Insurtech companies are emerging at the rate of over one a day and we are all self-publishing now. Twitter and Linkedin pump out real-time updates. Every day brings more opinions and an inbox full of insurtech news. So much choice, and too little time. How do we filter out the useful and important from the irrelevant and distracting?
Happy New Year. And thank you! It is you, our members, that make Instech London so successful – and fun. Through your support, whether as speaker, sponsor, social media activist or just turning up at events, we’ve been able to create a highly connected community, that really is making a difference to people’s business lives. We have listened to what you said in 2017 and have great plans for 2018…
An active start to 2018…
We all love innovation but some insurtechs care too much about tech and not enough about insurance. Everyone knows the market needs to get more efficient. Eventually, a few companies are going to make a lot of money fixing that. But the lifeblood of insurance is providing products that help business and people when things go wrong. New problems need new solutions, which bring fresh sources of premium. There’s $3bn income from cyber insurance in the last 12 months, a market that didn’t exist a decade ago. If you are an insurer with excess capital where should you look? Or perhaps you’ve seen a gap in the market: costly events that are not covered in traditional policies? We found seven companies bringing new insurance revenue opportunities to the market and invited them on stage at Instech London on 23 April. Here’s a snapshot of the key themes. To learn more take a look at the videos.
Parhelion: carbon offset insurance
Large energy consumers, such as power generation companies, have significant carbon offsets obligations. Some chose to invest in projects that give them the carbon credits to fulfil their offset requirements. The problem is that if the project fails they lose the offset allowance. The company then becomes liable for large penalties for not meeting its obligations. Julian Richardson founded Parhelion 11 years ago to provide insurance cover against such problems. Now big energy companies can make investments in third-party projects with greater confidence. Parhelion is also looking at taking the risk out of the exploration and drilling for geothermal projects. The large potential shortfall in resale value of electric vehicles because of poor battery life could be a problem for 42,000 people. Julian’s exploring warranty protection to remove this risk.
Zego: keeping the wheels turning in the gig economy
There is no shortage of insurtech companies offering cover for the gig economy. What sets Harry Franks, CEO and co-founder of Zego apart is that he previously worked for Deliveroo and had direct experience of what people needed from on-demand commercial insurance.
Harry knows that expecting people to actively turn insurance on and off each time they need it is not practical. Instead, Zego integrates directly into the platforms of its clients. When people sign in as “ready to work”, the insurance kicks in. When they end their shift, it turns off. Techcrunch describes Zego as having “spotted a gaping insurance hole in the gig economy”. Zego is moving fast. Founded only 20 months ago, they now have 42 people and provide 24/7 support. They’ve had to build or modify tech and work around regulations that were designed for more conventional annual insurance policies but still managed to launch their first product in 3 months.
Their first customers were in food delivery with a focus on scooters. They are now covering cars and expanding from the UK into Europe. Balderton Capital led the series A round in November last year valuing Zego at just under $10m.
Shepherd: risk mitigation not remediation
There are high expectations for dramatic cost savings from the IOT and sensors being used for preventative maintenance in buildings and equipment. Yet commercial insurers are struggling to find ways to take advantage of the technology either to generate new revenue, or to reduce claims. Will Brocklebank has 10 years in supporting facilities management and sold his previous company to launch Shepherd. According to Will the problems are two-fold. Most maintenance companies make their money on fixing problems not preventing them. Spending £100 to replace a cooling circulation pump that is about to fail clearly makes a lot more sense than waiting until the pump fails, triggering a cost of £10,000 to fix the boiler it serves, but the incentives are often not there. The second challenge is that in many companies risk managers don’t work closely with the facilities department to identify creative ways to reduce insurance costs. Shepherd’s tools analyse performance data on buildings and plant in real time. Will is looking to create collaborative partnerships between maintenance, insurance buying and insurers using the Shepherd systems as the risk analytics. He is currently raising £1m through our partners Angels Den – https://www.angelsden.com/project-view/shepherd/
Forest car: making money from your idle assets
Charlie Palmer is co-founder of Forest Car. Nine months old and part of the 2018 Startupbootcamp insurtech cohort. Charlie wants to tap into the thousands of cars sitting unused in airport car parks and offer these for rental. Car owners get free parking, a clean car and some income. Renters get a cheaper offering than conventional car hire companies. Forest Car doesn’t have to carry a stock of vehicles and dedicates a share of its revenue to planting trees. A great opportunity but difficult to build out from scratch, Forest Car has made the smart choice of looking for partners with established technology and distribution that can be used across all parts of its value chain. They’re working with the Carrot telematics device from Track Global, to disincentive bad driving behaviour in renters and create geo-fences to reduce the risk of theft. One of the early UK insurtech companies, Cuvva, is providing access to it on-demand insurance application. Charlie has agreed a pilot with a major UK airport parking company and is looking for other partners. Forest Car is looking for early-stage funding and more partners. Let us know if you are interested.
Nexus Mutual: for when smart contracts fail
Blockchain enabled solutions are becoming commonplace in insurtech. It’s too early to identify any winners yet. One thing that is clear is that the growth in the number of applications will be matched by an increase in losses through blockchain related failures: both malicious and accidental. Nexus Mutual is offering insurance coverage for smart contract failure. The application operates on Ethereum and uses the openness and transparency of blockchain to crowdsource both underwriting and claims assessment. Founder Hugh Karp hopes that by creating a new platform to source capital and assess risk, he will open up a new market for insurance, providing scale to the historic, but limited mutual insurance model.
BMS: helping keep your IP safe
One of the risks to startups in any industry is their ideas being stolen or squeezed out by large, existing competitors. In the virtual world we spend so much of our time in today, Intellectual Property (IP) is increasingly becoming a crucial component of a business’s brand. Patents protect IP, but applying for a patent requires opening the idea up for anyone to review. This is the point where a company is most vulnerable. Australia, which is where reinsurance broker BMS, is launching its product, has 75,000 new trademarks registered each year. For a cost of as little as 215 Australian dollars, companies can get up to 50,000 AUD in IP protection cover This usually sufficient to fight off an aggressive established company looking to block a new competitor.
Oil Spill Insurance: are you covered?
There are 3 million oil tanks in the UK. Judy Hadden’s Oil Spill Insurance does what it says on the label. A few years ago, after having sold the insurance broker she founded, Judy was advising on a contested insurance claim. Oil had been leaking from a household tank for over 6 months and clean-up costs had amounted to £200,000. The insurer repudiated the claim because it wasn’t covered in the household policy. Having researched other insurance policies Judy found that unlike the US, in the UK oil spill is not covered in a general household policy. Seeing a chance for her next business Judy signed up Chubb to provide capacity for her Home Spill product and is now selling it through third parties. Judy’s next project is a product for protection from a commercial oil spill.
Off-stage and engaged
Not surprisingly we had another packed event, with over 170 people giving up their Monday evening to catch up on the latest developments in insurance, tech and investing – on and off stage. We also heard from Pivago, the on demand data science providers. More on them to follow later, but you can see what they said here.
Many of companies that speak at Instech London are looking for early-stage funding. Last week we launched a partnership with Angels Den last week to bring together companies searching for funds, and people interested in investing. Please contact me directly to learn more about funding raising or how to register as a potential investor.
We were very grateful to our event sponsors Ninety, who are bringing Silicon Valley techniques to rapid product development for insurances. Dan White’s introduction can be found here.
We are always looking out for future presenters on stage at Instech London. Track me down if you’d like to talk about presenting.
Finally, we are only able to bring together such a great group of people and companies with the support of our corporate members and sponsors such as MSAmlin and others. If you would like to become a corporate member or host an event, we’d be delighted to hear from you.
Keep up to date with our future events at Instech London by registering here.