers that will effectively facilitate the transactions. We've now got platforms being created by those that serve the gig economy that are consuming and creating inordinate amounts of data profiling behaviours. And I think it's that it's that transition of taking the data that exists on an individual basis as a behaviour that needs and wants and translating that back into a risk profile and insurance.

Typically, there's a challenge around productisation, the other products that exist now need to be reimagined. And, and as we move into that we've also got the reality as, as Mark said, about the specificity of the coverage not being fit for purpose for those in the gig economy. And I think just, I'd like to just also bounce back.

So as an insurer is looking at this, you know, looking at the art of the possible, the reality is it's going to there's going to be a lot of data is going to be thrown up about behavioural needs and activities, that needs to be mined and, and worked out for some insights and building out new profiles. But more often, it's about understanding and getting through to building risks that are around micro periods, whether it be a you know, a movement between a to b is as the only period on risk is a very small element of time, which in theory to logic suggests, only commands of a small premium compared to the, you know, the traditional so there's that bit and I think I just like to go back right to the beginning.

What I think's interesting is, even today the gig economy is an on-demand insurances. It's got a lens of, of people on bikes and in cars delivering things, but as Patrick sort of alluded to, I think this sort of this, this change in perception and behaviour, whereby there could be some face it, you know, and they're already either sent very serious and significant professional personnel they require protection and, and products who are operating a level far above that, if you like the typical gig economy worker on a on a on a relatively low, you know, hourly rate. So, two products are going to be crafted to meet a very broad church of requirements. MH: I'll just come back, Matt. You framed the question about the kind of incumbent insurers. There has to be a pivot point for the incumbents, where the gig economy is still in the minority part of the commercial world.

So as a traditional insurer, they're there to put the majority risk in for the majority of people that are going to be their customers. And it's very hard for them to then pivot with any kind of agility into a complete new market until they see some market saturation.

So to not criticise them, you know, that they that they've performed very well, they, they're fit for purpose for the way the world has grown up. But it's this kind of, you know, enfant terrible of these new economies that are coming in behind it, that are looking for the specific covers, and it's, it's tough when a large business has been built on one thing, just to say, you know, overnight, it's going to move to the other, which, you know, I think insurance have been a little bit slow to it, but the growth of the insurtech community, and you know, managing general agents, in our vernacular insurance NGOs that sitting there, that typically kind of somewhere between a broker distributor and an underwriter technician, that's actually taking the risk ofworking on behalf of incumbent insurance capital, so they give them the capacity to write the risks of financial solvency capacity to do it.

That's why they've really come forward as a really strong business model because they can get under the skin of these big economy, small niches, he has a monoline: 'I have one need and I need to do it well' and actually flex their business model to be able to react to it, but with the security that you know, the rest of UK insurance PLC that puts him behind it. So I think it's I don't think it's an either/or, and it's not, you know, incumbents versus others.

It's a case of how do we keep moving the market forward to a point where it becomes obvious to an incumbent that they need to do things and credit to a few companies that are tried hard at it. Aviva you know, just near neighbours to you guys, they opened up Garage up there a few years back to try and innovate and ideate some of this new thinking coming out and not simply is round it, you know, we both work a lot around Lloyd's.

They have an innovation lab in there where they're inviting a dozen companies in twice a year - startups and scale ups - to actually be exposed to that incumbent market. And it's a lovely push and pull that goes on between the two communities where, you know, you could put it up and kind of overstating the point that a very large incumbent Lloyd's syndicate can go and play with a small startup, but actually the ideas that come out from those startups and the way it moves the the needle of thinking for the incumbent, you know, there's there's some really good relationships that have been born out of that and Lloyd's have changed some of their methodologies of working not directly as opposed to it but in part way where they now have what they call the syndicate and above. So it's basically a small package produced micro-insurance solution that considered sitting alongside the giants so that they're opening up the environment to do it so that there is a movement. But I just think like turning an old tanker, you know, it's always going to take a few miles before it's turned around.

PS: But I think the very nature of some of the largest companies in the world, and certainly over the last, say ten years, the fast growth companies, these are companies with massive potential future earnings and revenues, that actually have very little in the way of assets. And of course, most insurance was predicated on 80% of every company's value being in some sort of asset base. So really, property insurance was the starting point.

And actually, many of the kind of sharing economy platforms are really more akin to matchmaking dating sites than they are to 'we own stuff and we sell stuff' in the conventional way. And I think that I accept exactly what you say and agree totally Mark, with, you know, the startups and one of the issues for the beginning is picking which startup actually is going to fly. Because on the other side of the spectrum, you look at some organisations and if we were to pull up, you know, the largest companies in the world top 10, you probably find that eight of them we've never heard of 10 years ago. And actually, so it's those companies that initiate start are successful and grow rapidly, are pushing the agenda. And you know, you would say, are creating the urgency amongst the insurance industry industry to respond.

And I think the other thing that strikes me is, if you've got modern consumerism, that is basically saying, actually, we want things immediately on demand. I want to be able to turn it off if I don't want it anymore. I want things to be kind of disposable. So I don't want to buy a film, I want to rent a film for a night and then I'm not bothered anymore. It's kind of changed the way in which people buy stuff. And insurance is not immune to those kind of rhythms and changes in buying behaviour. That of course, the only way really to respond with some of the physical aspects of on demand consumerism is you need a flexible resource to meet that actually, flexible resource comes from the gig economy. It doesn't come from building mammoth themes have employed people. And I think the last point I was going to make this this point. Referring to to insurance is, I think insurance is a really weird industry because it was born out of quite clear, massive risk taking at its birth and over the years, as it's grown, it could be argued that many have lost lost the sense of entrepreneurial ism. So if the two challenges for a large insurer is how do I underwrite this? And or how do I service it? If your starting point is, let's see how we can modify what we've always done, you'll probably never get to the answer of that question. If your disposition isn't, okay, how do we do this? Rather than what are the constraints to doing it, you're likely to be inhibited. There's a large organisation to make those changes. And this is what's given the opportunity. You mentioned it for firms, sites, ego, you know, marks woman or the other kind of the new intermediary, who's saying actually, you just provide the capacity will be the entrepreneurial front end. Could we call closer to what the client needs, what the platform needs, what the consumer needs, what the gig economy worker needs. And therefore, the stress then is to tailor insurable risks into bundles and packages. And you know, digitalized experiences that make sense in this very sort of bite sized world that we now live in.

MH: I agree, I think it's really important to frame one thing that Patrick said there because, again, you know, we we spend our life in violent agreement with each other about stuff. And I think part of the problem with the insurance industry, you know, it has a reputational issue. You know, it's one of those like with estate agents and law firms and politicians that is easy to snipe at for all the bad that it does. Much of it as an insider and I'm sure others would agree, you know, kind of unwanted and, and not right, but I think there is an inequality in that relationship between the insurance carrier in its customer, it's very master/servant. Everything is loaded to the side of the insurance business. It's their wording, their policy, their premium, they're an expert, you know, the 35 to 50 page type policy that, you know, an SME will will have put in front of them written often in sorcery in English, you know, it's just not a happy place to start from.

So it ends up as a not quite a grudge purchase, you know, but it can end up feeling a bit that way because it's something that a customer feels they have to buy. But they don't have an aspiration to buy it. The garages. It's been sold by an insurance business and they have no control over. And I think if we establish that as a point of principle in the going forward for the gig economy and the on demand type insurance, it's actually equalising that relationship. So the customer is actually then fully sitting at the heart of this relationship and they have the ability to shape the relationship with their insurer and not be dictated to By the insurer about what they're going to take out, and I think that's been part of the slow to move the, if you're writing your ABC insurance company or writing, you know, a billion pounds a year of SME insurance, why would you change it because 50 gig economy companies come along and say that we need that needle to change. And that's a societal challenge. And I think Patrick said it before the outside of the backwaters and on way of insurance. People are doing that, you know, the on demand world, you know, the living off a smartphone, just buying stuff when you want it, you know, the convenience of now and mass customization, you know, can Amazon type experience of, yeah, we all shop on Amazon, but our five shopping experiences will be different to each other because they get to understand who we are, and they they make us feel valuable and part of their, their own business value chain. And I that that's, I think, a good principle that we need to adopt as an industry and I think for this debate, you know, if we're accepting, accepting that point, that's the trigger on I think for where the on demand insurance has a real opportunity to, to completely break new ground and create Greenfield to what it wants to do.

MS: So you you're making the examples from digital people at Amazon, where they have customer experience and customer centricity at their core, and they're from a world where perhaps owning that interface with the customer is is everything. Are you suggesting, you know, for lack of a better word, to use it again, but the incumbent insurers that that's where they should be being or do you think because there's no there's an alternative, right, which is, which is by collaborating?

You provide the underlying insurance products and structure but you work with insurtechs and different companies who may be better placed to answer in that relationship with the customer, in a way, that's easy, right? You know, you, you, you, you walk up to the car, you're going to rent and your insurance is part of that experience for your iPhone. You don't go separately to Aviva.

MC: So Matt, all of the points you've made are absolutely on the money, because you're looking at the incumbent position and a historic position back to Patrick's point of asset basis changing is the transition of moving from a payer relationship of indemnity to a partner relationship. And the deeper the partnership goes, the more intertwined it is with it from technology, then, then you're going to start getting back to the the win wins that you know that effectively cement any, any long term new relationship which is to the benefit of both parties to your point, so that the movement from any traditional thinking of of indemnity and paying, as you know, in response to a claim to a wording, but moving to understand that, you know, the direction of travel, the things that are very different now that are actually the critical and board talking points for for some of the platform businesses or Uber can be vastly different to someone with massive property basis and assets, as Pat already touched on.

So I think that that's all I hope, you know, could brings everything into perspective of, we're all getting down into a move of having to become closer together. And, and, and be able to respond at the time of need, wherever that is in the chain for for on-demand and on-demand is obviously very timely by its by its nature.

MH: To play to what you guys do at Elsewhen, I think there are new job titles coming into the insurance world a decade ago weren't there. You have customer experience, pretty cool. You've got you know, user experience, you've got design led thinking.

So, you know, the, it's not an operational thing. It's just a strategic and a philosophical thing that that businesses need to change. And, you know, Matt touches on it, because that gets led by the board at the top of the company. So if the board had the willingness to say, actually, you know, what our business model, it was fine 10 years ago, but it's not really fit for customer. We've got to move that out.

Now, you know, knowing that you guys work around the banking industry, you know, one one looks at the period between 2008 and the financial crisis then, and the one today, because today's not a good day, but you have a couple of months back today, that you now live in a world where actually banks have put all of the customer need at the front of what they do. I'm a lifelong Barclays man. I you know, I got bored with Barclays, but I like Barclays again now because they they actually thought about me and what I need is a business learning and in my personal life, you know, Matt and I use Starling you know, for our business and you see the challenger banks are how they're coming in and and that feels like that. That's where that pivot and that that relationships get more equalised, where you have a short story I'm doing astronomy on screen shorts are still a little bit apart. But you know, you can see it coming together.

PS: Yeah, I think I think one of the things that insurance has struggled to unlock is the power of data. So I always think about large insurance and actually, who holds the key on a deal. And often it's not the marketing guy or the sales guy or the or the product leader. It's actually the actual actor in his model. And I think one of the difficulties, or one of the transitions insurance needs to flow through is to how are they using data to determine the real risk profile of the things they're looking at. Now, if I take a simple example, you know, I've got a car on my drive that I don't really use these days very much. But my motor insurance is absolutely obsessed with my with my postcode. Whether I've got a garriage, whether if it's on the street, whether it's under a headlight all of that stuff, well, the big risk is me and how I behave on the big risk, actually, where I leave my car is not a big risk.

And I think the benefit of organisations that you would say really data, data organisations ating data through a service, they actually know how people behave. And I think until insurance can use that data to determine some potentially slightly different risk metrics. Then it's going to struggle, I think, to get to a very responsive, re, you know, proactive, almost as far away from the annual insurance policies you can get, I mean, terms of benefits could change overnight, because of what you're doing here and there, and we know you're doing it because we're planning into some of your activity based, just like, just like we've got a Fitbit on you. We know where you are. We know what you're doing. We know how you're getting there, how quickly and so forth. And I think one of the challenges for the insurance industry is challenges, whether they've got data or not. And I think that's a different issue. But assuming they've got a capacity to gather data, and use it to drive out premium, is it the right data set? Because actually, a lot of businesses are doing away with kind of these fixed facts and a more into what's actually happening from a behavioural perspective.

MC: I think just to literally put take on that curiosity is so crucial for any any business but no, as Pat says, the reality is there's a lot of data out there but we need we need people to consume it and be curious with it to try and find better insights, which is Leading to product innovation and service innovation and the life that's so being curious is super important.

PS: Yeah, yeah. And a simple example right now, I suppose is the car I refer to on my drive, I don't think I've driven for two months. So actually what uses an annual insurance policy for me because I've been money, I've been money for nothing. For two months, it's been no risk whatsoever. The car hasn't moved. Now, in a behaviorally based world, of course, my provider would know I've not moved. They would say, Are you still alive? We notice you've not moved, who you are, why don't we ramp back and we can ramp back up when you start to be mobile again. And, you know, it's kind of that push pull. And actually insurances and even the law that governs It is very reactive. We react to what you tell us, rather than what we either know or what we could get to know through data and technology. And that will be a big shift when that happens.

MS: There's a Yes, really interesting point that we've got a question that kind of speaks to that we actually got a question from an attendee, it comes from Mark Andrews. So thanks for this Mark. Because there's kind of two bits to that, Patrick, in terms of the challenge to insurers serving your use case there. There is a there's a kind of a cultural block, potentially, which is like, maybe culture isn't the right word. But do we want to do we desire to rethink the way that we price risk? Do we want to rethink the way that we put together these policies in these products? And then there's a there's a technological block, right. You know, we're not in the place of how do we get to the place where we can use things like telematics to actually price and you know, think about risk and build products. With that in mind. Mark Andrews question was, 'do you think the on-demand startup insurers or MGAs, will take market share from incumbents who are still offering annual policies? Or do you think actually, really, there's more opportunities for them in emerging risks? You know, meaning are they going to eat the breakfast of the incumbents? Or are there other other areas that aren't touched in the market, that they'd be better placed in looking at?

MH: I'll put a quick kind of historical perspective to it and kind of maybe go back to when Direct Line started for those of us old enough to remember that, you know, it was seen as a novelty on the side and not a threat. And at that time, I was working for a Lloyd's business and had a very large motor syndicate.

And I remember going through a year of sitting in various meetings of you know, kind of Direct Line being ignored as some kind of odd little bit of noise on the side until they realised they were capturing some market share. And I think that the word I think to answer to Mark's question about the the kind of seeds of change is the word fear.

And the fear started coming in amongst the incumbents that actually these are sitting in the food off their table. So whilst they could be ignored, they then there was a real kind of sea change of how do we get the word direct into everything we're doing, because that was the kind of buzzword and the sexy word at the time to get in there into a point where eventually everybody learned to play nicely with each other. And, you know, and again, we mustn't be binary that it's either all on demand or all annual. Yeah, the whole thing does need to play kindly with each other because Patrick has another part of his businesses and his life, the risk management part of it for large corporates, you know, they don't need on-demand insurance they need on on-stream insurance all the time. So, so the two will eventually I think, come come play nicely, but it's hopefully answering Mark's question from my perspective.

I think that that needle will start moving amongst incumbents when they actually properly see fear and actually have to do things for themselves because go back to what I did say earlier about the managing general agents out there, they can coexist because the incumbent can basically give a nice big war chest of money to the managing general agent to actually underwrite risks on their behalf. So it's a no operating cost. It's purely paid on the the fees and the override, is that a pay to that mga but the mga is then the little agile business that's going to go to capture and that's, that's a good current model. And that feels like a good pathway for a while. Those that's my opinion.

Leon Gauhman: The insurtech ecosystem is just one step. So you can see like on-demand is, is a is a is a current topic because that's one of the first niches that's been occupied by innovators. And this is a, a everything that's been said so far, you know, focuses on the customer. This is where the next boss battle is going to be won. And this is what everybody understands. And that's the opportunity that the thing, the insurtechs - the ability to solve a customer problem and give them what they want, which the insurance industry has been historically very unwilling to do. And now waking up to reality where their new markets and potentially some of their ecosystem has been shifted away. And I think one of the things that wakes verticals up in a in the most frightening way is actually the attention of the GAFAs and the insurtechs is just the first it's kind of like death by 1000 cuts. You know, it's it's kind of a purchase being taken away in new markets explored that the current This system is too slow to arrive at. But, you know, like, it's I think Patrick said the top 10 companies on the S&P500 outer, or, you know, the biggest companies are, weren't there 10 years ago, and those are majority currently tech companies, and they are gobbling up everything. And there's absolutely no reason why a one of these giants should not address the insurance market. They have the customer, they have the pockets, they have technology. And for me, I think that would be a much scarier and bigger wake up call where a whole markets could just disappear overnight. So I think it's fintechs are kind of the canary in the in the coal mine, if you will. Yeah.

MC: Taking on Leon's point. I mean, Mark's question is, it's: Historically, whether insurtechs will, you know will effectively eat the breakfast or from the incumbents is, the reality is I think these are those that have those that have the platforms or have the direct that had the customer and therefore the customer needs to be those they feel they can partner with most beneficially.

So historically, insurance companies were able to do bank assurance because the insurance company and the bank were very analogous in terms of their structure, their layers, they had 58 different departments, they could all talk to each other.

Today, a platform provider if we if we use Uber is going to want to know an engineering team is going to want to talk to an engineering team very quickly and have very, very fluid conversation. So they need to wherever they find that best I think is where the fit will go. Which may ultimately lend itself to to startups because there's a much there's a more is a better fit. But equally, it may well be that incumbents end up stop and stop. buying some of the some of the startups to give them that that specific nation jealousy that they need on the edges. So actually, a business model becomes a hub and spoke and the spokes become business lines of business model focused may well be a direction of travel, potentially.

PS: Yeah, I think there's one other thing I would add to that he's that you can't underestimate what the consumer looks for. And actually, what they perceive is strong, reliable ethical brands is is actually a real magnet to doing business. I think. So I think you're absolutely right, that those particularly sort of consumer centric brands that are rapidly growing, actually will will be regarded by customers. So it's a safer place to be, but you know, your brand value is like a snapshot in a moment of time. So consumers behaviour now, please, I'm going to give something ago actually, if it doesn't work, I want to turn it off and try something alternative. And if I fancy I quite like to go back again. So I think the brand value of ensures, you know, amongst some of the people that tribe serves isn't particularly regarded as you know, the thing. It's, and certainly I would say it's not necessarily as important to customers, certainly in personal lines that the insurance would like to think. So, you know, I don't think we can forget the consumer base and their appetite to consume Non mandatory insurance. And I think the other thing that, you know, I've noticed is much of the insurance that we design, arrange and provide, actually, is for risks that up till now have not been insured. So, so, as well as kind of eating someone else's dinner, you're actually bringing new insurable risks to the market.

And there's a real play off between, you know, those platforms that rely on freelance communities. Of course, there may be a desire without risk to the employment status of freelancers to provide support through insurance as a mechanism. But of course, the platform's themselves have considerations around what does this mean in terms of our role and responsibility to these freelancers? What about things like vicarious liability For freelancers and the overall sort of employment law, so the two things are not necessarily in the gig economy sharing economy are kind of divorced from each other. And this is why it's really difficult for companies and potentially some of their visors to, it's hard to focus on one piece of the jigsaw to the exclusion of the others. And I suppose the last point that, you know, I've noticed, insurers somewhat struggle with, and it's very glib to see, well, large companies are siloed. It's probably true, but it's a bit glib, but actually, when you look at the construction of insurance, it's really, really line by line class of business driven. Whereas actually, many of our customers, they're not interested in that. They actually want a little bundle with maybe four or five classes of business owners. A bundle, they only want to buy just a little suite of stuff. And I think sometimes the class orientation of insurance or the insurance market makes it hard actually, in that structure to bring together little small kind of hourly, per job, daily monthly bundles of stuff. It's hard to manufacture. If you start from the proposition that liability, we go to our liability experts for property, we go to our property experts for personal accident. Well, now we're into accident and health. We've got whole separate team over here. You see what I mean, to get into small bundles, for many insurers, just too hard. And one of the difficulties they have is really imagining what's the size of the prize, and I routinely taught to insurers that their appetite dwindles, because I don't have a book of 100,000. policyholders. what I've got is I've got something that I'm going to grow into 100,000. policyholders and actually, people want gross written premium and they want volume right up front. Well, actually, the world's not not like that, you know, it's a bit like, you know, the guy who didn't sign the Beatles, you know, If only you'd know. And actually, once they're big, everybody's interested. So it's a, it's about looking very carefully at what you think strategically, the world's gonna look like in say, five years time, and who are the winners? You know, what's

MC: One thing I'd say on that is, I absolutely agree with that. And insurance has very badly walked its way up to five, six years ago, into a kind of mass commoditization, if it could just do one thing and sell it to anybody that care the cost per acquisition right down. You know, I didn't say it in my introduction, but you know, I've been quite instrumental in founding an insurtech business five, six years ago: the big premise of that was to go from mass commoditization into mass customization. And actually all of it was about driving people to the power of one because we recognised when we when we were talking about the business that part of the issue of insurance have it been sold not bought by the by the consumer, because no one actually felt it worked for them. And it all it was was about gaps and cracks in it that just wasn't going to suit for people. So the march forward in that time, you know, I still think it's got a way to go with it is again, learning the Amazon type experience, you know, what's, what's more mass commoditize the books give them what they originally sold, let alone everything else. But what they've taken is that, that commoditized experience down to a very customised. This is What is going to work for you? You know, you, Matt, you've got a lovely bookshelf behind you full of books that you clearly, you know, very, very careful and caring about the books. But yeah, Amazon know you, and then they fill in your bookshelf full of the books you actually want, you know, and that that's the big step across the Rubicon, I still feel the insurance industry hasn't yet fully embraced for the reasons that Patrick said that. Yeah, why would we do that? You know, we can do a one job and sell it to a million people and make a billion pounds in premium, whatever the losses are. But why would we make that change to actually get down to a power of one because we're gonna have to work a little bit harder. The cost of acquisition is going to go up without getting over technical in the way, reinsurance businesses are running: They're not actually making a huge amount of money that's pre-COVID, let alone what's going on at the moment, the operating costs of the business are quite high. So where's the appetite for change that comes in, you know, and that's another bucket.

PS: I think there are some brilliant sort of corporate case studies in other sectors. So if you look at the kind of Harley Davidson story. So late 60s, early 70s, the company was crunched, you know, it was virtually out of business. You know, the thing they discovered was by chance that actually, if they could sell bikes where you could adjust the height of the seat that was really interesting to consumers. They did that. Right? And now, a Harley Davidson will cost you 3000 pounds more, than a Honda Goldwing. And arguably, the Honda Goldwing goes better and for longer and less. And so, you know, there are other lessons and one they want to avoid, of course, is the Kodak lesson that, you know, as the company failed, they did have the best dark rooms in the world. Yeah, that was the point people didn't want dark rooms. So. So it was an irrelevant brilliance that they had, because the world had moved on. But I think, you know, I think sort of change can be, it needs it to be an energetic evolution. It doesn't mean, here today, we stopped doing this and we start doing that, right. But you've got to evolve. And you do that by learning. You do that by a lot of listening. And actually, some of the sacred cows of the insurance, you know, at the insurance industry, quite clearly, quite clearly have stood the test of time as to finally now to challenge all of those.

MC: I mean, I think it's interesting one of the things about product innovation, of course, is that is to be able to walk in the shoes of your customer and, and those in the gig economy on demand who are doing maybe multiple jobs. That's not that's not a happy space are a comfortable space for those in that you know, all of us and around the insurance industry. But now COVID and post COVID maybe we've all had a little bit of an awakening about what being more independent is like. And we can apply that back to, to some of our product design thinking. For our product design for customers, both in the gig economy and and outside as well, it's all become a little bit more independent of mind and thought.

MS: Yeah, there's the parallels from from even talking about with the industry. I'm a little bit closer to banking and financial services, in some of the things that worked with Elsewhen. And the parallels are crazy. There's so many in terms of a sort of presumed trust in household name brands, that just doesn't exist anymore for you know, younger demographics, this idea of selling products, you know, rather than thinking of in terms of customers and what your customers think, and then the looming threat of GAFA who think in terms of you know, owning the customer, they're not they don't have you know, Patrick talking about your silos, the guys at the GAFAs who are thinking about banking, they don't have a mortgage silo and, you know, in a lending site, you know, they don't fit. They're not tied to these historical sort of banking products to turn a profit. And they have a sense of this 'cohort of one' that we will sort of started talking about, you know, things like your Instagram experience, your Amazon experience is getting close to a cohort of one experience, which feels many miles away, it seems like and there's this idea of what's gonna be, therefore, the finTech moment in insurance. Matt, you started to hint there that perhaps COVID is this kind of this this accelerator? But I'm wondering if I'm wondering if there's something around customer centricity is something that we talk a lot about at Elsewhen and Leon, you can talk about you're in the business of speaking to very large companies and dealing with the real structural roadblocks. And often they say they want to be customer-centric. They say they want the customer experience, but there's very real structural challenges that stops them from doing that, do you think they're likely to kind of get out of this is is it's all about, say, COVID We have to do something.

LG: Yeah, that's interesting to see kind of the value chain and if you look at the insurers, you have this incredibly inflexible base, which is almost like a utility, you know, that on top of which this this, this this value chain is built, you have the underwriting which is essentially data modelling, something that can be completely automated. And then you have the brokers which are you know, the, the channels that are hidden, you know, need to be turned customer-first slick, delightful propositions, you know, through that entire kind of chain, things in the sector really, we have a huge opportunity to change that and then kind of in that sort of end-to-end change will enable a really quality different customer-first propositions and I as a techie when I look at this I see a huge opportunity you know, I'm sure that's not goes unnoticed noticed in a, in a in other sectors by other people, but there's potentially something along line legislation that needs to happen the same way as Open Banking happened for financial services, to really bring the point home that these huge companies that sit on this cash capital And allow these ecosystems to exist and provide the utilities for it are actually going to be turned into utilities and open them up and remove the technical barriers away from other businesses, being able to build on this infrastructure same as telco same as financial services, same as utilities.

The, you know, operational costs are something that, as Mark mentioned, operational costs, and underwriting is something that being, you know, cleared away in financial services by, by many businesses, this is one of a lot of opportunity is based on that only of replacing manual labour, kind of the Dark Arts with of underwriting with machines, you know, completely streamlining that pipeline. And on the on the consumer side, when you compare kind of propositions and even with the even if you look at the insurer Tech's You know, there's nothing you know, Is there a place for a beloved and beloved insurance brand? Is there a place for you know, we're talking about going to top 10 brands, I'm sure that there's not a single insurance logo in there. Is there a place to create something like that to create the relationship with the customer? where people are telling, you know, you have to use this you need to be on this you need to know munzo get it and once you know, like, it kind of having past it, is that possible to dream that consumers are going to be excited about insurance? Why not? It's happening everywhere else. So I think there's a huge, huge opportunity for customer centricity. The insurer Tech's are the first ones aligning into that direction, awakening the sector. But there's, you know, that there is a possibility of a tech company looking at this and just slide it in because they don't have any of the of the legacy and that could be a very scary moment for a lot of different executives.

Yeah, yeah Patrick, you, you talked about which we talked about in financial services, with, with platforms, possibly a stage beyond what Leon is describing, where you're just free to switch between providers, right. And as and really, you have no brand loyalty because there's a platform owner. It's a it's kind of open to, sorry to that so as platform owners to try and sell their products to the consumer, but actually, what we want is true customer experience, right? And I don't want to have to pick and choose, you know, and work out exactly where I'm going to get the best deal. Those kind of things will be automated. But perhaps in the medium term, like we've seen the challenger banks, that actually there is a place for the Monzos and the Revoluts for this world who are serving a need right now. And actually they do have there's a new kind of brand for a certain demographic, there is a new kind of brand loyalty. There is a sort of that that iconic orange card, there is a place in the market for that. So I think that's quite interesting, because I don't think we're, I totally take your point where you're seeing insurance going eventually. But But in terms of the maturity of the ecosystem, we're not quite at that point, are we, where my iPhone just picks my the best premium for me from minute to minute, you know.

PS: Yeah, and I think I think the transitionary period you talk about, is really understanding what kind of brand gains consumer loyalty and what kind of brand is irrelevant to most consumers. So it's very difficult. I think, you know, deciding It's an unloved brand, to, to develop a sub brand that will suddenly become love because, you know, it's got kind of, you know, setting the title. It's far more. It's far, far more than, you know groovy names really. It's more about I think, brands and solutions that to the consumer, give them the competence, you understand what I'm about. So, I mean, we were working on a on a project at the moment, which is for musicians. And the success of the product won't be actually these heads of cover, or these limit. It will be the mindfulness of the product that says to the consumer, we know what you what you need, and actually, we know what you don't need. So we're not going to deal with any upgrades of stuff that's pretty superfluous. We're going to knock out stuff you don't need. We're going to leave in The stuff you do need. And we're going to lead your thoughts right here right now. We're in fact, the target market, on earning any money at all whatsoever. So actually, you know, if I, if I digress, the opportunity is right here right now, because I think when everything's going smoothly, people only think about insurance, either when they have to pay a premium, or they've got a claim. Other than that is probably the last thing they think about. Right here right now. Actually the ability for many people to think to themselves, did I really protect myself as well as I could do here? Because Because I've now got nothing. I think that's the opportunity or insurance and risk transfer to play its part. But actually, you know, you know, life is life is not one big video series. to photograph So, you know, if we come out a lockdown by the New Year, the world will have moved on. And we won't be thinking about lockdown anymore. So you've got to be dexterous and fleet of books, to strategically be able to strike in a moment of opportunity, threats or opportunity. Whilst having, I think, this kind of entrepreneurial lead process that says, actually, no one knows what the world's gonna look like in six months time. But when something changes or want to be ready to change with it, whatever that rather than just, I'm just going to hold on to my business model. And it's only a phase and it will all come back. Well, not necessarily so.

MS: So I'm conscious of the time because you guys have been really generous with your time and sharing your ideas here. But I think totally I think maybe that's a good takeaway, which is that The insurers shouldn't be thinking purely in terms of what's going on right now in terms of COVID. And equally, they shouldn't be thinking that there is going to be some kind of return to normalcy. Once this is all over, there is an enormous opportunity to be thinking about, you know, the very meaningful ways that the world is going to change. And insurance is going to change and the changes are going to kind of be kind of architects of that change or it or it might happen to them. I'm sure we could. I can see mark and Matt guys jumping on that. We're out of time.

Thanks, everybody, for being involved with this. I'm sure we'll do another one of the soon to everybody who tuned in. Thank you. A recording is going to be available. We're going to email that to everybody who signed up and we'll be sharing that on our Linkedin. All right. Thanks a lot, guys.


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