In my annual run down of the year that was, and things to look forward to - I like everyone else have missed far too much of what we love so much, but adapted and got on with it, travelling the world from the comfort of my own chair. I also watched our industry go through great highs and horrible lows. Some of that is reflected in this years predictions as leading indicators as to what we need to do and will fix through 2021 and beyond. I've started recently to use one word to describe this year, quite simply - 2020 was relentless. How was yours?
Before we get into this years predictions, as usual heres my scoring of 2020's predictions!
I honestly have been trying to put this one off given 2020, but here goes. See here for the full predictions, my quick report card below 👇🏻
InsurTech's fade away - We have seen some startups leave us this year, less than I thought to be honest. I do wonder how the funding runway survives through 2021. Marks 1/2
Move innovation externally - I think given COVID, this hasn't really happened at all. If anything, innovation units changed shape, and got shut down. Marks 0
Collaboration slows down - I've definitely seen this through 2020, mainly because our focus has been on surviving 2020 and ensuring BAU, reemphasising that some insurers are notoriously hard to work with and slow when it comes to decision making (note, not all of them!). Marks 1
Convergence of FinTech, InsurTech and Wealth - I was hopeful for this, but I don't feel its here yet at scale. We have pockets of examples, when you look to the likes of Revolut, with 10m customers you can do all 3. Marks 1/2
Invisible and embedded - Still plodding on. This feels like my pandemic or cyber risk item on the Annual WEF global risks report. I'm going to keep it on the list until it actually comes true. An encouraging number of partnerships and new capabilities gives me a generous result. Marks 1.
SME, SME, SME - I remain super excited by this, globally. Has anyone cracked it yet, not really. I remain optimistic, based on what I have seen this year as well as the many legal cases this year. Marks 0
Peak Conference - This happened for the wrong reason, but still was correct. As we all moved to Zoom, Teams, Meet etc - only a few of the great conferences survived online, and with that a welcome collaboration between ITC and DIA. I do hope to get back to them in person in 2021. Marks 1
Fewer but Larger Investing rounds - I was right on the money on this one, our research in Q3 proved it too - read the full report here. Marks 1
Health - COVID Infused, this trend has just started, and has even more focus going into 2021. Marks 1
escooters will work - Darn it, I hate being right sometimes. Another COVID accelerated outcome, with trials around the UK, and more to follow with them expected to be legalised, shortly. They are here to stay. Deal with it Nigel. Marks 1.
The year of the EV. This was helped by the UK government bringing forward the deadline to 2030 to scrap petrol and diesel vehicles. A great read here, but sales of EV's are up on last year and continue to rise. We also expect that the USA will rejoin the Paris Climate Accord under a the new administration which will further accelerate this in 2021. Marks 1. (don't mention the Apple car yet, still a few years off)
2020 Score: 8/11 - 73% - I'll happily take that.
2021, Looking ahead - so here goes!
1. Let's fall in love with Insurance
If 2020 taught us anything, is that insurance matters, really really matters! And when it doesn't do what you expected it to do, we lash out and clam it's not fit for purpose, it was sold incorrectly or anything but, I didn't read (and if I did) I didn't really understand what I was buying.
The UK Business Interruption Test Case is a wake up call to the industry on so many levels, especially for small businesses. Many other cases are ongoing around the world too. Add to that, event cancellation, travel disruption and wedding insurance plus many others that have all kicked into action. Back in April, the ABI estimated payouts to be in the region of £1.2bn in the UK. Motor insurers across the world refunded premiums, I tracked many of them back in April here which I found super encouraging- with many thinking and looking to why insurance is not more of a utility? This was a positive move by many global carriers (but very view UK ones!)
A large part of this is that Policy Wordings simply have gone too far for too long, regardless whether Direct Carrier or Delegated to a Broker, we our out of control, and if we are not out of control, then we don't really know in some case what we are signing up to. We need to know whats included and whats not, this is clear across all business lines - more importantly, we need to ensure people on all sides of the table understand these if we are ever to fall in love and build (rebuild?) Trust. The SARS outbreak in 2003 had us rethink things, tighten up wordings, but not in a uniform and consistent way. In many cases, this is no different to Silent Cyber or Solar Flares. For every new event/issue that emerges - we can't keep going back over the same old costly process every time. This will come into further scrutiny by the regulator in 2021.
2. Education & Awareness
To fall in love, weneed to talk & engage more. During the pandemic, communication has been consistently poor - (see our SME research here). We heard from practically everyone over the last year that we have ever engaged with or given our email address too, other than our insurance company or broker (I appreciate a sweeping generalisation, and not true in all cases). Net result, we need simplicity and transparency in the industry, and we need to start now.
Communication cant just be about up-sell/cross sell - we also need to look to education & understanding around Insurance (and broader financial services, much much earlier). I look at my kids and see they will come out of school knowing about COS, SIN, TAN and many other things I hope - but wont know how or why to use a bank account, change a plug or car tyre, or importantly in this instance - the purpose and need for insurance, how you mitigate and manage risk.
As an industry, we have moved a lot here already - but we have a long way to go. Especially if the embedded and invisible nature of insurance takes off as we expect. It's at risk of being further and further away from the consumers or business owners mind
2021, we will see people get smarter & wiser when it comes to insurance. As an unintended consequence of this, we may see a resurgence in agent and broker channels to support some fo the demystification.
3. Access to Talent
By agreeing we need to address #1 above, starting with #2, we will ultimately have a larger talent pool of people who want to and will come into insurance over the next decade. For the avoidance of doubt, this is not a short term fix. This will take a generation or worse, multiple generations. But there is an intrinsic link between all three of these, an ongoing & continuous direct correlation. As our industry relies more and more on technology, partnered up with deep insurance domain - we need more people, lots more people - and in todays digital age when everyone is remote, competition has never been more fierce. Talent pools are now global, no longer restricted to your local area. Your options and competition may be 1,000's of miles away.
To attract great talent we need to change the narrative, rebuild trust, make it a inclusive and diverse environment and show that we are tackling problems that really matter, from global climate change to keeping businesses moving and people alive and healthy. As a result, we will see more insurers focus on brand and reputation. It never more apparent for me than recently when interviewing industrial placement candidates for Deloitte, they knew more about and importantly were inspired more our values, purpose and actions than the actual capabilities, practices and client work we do. This will be a key focus for insurers in 2021, with many including Aviva already making moves, see here for their most recent appointment around brand and corporate affairs. A newly created role for Aviva.
4. Acceleration vs Disruption - Digital Indigestion
2020 meant everything was accelerated. The things we thought would take years, got completed in months. After all, necessity s the mother of all innovation. It was amazing to see the speed of change in an industry, frankly not known for this.
That said, the change we have seen is acceleration, not true change. We, like many industries are doing the same things in a digital way. We have not re-imagined, rethought, or in many cases challenged what or why we are doing in the first place. Zoom, Teams, Google Meet replaced physical face to face meetings. Collaboration tools replaced whiteboards. Online forms replaced paper ones. For many, there is no going back to the 'old' ways of doing things. My point here is that the old and current ways in most cases are the same, just digitised. I truly take my hats off to the many teams that got on with this, worked tirelessly to enable remote working, purchased laptops, remote desktop tools and generally in most cases allowed business as usual.
As we enter 2021, I expect to see an element of Digital Indigestion. How do we cope with all these things we put in to patch things up, make stuff work and just keep trading? what are the implications? are they what the business needs now and in the future? Are they effective and efficient? I expect many of these now to be reevaluated and held up accordingly to see if they will or should survive the test of time. Are they needed still, can they be simplified or changed entirely? Most of this is purely from a process/technology lens - and doesn't yet take into account the human element of change needed.
Whilst 2020 was relentless and we achieved so much, 2021 will in some ways slow this down again, re-look, reflect and address the areas the truly make an impact.
Quite simply, given our funding review earlier this year here - highlighted there were zero net new startups in the H1'2020. Add to that, 80% of the funding went to the top 10 InsurTech's, that simply means there are a lot of mouths to feed with very little money left, even if funding surpasses, as we expect it to that of 2019. Hardly surprising, the world is a very different place right now, InsurTech has highly matured, some markets, lines more so that other. We have seen IPO's from Lemonade and Root (congratulations Daniel, Alex and respective teams!) with am IPO filing from Oscar Health this week on the health side. Hello world! This time last year, WeFox raised $110m, Series B - and this year continues its stellar growth with a profitable 2021 ahead. InsurTech has firmly landed on the lawns! As I write this, Lemonade are cruising through $130 per share and over $6,5bn market cap! here.
A whole flurry of new deals emerged in the last few weeks too, across traditional incumbent players consolidating, carriers buying InsurTech's and InsurTech's by InsurTech's including:
RSA acquired by Intact - here in a mega deal.
InsuraMatch acquired by Travelers - here
Brolly acquired by Direct Line earlier in the year - here
Drover acquired by Cazoo - here
Drivit acquired by Zego - here
Juniper Labs acquired by Next Insurance - here
RiskGenius acquired by Bold Penguin - here
I expect this to accelerate into 2021 for a number of reasons; from funding runways reducing, insurer decision making slowing and bandwidth to focus on innovation and new tech drastically reducing, given the focus on what 2020 delivered us. I also think with the digitisation push of 2020 COVID, this enabled many of the traditional carriers to level up with InsurTech's that whilst had a strong initial proposition, they were still just a feature of a larger play. InsurTech's dominance for 2021 will focus on those that enable further existing carriers vs full stack competing ones (despite the success of Lemonade, Root, WeFox and soon to be Oscar) or those that have specific communities or niche groups they serve. With the latter, the question will always be - how do we get to scale still?
6. Healthcare is the real winner in 2021
From listening to customers, colleagues and partners over the last 12 months, it feels like Health is the big winner ahead. Like life insurance, whilst thinking about mortality and what happens if? - we have also turned to our own health. I remember early on, a UK National Press Headline read something like - coming out of lockdown, you were going to emerge a drunk, chunk or hunk!
So this year whilst the industry has moved mountains, we ourselves haven't moved as much, or in some cases - not at all. This in itself has had a profound impact on our health, physical and mental. Insurers have stepped up and then some in this category, both for our own thousands of employees across the globe, displaced to home. I recall listening to Ali Parsa from Babylon Health on Secret Leaders Podcast talk about how pre-pandemic an MD in the USA said people would never use tele-medicine, and as soon as the lockdown hit - there was a gold rush. This to me is the Zoom of our industry.
In the same way we got people home working, practically overnight - I think we will have equal challenges or desire in many case to get people back. Primarily because we know in many cases we can work remotely, don't need to visit a gym, go to a Dr or Dentist surgery, and in many cases will do what we can do avoid it. This year alone, I have done at at home DNA test with 23andme, a blood test with Thriva and keep looking to by a Whoop Band to give me more data than I care to imagine (additionally they raised another $100m in Series E funding in October). if my healthcare provider could take all this, I would let them have it in a heartbeat. I'm pretty sure I know more about me now than they do, which I would love to reverse - they are the experts, take all this data and tell me how I can be healthier, live longer, not wait for my call or claim.
Some proof points for me, beyond the forthcoming Oscar Health IPO include.
Physical Health with Peloton - right time right place, and for those that know and follow me, already know I'm totally addicted. Their IPO in September 2019 at $29 per share, now trading at over $150 per share. They just doubled down on production with a $400m acquisition of Precor, and now with a Market Cap of $41bn. Apple of course also launched Apple Fitness as many other gyms, yoga studios and more all turned to zoom. Those that have vertical integration are still winning though in my mind.
Mental Health with Calm - now worth $2bn with their latest $75m investment here showing that mental health is more important than ever and companies large and small need ways to help individuals manage their own mental health.
Brain Health with Heights, from Dan Murray-Serter and his team, recently raising over £1m in just 20mins through crowdfunding. Heights is a new smart supplement, focussed on your brain health. A subscription service thats packed with goodness and a podcast of health experts and brilliant insights with supporters including Stephen Fry, Jay Shetty and Dr Rangan Chatterjee to name but a few.
Remote Dentistry - Instant Dentist from Aalok Shukla and Lucie Marchelot Shukla and how they are bringing Remote Dentistry here really surprised and impressed me with the level of engagement and capability of things you can evaluate and see, without ever sitting in a dentists chair - music to many ears I'm sure! Add to this, cosmetic care such as Straight Teeth Direct, also from the comfort of your own home, very similar to Invisalign. Super Impressive and excited to see where this goes.
Finally, Swiss Re's new partnership with Google Verily demonstrates how insurance is further partnering with Big Tech to drive clear benefits for customers, as well as their recent announcement of a verily patch - more on that here. Again the exciting thing for me is the combination of hardware, software and services into one proposition.
Theres actually a great webinar with Bupa led by Mark Allan, Chief Commercial Officer joined by their new Group CEO, Inaki Ereno, Dr Neil Sikka, Dr Luke James, Richard Norris and James Sherwood in which some of these are discussed. See here for the full replay on Digital Health Insights and where they see the market in 2021.
I'm not sure I should include this in health, but hey, 2020 and all! - Pet Insurance is on a roll! With everyone at home, I just need to look at my facebook feed, immediate friends and the price of pets and it seems the entire world has bought a dog (except us, Emma wont let us!). The reason I mention here is I genuinely believe a lot of similarities between human health care (systems, processes etc) and pet healthcare. In the same way humans have turned to TeleMedicine, so too have our pets with 24x7 video calls to vets and much more. Bought By Many have partnered with FirstVet. Others including everypaw and many others have followed suit offering the same service. I mean after all, we love our pets more than we love ourselves sometimes!
I should also say a huge thanks to the online community for continuing to motivate each other from Bobbie, Sharon, Nick, Pat, Ed, Chris and many others! We truly have kept each other moving, when some days - we never really wanted to!.
7. Life & Protection grow
As well as a focus on health, the pandemic this year has questioned our own mortality and put in place consideration and protection from those we may leave behind. Life insurance claims payout due to covid have increased
Much focus and funding will shift from P&C to life, protection and health. We have seen some of this already with the likes of Dead Happy - making life insurance simple, YuLife - rewarding living - and the InsureTech Connect Global Winner this year, bequest - which I think is a fitting accolade for James and the team who are bringing Life insurance, wills and family wellbeing, all under one roof! (another push to simplification and composites!)
8. Embedded and Invisible finally lands
While I have been banging this drum for years now, from my narrative on Value Added Services, to Loyalty the icing on the cake still holds true for me, now more than ever. Simon Torrance recently put together a great article on Embedded Insurance, well worth a read - highlighting the $3 trillion market opportunity.
This year we have seen huge advances from folks like Swiss Re with iptiQ and IKEA, new motor partnerships with Daimler, partnerships with PingAn, back in the UK John Lewis partnering with Munch Re Digital Partners, a(nother) rumoured Tesla Partnership or Insurance launch, and thats not even starting on the GAFA's of the world. Traditional Insurers creating platforms for partnerships, a great example from Nationwide in this video here as well as others such as the Chubb Studio - described as Insurance in a box.
Let's face it, this has just begun and is only going to grow, exponentially! Largely because we have failed at #1 above! We don't Love insurance (yet!), and if we don't address it - it's more of this. Not a bad thing for those that that can adapt quickly and provide capability and capacity.
One of my most memorable conversations this year was with a colleague who when asked about her insurer responded with 'I just don't care enough'. Truly heartbreaking for someone who loves this industry so much. We have to do better.
From Angela Strange, A16z, - do you want Insurance with that to ecosystems and much more, I have had a tonne of fun this year helping non-insurance companies define and build insurance propositions (more on that in 2021!) and can only see this growing. I wrote about it earlier this year when Amazon launched their Care Hub - will the winner in the future be those that own distribution and access to the asset, be it the home, car, truck, fleet, ship, building, rather than layers and layers of additional providers. Sure we will always want choice, but how much - when does convenience and ease take priority when we are already time poor?
We just need to look at NeoBank's like Starling who recently hit 2m new customers, who have continued to grow both their Personal and SME market place offerings, both including multiple insurance lines from mobile to motor to health and life. Almost in line with what I have highlighted above. It's making me think, have I been too short term focussed or are Starling ahead of the curve?
and that's it! What do you think, do you agree, have I missed anything obvious, focussed too much on the short term or are too far out whacky that they can't be true? (I honestly don't think the latter this year).
Looking for some additional perspectives, check these out👇🏻
As always, many of of my friends throughout the industry make similar predictions. Here's a few of my favourites
Matthew Grant & Robin Mertens from InsTech London this year crowdsourced the Insurance Predictions, with an all-star cast from around the market - a great event to re-watch and look out for the post on it soon. Spoiler Alert - mine is #1 above, lets fall in love with Insurance again!
Outside of Insurance, look no further than Kara Swisher and Scott Galloway from Pivot Podcast and their Big Predictions for 2021 - write up here Always good to look outside our own wheelhouse to see how the rest of the world is reacting, and these two are my favourite!
and of course, look out for our own InsurTech predictions show in early Jan with InsurTech Insiders here which we recorded a few weeks back. Thanks Hanna, Sarah and Alex.
If one thing has encouraged me in 2020, is that the community is stronger than the individual and the global InsurTech community brings it by the bucketload - delighted to be a small part of it.
Look forward to your feedback, challenge and thoughts as always, as well as seeing as many of you in person through 2021!.
Nigel Walsh | @nigelwalsh