Podcast 13 - The Great Insurtech Debate Part One: "Is the insurance industry failing its customers?”

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On 30th October, InsTech London brought together industry leaders at The Steelyard in London to debate whether the insurance industry is failing its customers in part one of the Great Insurtech Debate.

Speakers included BoughtByMany, Trov, Zego, Zurich, EOS Ventures, InsurTech Gateway, KPMG, SAS and Deloitte. Many thanks to our sponsors for the night, SAS and Novidea.

Join InsTech London, our speakers and another packed audience to hear what they had say - and what our audience had to ask them.

The second part of the debate - "Who will own the future of insurance?” - is available in podcast 14.

Listen here to InsTech London podcast 13. It is also available on iTunes, Spotify, and Podbean.

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Transcript for this podcast

00:04 Robin Merttens: Hello and good evening. My name is Robin Merttens, I'm the co-founder of InsTech London. InsTech London is a community of people interested in innovating insurance, comprising innovators, insurance companies, investors and generally those enthusiastic about the future of insurance. We have monthly events at the Steel Yard in the of City of London and this is our event on the 30th of October when we had a panel of InsureTech experts to come and discuss with us “Are insurers failing their customers?”. And first up to provide his views is a co-sponsor, Paul Ridge of SAS.

00:44 Paul Ridge: Thank you, welcome. As Robin said, we've sponsored a few of these events I think from quite a while ago. We were an early supporter of InsTech London, so it's good to be here. Thank you to everyone that's come along this evening. So I personally work with a range of insurers, we do globally as an organisation, so I guess we have a sense of perspective. The questions that are being asked tonight are quite challenging, I think, for us particularly. I think we look at insurers as having a key role for us, a key vertical for us, but we are always then comparing insurance maybe against other verticals, other industries. What innovation is going on? What are we seeing in terms of disruption and change in many other markets?

01:26 PR: So is insurance failing its customers? I think from my perspective, I think there is an issue in the industry. I think there are some things that have happened quite recently that have maybe helped me structure my opinion, and the points that I'll make. I think one thing for me is that it's surprising that it takes a movement like the InsureTech movement that we have today to really challenge an industry and demand of that industry that it adapts and it moves forward. It was a question for me of would we be seeing the change that we are today if it wasn't for that challenge? Would the industry, if it was independent of that, still be looking at innovation and still be trying to move forward?

02:09 PR: One of the things that struck a cord quite recently, we had an event in Milan and we had a key note speaker. That key note speaker for us was a chap who was from a leading university in Italy and a professor of innovation. So he talked of this world that we live in today and this world that we live in is not short of one thing and that's ideas. Everybody has a great idea, but what we find is that those ideas often lack meaning. And he said that one of the challenging things we have as organisations today, what we have to do is not ask our customers what they want of us; we have to think beyond that and we have to think further, whether it be the Steve Jobs analogy, or whatever it may be, we have to think what our customers need. I think what we potentially mean by that is, “Do those people really need the cheapest motor insurance they can possibly find?”  No, I think what people actually need is the right level of cover for the risk that they face at a fair price.

03:06 PR: So from that perspective, I think one thing that I referenced and someone put it much better than I did, and I think we've got a speaker from Bought By Many later, so if you haven't seen it on LinkedIn, it's worth a read. So Steve, who is the CEO of Bought By Many, wrote a letter to the Chairman of Aviva, and he put it in a much better way than I did. And what he spoke about is the need for that organisation to find a leader who starts to think 10 years ahead. Somebody who starts to think about what the customers really need, start to think about trying to tackle that industry-wide problem, Why does it take a regulator to ask the industry to stop and think about dual pricing? Why are we looking at an organisation discounting the acquisition that it puts into policies, but then we find there a number of instances where vulnerable customers are paying three times more than they probably should for their insurance renewals.

04:01 PR: So Steve positioned it that way. If we are looking forward, if we are trying to challenge this industry to become customer-centric, then I think we need to consider what the customers really need, not what do they want. And that's a challenge, because for many, if it is personal lines, motor is going to be a huge part of their business. So it’s a big decision for somebody leading an organisation like Aviva to stand up and take a stance in the industry and put the customer ahead of those kind of key metrics on shareholder return and things like that, to really transform and drive forward Aviva as a business.

04:38 PR: I think on the technology and innovation piece what also happened recently for us, it was a third year anniversary of what would be termed as some of the buzz words in the industry at the moment around AI, machine learning. So three years ago, an insurer implemented straight-through processing or real-time decisioning at the point of claim. Huge benefits to customers, their NPS score went up significantly, huge cost reductions. That was three years ago. Back then, the buzz words that we have today, weren't really around, it was good old analytics. But what it proved for me is that the technology is available for innovation to take place. So again, without the Insurtech movement pushing and challenging the industry, why three years time later, have we not seen others adopt that and make that a reality for their customers? So hopefully, there are some points in there that maybe strike a chord with a few of you. Be good to get some debate and some discussion around those points.


05:47 RM: So I'd like an InsureTech innovator's view of, Is insurance failing? Or are insurers failing their customers? Ed Axon from Trov, SVP in charge of all things sales, “are insurers failing their customers?”

06:05 Ed Axon: Thank you very much. Thank you for having me, Robin, I'm glad to be here. I'd start by saying, I'd probably vote for Paul because I thought he was very, very good. So the question is, is insurance failing its customers?

06:21 EA: Robin has obviously asked us, as InsureTech people, to be controversial, but that's not what I'm really here for. What I would say, the InsureTech movement maybe wouldn't be around if everything was rosy. If you look at different sectors in the market, you'll see that there's a lot more going on. The word failing I think may be extreme. What I would say in certain sectors of the market, like general insurance, the insurance world has allowed other people to get into that journey.

06:53 EA: If you take motor insurance or general insurance in the UK, the aggregator plays a huge, huge part in it. Now, initially was that good for the consumer? It probably was. Is it good for the consumer now? I think that's a huge debate. So you've got these massive insurance brands that we all grew up with that are hugely trusted, that have allowed someone else into that journey. I think that's a potential problem. Now, it's great to see a lot of the guys, the Zurich's and the Aviva's and Direct Line, working hard to build that relationship again. But there is an adoption theory in brands where if you don't flatter the audience of today, what happens is they just believe that your brand is for their father's brand or their grandfather's brand.

07:40 EA: So you've got these massive big insurance companies, hugely trusted, that I think need to do more to work direct with the insurance companies again. Which is great to see that they are. There's a lot of innovation around claims management, which is great to see. That's again going to give the insurance world and consumers some of that trust back in these big insurance brands. Working with InsureTech's, I would say that of course. But I promised we wouldn't use the word collaboration, but working with InsureTechs to define new products and get the trust back from consumers I think is going to have a huge impact on it. So my answer to, are insurance companies letting the consumer down?

08:26 EA: I wouldn't go as far as that, I think they've just let someone else into the journey. And I think what's important is you get that relationship back again and work with innovation. As Paul said earlier, the innovation around InsurTechs startups, real time pricing and the ability to calculate risk dynamically, that's the stuff that I think consumers today. Trov's very existence is because there is a gap between what young people believe about insurance, and what they need and that's why we exist. So my answer would be, not as extreme as letting down, but maybe they've allowed someone else into the journey. That's me.

09:10 RM: Thank you very much.

09:16 RM: Next up we've got Nigel. If you're running one of these things [events] and you want somebody to say something than he's your man. He’s never short of a word, Nigel the floor is yours.

09:27 Nigel: I think that's a compliment Robin. Thank you very much. So, neither of my two predecessors answered the bloody question. Have they failed, have insurance companies failed their customers or not? Answer – no - and I firmly believe this. I've sat at every one, well not every one, but many of these events and talked to many of the InsurTech startups. I work with them on a regular basis and I work with lots of carriers. Have we failed our clients? Absolutely not. Let me give you some evidence. 99% of claims paid by Zurich, it reminds me on my billboard everyday I walk to my local train station. Thank you, Arslan and team.

10:04 Nigel: Aviva came out and said exactly the same thing, 96% of claims paid. Have we failed? No we have not. So the promise to pay, the thing that we're here for in the first-place, does get executed, number one. But this is not marriage guidance. I've not been through it. I hope never to go through it. But from all the movies I've watched, it talks about the things you need to do to make your relationship work.

10:32 Nigel: So the relationship we have with our insurance companies, do we care about each other, do we talk to each other? Answer - no. Who's fault is that? Possibly the customer. I'm not saying the customer's at fault here, but if I don't call you and all I ever do is call you when I'm in crisis, when something's wrong, when I've had a crash, when I'm in a really bad state. Yes the insurance companies open their arms with a welcome and go, how can we help? Have we failed you? No, we have not failed you.

10:57 Nigel: I'll add a third party to the relationship. You mentioned earlier, with regards to the PCWs for example. We throw all of our data that you want to value into a third party, the third person in the relationship and let them find the cheapest possible thing to compare you against and then think you're all the same. Marriage guidance might tell you, that is a bad example of bringing a third person into this relationship. I still have not failed you because when you take the cheapest option that you want in the top of that list, I will still be there with open arms to answer your questions and address your claims.

11:36 Nigel: For anyone that follows Oliver Ralph, insurance correspondent for the FT, he wrote a great piece about the identity crisis for insurance. And I do believe in this piece. Maybe the insurance company of tomorrow, in fact not maybe, absolutely the insurance company of tomorrow will be very different to the insurance company of today. Maybe what you buy isn't insurance, maybe it's services that happen to have an insurance embedded into it. Maybe it comes with a product that you buy or the service that you're engaging in. Maybe, it's episodic or whatever fancy word you want to use for time-bound, but it will definitely change.

12:09 Nigel: That relationship with insurance companies will also then need to change. We look at other industries and go, look at those guys. We look at our digital version of our paper statement from a bank, and call it digital banking and go look, we've got a FinTech digital banking app. That really and truly is looking at a digital statement that we had all those years ago. So not much really has changed in those words.

12:34 Nigel: Have we failed you? I still think not. I've answered the questions about 20 times and I keep doing it. Could we become more efficient, to your point? Without a shadow of a doubt. Look at any other industry that we engage with and tell me they couldn't become even more efficient. Even our good friends at Amazon or Google, or Facebook. Has anyone ever tried to call Amazon? Okay. It's not an easy thing to go and do sometimes, but you know what, they are flawless at execution. So there are things that we can learn from other people without a shadow of a doubt. I go back to you and say, have we failed? Absolutely not. I will stop there.

13:13 RM: Thank you Nigel.

13:16 RM: Excellent. Who wants to put a contrary view? Yeah, so I thought you might to do that, Luisa.

13:23 RM: Luisa Barile, the Chief Financial Officer from Bought By Many.

13:27 LB: Good. So I'll have to be the controversial one here. When Robin told me the topic of this debate, I thought would anyone actually argue that the insurance industry is not failing its customers. And I think you know, if you think about it, most people have fairly basic insurance needs and most of that, the majority of people can actually get cover for what they need, and they can pay a reasonable price, especially in retail, where the price comparison websites are prevalent. Yet, when we think about what has happened in the past four or five years now, everyone is thinking about InsurTech and innovation, so there is quite a lot that has changed in that period. So you would expect quite a lot of improvement on the customer experience side, if you look at how the customer perception of insurance has changed over this period, there are some interesting insights. I looked at the Customer Experience report done in 2018 by Engine on a sample of UK population and we see the insurance industry ranking at the bottom of the table consistently over the last five years.

14:54 LB: So there's a ranking of basically 14 industries, and they ask people which sector would they rank in terms of the best experience for customers and insurance is always the bottom one. Not only insurance is always the bottom one, but if you look at the past five years, the share of people that are mentioning insurance as the top industry has actually declined by 2%. Now, 2% is not a big decline but within the context of other industries who have actually increased in that share, especially banking, which is in the same space of insurance, the gap has actually increased and insurance has not. It has done quite a lot of things over past five years, but it has not managed to bridge the gap compared to other industries, and it is still at the bottom.

15:45 LB: So my answer to the question would be, well, yes, insurance has failed or is failing its customer, maybe not in general the customers, but definitely is failing the customer experience and the customer expectations in that regard. And I think the more interesting question would be, where is insurance failing? And I would have four points on this. The first one is education. There's still a large part of the population that is under-insured, especially in retail and small businesses where the people are less sophisticated. And this is a problem for the individuals, but it’s also a problem for society in general. Buying insurance is still very hard, contracts are very long and complicated, and a lot of people don't have a good perception of the risk. A lot of the time people buy insurance after something has happened, even I bought my car breakdown cover after the first time my car left me stranded on a street.

16:51 LB: The second problem I think is transparency. People just don't have a good understanding of how the premium is calculated. What happens if you claim? I think I told Robin a story about a conversation with a taxi driver I had when he was saying, "Well I had an argument with my wife because we had a claim like 500 pounds for a leakage. I had a policy with 300 pounds excess, so my wife really wants to claim. And we claimed, we got a 200 pounds of the difference and then the next year, guess what, the premium went up by more than 200 pounds. So, insurance is a fraud. You're just raising your premiums and that doesn't help anyone."

17:37 LB: And if you think, there's still quite a lot of practices in the insurance industry that are not helping the customer experience such as; not really understanding how the premium is calculated, what happens when you claim, the things that we were mentioning before about the insurance, the interest rate charge and the premiums if you pay monthly, they are still not helping the insurance industry. My third point is around digital experience, and that coupled with the human touch. So clearly people want to buy things fast, want to buy things when they want, so they want a digital experience, but it's still important to have a human touch about it. And that's something that, both the insurers and the InsurTech can do quite well, but they are not doing particularly well at the moment.

18:35 LB: And the fourth point is about inclusion. Now leaving politics aside, the world has moved to be more inclusive and we now better understand the value of diversity in business and in society and I think insurance is lagging behind the other sectors in terms of inclusion, not just in gender. I'm probably the only female person on this panel... two, yes two. Good but we're still underrepresented, in terms of race and sexual orientation and anything. And I think it’s easier for InsurTech to attract people with diverse background but it's also very important for the whole industry to move the needle in that direction.

19:30 LB: So my answer to the question is yes, I think we are but I hope that together we can actually change that.

19:43 RM: Thank you. It's time we had an investor's view. Stephen, do you want to come and represent investors for this purpose? So Stephen Brittain, the co-founder of Insurtech Gateway. Steve are insurers failing their customers?

20:02 SB: Good evening, everybody. I'm a slight imposter because of my background, I was a product designer. And I spent 10 years studying customers before I came to insurance. So I have an interesting comparison, because I've arrived in an industry that I believe has absolutely zero view of their own customer. And I'm trying to bring designers and creative thinkers into your industry. So it's more a question of who am I investing in, rather than here I am to invest. I've been scrambling around with the rest of them, trying to work out how I'm going to fill a few minutes here in the debate format. But something struck me. In the first conversation I had when I came into insurance, one of my best friends, he's an insurance broker, and he took me out to lunch. And he said, "I'll take you to one of the places I take my clients." And my first observation was that he'd put on three or four stones since we were in school together.

21:00 SB: And he basically gave me a massive lecture about how to look after customers and clients. And I said, "But I've spent 10 years studying customer needs and consumers." He said, "Yeah, this is how business is done, my friend." He knows every best restaurant in town, he's got an incredible expense account, and he understands the word client like nobody else does. He understands customer and he understands client. And I come from a world that was trying to understand why the iPhone was successful. Why Amazon was taking everybody's industry?!

21:30 SB: And, I guess, I'm just trying to shift the debate from a conversation that says, "Wow, the insurance guys sure know how to service a client," through to, "They have no view at all on customers and the emerging customer needs." And I've taken that same philosophy, in terms of the incubator we've started to build, because it wasn't a case of just investing in the ideas that came towards us, because I wasn't meeting people that really understood the customer, or in my definition, the consumer.

21:58 SB: So the incubator that we've built, was built within a business that didn't touch insurance for five years. We were just trying to innovate. We were trying to find disruptive models, and new segments of consumers, and new needs that we would meet. And this felt quite a normal approach to us. So without giving too much of a plug to the business, what we've really struggled to do is to find people from the insurance industry who could engage in an environment, where they genuinely get to test with consumers, and actually see if their idea works, live. And see what really happens in full technicolour. And understand why the pricing, and why the distribution, why the call to action doesn't work when you work in insurance, how difficult it is for you all to make that work.

22:46 SB: So, I will leave my point that, we all have a lot to learn about how to service clients in the insurance industry, but consumers is another game. And that's what the industry needs to wake up to. Thank you.

23:13 RM: Next, we've got Arslan Hannani from Zurich. A particular thanks to people from the industry, because I had to make a lot of phone calls to get to someone from the insurance industry to come into the InsurTech Lion's Den and represent the incumbents, so Arslan, thank you.

23:29 AH: Thank you for having me today. You can imagine how excited I was when Robin called me and said, "Can you come and talk about why insurance is failing its customers?" So I think there are a lot of valid points that have been raised today. One thing that I heard earlier was, “the separation of the InsurTech industry” and the other thing is “it’s for the benefit of the customer” – they’re both something that this group and this industry should just stop.

24:06 AH: As insurers, I think one thing that a lot of people forget is the responsibility we have to carry, as well, right? Let's take Zurich as an example. We've got 60 million customers, we've got revenues of over $50 billion. There are a lot of problems that we have, but we have to look at each solution with a sense of responsibility. Is this something that we can go and tackle right now? Is this a product that we can go into? Is this a customer need that we are the right insurers to solve, today?

24:37 AH: And that's the sort of balancing that we have to do in the back end. There are a lot of consultants and insurtechs and investors here. I don't think there have been many times when you've knocked on an insurer's doors, and we've not let you in. We're a pretty open book when it comes to our problems. Obviously, there's a big regulatory burden, as well, that we're all aware of. But I think, take that perspective from us, that there is a sense of responsibility that we have that we can't just go in and start experimenting with things. And we can't just go in and start changing things, until we know that we can do this in a responsible way, where we can take care of our customers and continue to pay those 99% of those claims.

25:20 AH: But I think the solution to all of this is, again, I know we're not supposed to use the word collaboration, but you guys need to keep doing what you're doing and we need to all challenge ourselves and be that mirror. If there's technology that could help us solve a problem, we want to hear about it. We may not act on it, but we want to know about it. If there's a customer need that we haven't identified that somebody in this room has, we want to know. We want to tackle that problem together, but if we keep separating the insurtech industry from the insurance industry, there's only one person that will suffer and that's the customer.

25:58 AH: So I'm not even going to take my whole five minutes, but I'd request this room to step back a minute, and think about the responsibility that comes with size. And also, let's keep challenging each other to make each other better. There are things that I've seen from people in this room in meetings that we could never tackle. And we are adopting those, we are working with those, we are exploring those. There are equally ideas that we've seen that are absolutely phenomenal, that as the incumbent that I'm here representing, I just cannot take the risk and do it in a responsible way. So that's the, sort of, balanced view that I wanted to share with this room. Thank you.

26:34 RM: Arslan. Thank you very much.

26:40 RM: A point very well made, thank you. Next, Paul Merry, Partner at KPMG. Are insurers failing their customers?

26:51 PM: 15 years ago on a dark October night, I went back to my home town in Cardiff to meet Prudential customers. It was a bit like tonight, really.  After the CEO had given us the grand presentation of how Prudential were solving the world's problems, all of the customers had the opportunity to meet Prudential staff of which I was one. And the first person that came up to me was Barbara, she was a lady in her 70s, grey-haired, and she was a big fan of Prudential but she wasn't happy.

27:39 PM: For years, her man from the Pru, Tony had been helping her and her husband Gwynn to save for their retirement to buy their first home. And when Gwynn passed away, Tony helped Barbara to arrange the funeral. Prudential was a loved institution for Barbara. And conversation after conversation that night, went along the same lines. Where is Prudential now? Why did you get rid of the direct sales force? Where is the man from the Pru?

28:17 PM: He was a trusted friend, and it taught me what customer experience could be. Now for those of you old enough to remember the man from the Pru, it's not like it was great in the good old days. That's not the point I'm making, but in terms of customer experience and customer loyalty, I don't see any of that now. Nigel was talking about marriage and I think banking products for example, are often referred to like a marriage. You're more likely to get divorced than change your current account where as insurers are struggling to get beyond a one-night stand.

28:57 PM: So in terms of what's happened to the insurance industry, as some people have said it's become disconnected, disengaged, it's become distant to customers and that's the big challenge. The work and the analysis that we've done, the customer experience, excellence analysis, the top, the 300 companies that we looked at in that, how many insurers do you think were in the top 10? Top 20, top 30? LV at 32 was the highest ranked insurer. So, you can hardly say that it's not failing customers, they're a handful in the top 100.

29:39 PM: Now moving on, I think there is a glimmer of hope in all of this. Top in the US survey was, believe it or not, an insurance company, how many of you have come across USAA? A few of you. So for those of you who don't know, it's got 11 million customers, and it provides insurance and financial services needs to US military personnel, and their families and it's focused on the customer, has got great employee engagement, has been a fast adopter of technology and all of the customer engagement has not been at the cost of expenses. It's expense ratio is 15%, which is half the industry average. So what's the good news?

30:26 PM: There is some good news, there's huge amount of hope because the insurance industry can deliver great customer experience, it's just it's not at the moment, not in most parts of the industry. It's not providing the products, it's not solving the risks that people need. The bad news is, for some people in the room, it might not be the insurers though that are going to solve the problem going forward, but we'll come on to that later. Thanks.

30:57 RM: Well, thank you very much.

31:02 RM: Time for an InsurTech view again. Harry from Zego, co-founder.  Are insurers failing customers as far as you're concerned?

31:15 Harry: I think there's a challenge here, because it's so easy for me to say yes. But actually insurance is so vital to everything that we do in all the ways that we do it, but I think actually what we're seeing is a shift in the way in which people want to consume insurance. So we're seeing a shift in our customer demographics, as much as the way that we're trying to solve it and to my mind, and certainly in the areas that we operate, what we're missing is customers have never had – because of technology – as much choice as they have today.

31:43 Harry: Through their phone they can have access to any goods, any services at any time, but for insurance they're still put into a large homogenous group and said, "You are going to be this type of insured person." And I think this is where technology needs to work with insurance in order to create hyper-personalised insurance for individuals.

32:08 Harry: There was an interesting article written by Earnix, I don't know whether anyone read it around personalisation of insurance and to my mind, it was absolutely spot on. It said, "If you can give something back to a customer, because you can become relevant by using technology, you can say that one person doesn't want to feel as though the person next door to them has exactly the same insurance policy, then you become relevant, you have better engagement, you have higher retention rates with each one of those." And so that's where I think insurance through its lack of understanding of what the art of possible is, what the art of using real-time data is, is failing its customers.

32:48 Harry: I want to pick up on a couple of things that have been said so far. So Arslan, 99% of claims are paid by Zurich. I think it’s a great stat, but I'm not sure that a company should really be advertising the fact that it's doing what you pay it to do in order to retain customers.

33:07 Harry: I believe that insurtech really should make someone feel like they are completely unique, and so if you can do that, if we can have -  I said I wouldn't talk collaboration - but if you work with insurers that are willing to use technology to get real time and real detailed data about an individual, give them back a policy and a product which is absolutely unique to them, then you're going to become relevant and that's going to make you not fail your customers.

33:56 RM: Thank you.

33:58 RM: Last up, Karl. To me, Karl Bower, but Karl with a most complicated surname in InsurTech history. Are you going to tell us what it is in full?

34:09 Karl: Hello, everyone. We are an investor, mainly series A and B in InsurTech. I think most of the things have actually been said already, but from our point of view, “is insurance failing its customers?” Our point of view would be, no. Insurance is actually having an important social value. It's paying claims. It is omnipresent at many parts of society. This being said, it's massively under utilised. It has been quite late in utilising the emergence of the mobile phone. It has been quite late in utilising the huge data and knowledge of it's customers, and we as investors are very excited in helping the insurance industry, together with InsurTech and bringing them together, in order to provide a better service, better pricing and better risk selection.

35:00 Karl: When I look at the banking industry, in terms of use of technology, I would think that the insurance is probably 10, some people would say maybe 20, years behind the banking industry in terms of using big data, in terms of understanding what you can do with high processing, with data analytics. The credit card companies understood that probably 15 years ago. The banks understood that with many of the payment services and understanding the customer profiles. The insurance industry hasn't really failed, in that sense, it's customers. It has just been extremely slow, in our view, in terms of really, really getting the maximum potential out of it.

35:39 Karl: We all wonder whether each industry has it's kind of Uber moment and creation of a totally new paradigm. But I wouldn't see it like that. We ask ourselves the question, of course, and I would compare this more to the Spotify moment. There was the record industry, and the music industry which should own iTunes and which should have created Spotify. They missed that opportunity, in a totally different paradigm, and so part of it actually totally lost.

36:11 Karl: I think insurance is not going to face the same challenge. Insurance is a complicated industry. A lot of the InsurTechs, who kind of entered the market two or three years ago, or four years ago, have realised that in the meantime - you don't displace the insurance industry just like that. I think ultimately what the insurance industry needs to do is work much more in cooperation. I would not use the work collaboration, much more in cooperation with innovation. It's an industry that is going to have to massively simplify itself, in terms of structure. Yes, it's a regulated industry, so you don't change that either, but the regulators also have to adapt themselves to having a much faster adaptation process to what technology brings.

37:00 Karl: And ultimately, we would expect that the industry, rather than failing its customers, is going to have a battle between those big players who are going to be fast in adopting change, versus those big players who are going to be too slow, and who could eventually, possibly, die of a slow death.

37:22 Karl: If you see what's happening in the technology industry overall, you conclude quite quickly that actually there's a massive consolidation around the biggest players. I think there is going to be some similarity in terms of what's happening in insurance. I don't think that Zurich Insurance is ever going to put bankrupt by Lemonade or God forbid, Trov. Zurich could be put under pressure because suddenly somebody has a fantastic corporation with smart technology with an Amazon or the biggest car manufacturers. And I think that's what the insurance industry, if it doesn't want to fail its customers, has to learn in terms of cooperating and being fast and being more efficient, at being nimbler.

38:12 Karl: And ultimately for us as investors, what we're very excited about is that the insurance industry is really moving from a moment of protection to prevention to prediction, and that's a journey which is offering an enormous amount of potential. A lot of insurance companies have really understood it, but frankly, when you speak with the big organisations, they understand the opportunity. They just have to adapt to this kind of complexity in which they operate and which is quite bureaucratic and really take the opportunity. That's it. Thank you.

38:46 RM: Well, thank you very much.


38:52 RM: We've got five minutes for questions, so if you've got a question, I'd like to know what the question is, and who you'd like to direct it to.

39:00 Audience question from Will: This is for Nigel. Hi Nigel, I'm going to challenge your claims statement. I'm also going to refer to what Luisa said on this topic as well. Paying claims isn't really the only promise that you're making and not every claim is made, because when you do make a claim, often you get punished as a result with an increase in your premium. So if you're getting punished for making a claim, how is paying the claim necessarily meeting the expectations and our promise to the customer? And also if it's 99% of claims being made, so claims being paid, is that of all claims that are being made or is that of all claims that are valid or what's the reality behind the statistic?

39:43 Nigel: So, I'll let Arslan respond to his own statistics. I was reading the Billboard, that I truly believe in. Yes, we are advertising what we are engaged to do in the first place, because you lot don't believe us. I say you lot, myself included. Fundamentally we believe in the misconception that insurance companies are there to screw us out of a penny and not pay claims. It's generally untrue, and they've resorted to calling out the facts.

40:10 Nigel: It's back to an Obama speech a while back, he talked about climate change and he said “I can argue with anyone but let's start with the facts”, and if the facts that are reported by the press or elsewhere are saying, “another insurance scandal claim not paid” for whatever reason, guess what - all those millions of claims that do get paid, don't sell papers or make headlines. So the reason we're coming out with the advertising in my mind is, because the perception is that we don't pay. The reality is much different. So let's start with the facts. I think it's fair to say, you asked it, you know you answer to this but if we start with the facts in the first place, we can have a sensible debate first and foremost.

40:45 Nigel: Do you want to add anything to that? We are on teamwork!

40:50 Arslan: So to answer to the question is 99% of all claims. To come back to Harry, it is a perception issue and that's why I have to come back to my point earlier, which is about responsibility that we know that this is what we guarantee and what we promise our customers. We need to do that in a responsible way and to make sure that we can do that for the long term. That means do we have to give up a lot of opportunity in the short term? Absolutely, but that's the balance, we have to strike and that's where we need help, that's where we got guys like this, and we've got people in this room to help us get to a place where we are making things simpler, we are increasing inclusivity and diversity, and we are challenging things like the dual pricing issues.

41:40 Arslan: Look, that's a very challenging question obviously, but I think it has to come back to... There's every individual brings a certain amount of risk to a certain pool, and again we have to live with the law of large numbers, right? So we have to take that balancing act. Do some people get an unfair premium increase year over year? Absolutely they do, I'm sure they do, there are examples, but there's also somebody who's had a million dollar claim where the premium hasn't gone up or it's only gone up 50 pounds or whatever it may be. So I think you have to balance both aspects.

42:15 Nigel: I'll add to that if I may. I'll come to your question in a second. I'll add to it. I go back to our favourite man, Mr. Obama or my favourite man Mr. Obama, and I get back to the facts - maths don't lie. If there's any actuaries in the room, they know exactly why premiums will change and what risks are carried at what point and where. Our issue, and we'll come to this in the second half of the debate, is customers don't know number one, and back to the first point, customers don't always care, until they've made the claim and they go, "But why's my premium gone up?" Well, actually, number one it might because you've had a crash or you've made a claim or number two, the whole IPT thing that came out over the last couple of years, and the massive increase that we've had, people don't see it as IPT, people see it as the insurers put up my price. When actually rates might have gone down in certain instances. We've got to start communicating better. Call out the facts, stop playing with hype, Gareth. I've got the mic.

43:05 Will: Okay, so just on that, so I don't want to just pick on you but it's always the most outspoken people get directed the questions. Okay, so claims, right? I mean that's because it's the only reason that customers call you, you said, it's like a marriage, why don't you call us? Well, what the hell you're going to do for me if I call you without claim? It's like, "Hey dudes. I just want to chat. Make me happy." Come on, that's ridiculous. We're not going to call you for anything because you can't do anything. Secondly, okay if I may...

43:36 Nigel: I’ve got a really short memory so I'm going to forget the first question. Okay...

43:39 Will: Okay, secondly. On the whole claims issue, the reason that people get frustrated about you putting up the premium is, as you said, “you're an individual and you're in a pool of people”. Yes, you should know, it's about Harry's point to hyper-personalised insurance. You should know the risks, that's your job. So if I make a claim, you shouldn't put up my premium because you should have understood. It's like loss adjustment, it’s ‘after the fact’ risk management.

44:06 Will: No, no, no, let's get parametric. You ask all the shit you need, and you tell me what I'm going to get paid when I submit the claim, and then we are on a level playing field.

44:14 Nigel: Stop lying to me on your forms then for God's sake.

44:17 Will: I am not.

44:18 Nigel: Where is my car parked? In the garage. What bloody garage? We've all seen those things. So I do take your point. First and foremost, is anyone else willing to stand up here with me that says insurers are on the right side of the fence? Other than Arslan? Come on Arslan. Come on. There are a few people standing up, good on you. To answer your first question on premium and why it's going up. The first question wasn't it? I have a very short memory.

44:49 Nigel: So on a completely side affair, I worked in contact centres for years. What contact centre agents get to hear and deal with from people that will call them on Christmas Day, to go, "I want to chat" is fantastic, go and search out the charities that do it. It's not the answer to your question, I promise you, but the things that these guys do and deal with day in day out, is phenomenal. When you only call me when you're pissed off, irate at the side of a road, or have a leak, right? So it's not a great place to be called in. But one of the guys mentioned earlier, Karl mentioned it…

45:22 Nigel: Insurance companies are changing. We used to be years and years ago, way before the event, now we're at the event, we're going to get up to before the event – it’s all changing. Look at AXA what they're talking about with payer to partner. You look at other people's taglines every step of the way, whatever else. Look at vitality, let's get all those people that should be moving, that aren't moving, moving, we are becoming more informed. I was listening to the radio at the weekend and Vodafone were advertising V-home. You've seen the Neos things out there for the Insurtech community, with the smart home kit. Everyone's racing to get more insights and provide you with better information. And then you won't be calling them, they'll be calling you; “Hey...

46:02 Will: Will.

46:02 Nigel: Will, thank you. My eyesight is going as well as my hearing. "Hey Will, did you realise this, this and this has happened? If you do these things, it's in your interest, and by the way, we'll lower your price, or by the way, your price will go up. But give you the options and the choice." For anyone that follows Amazon Web Services, AWS, is the behemoth giant of a business behind Amazon's technology services.

46:25 Nigel: They will actively reduce your customer pricing without you asking. Imagine that in an insurance company. Imagine getting a call from Zurich, not putting you on the spot here, sir, I'm on your side, I promise; but imagine getting a call going, "Hey, rates are going down this month, we've lowered your premium." We're almost into the stage of a Trov where we've got per minute, or per day, or per cycle pricing. I think it's coming, personally speaking, so call us any time, I'm sure they'll talk to you.

46:52 Robin Merttens: I'm sure there are people in the room who say, "I can do it now." Nigel and Arslan, thank you very much for coming to the lions den. That generated some decent debate. So, look we're going to take a break. You will not be surprised to know, given the slight bias in the community, that 75% of you voted that the insurers are... No, I wasn’t going to trying to hide that stat. 25% say, even that's, actually...

47:29 RM: Yeah, come on those of you... Now you've heard Nigel and Arslan, you can change your votes. Two other things while I've got you. The next InsTech London event is on the 19th of November. It's a clinic. So we've got 15 advisors to come and provide free advice on a variety of topics. How to get R&D tax credits, what Brexit means for you, how to create a new product, what you should know if you're a budding entrepreneur. 15 of them, they're on the website now.

48:05 RM: We'll start ticketing immediately. If you're in the corporate world, or just have an idea or are a start-up, then you could get a lot of free advice in an hour and a half. There after, it's the, God, I can't believe I'm doing this already, the Christmas party. Christmas party on the 13th. We're looking for sponsors. We've got a venue, we've got it all organised, we just need a little bit of money in the kitty. So we're going to take a break now, 15 minutes. Part two is, who will own the future of insurance? Thank you very much.

48:40 RM: One of the most enjoyable evenings we had. That was a good cross section of views, and it's clear the fact innovating as an insurance company is far more difficult than most of us innovators appreciate.

48:53 RM: If you want to participate in events like this in the future, come to the InsTech.London website, we do these things once a month, and we are doing our very best to bring innovation to the insurance industry.

49:06 RM: At that point we took a break. We went to part two, where we asked the second question, "Who will own the future of insurance?" And we'll be back for part two in a short period.