Matteo CARBONE, Founder and Director, IoT Insurance Observatory

XPRIMM: Digital and focus on consumer are the game changers for insurance markets nowadays. This "wave" will eventually "hit" also the CEE and CIS markets. How should insurers prepare for this wave and what are the first steps to consider?

Matteo CARBONE: Let's start with the strategy. I believe all the players in the insurance arena will be insurtech - in any region - meaning organizations where technology will prevail as the key enabler for the achievement of their strategic goals. "All the insurance players will be insurtech" is the title of a book I published a few months ago and it has continuously been in the top 3000 bestseller management book on Amazon.

XPRIMM: Western European companies are working to adapt to the rapid changes we witness today. In your opinion, what are their achievements so far and lessons learned to be considered also for the CEE&CIS players?

M.C.: The importance to don't fall in love for a technology: any solution sooner or later will become obsolete; any investment sooner or later will represent a legacy. The innovation is not a final destination, it is a journey. You cannot stop to innovate. Innovate or die.

XPRIMM: Which are, in your opinion, the main success factors in adopting the latest digital technologies in the insurance business? Where are the main challenges lying?

M.C.: To focus the innovation effort on the achievement of strategic goals. I developed a few years ago a framework to evaluate any InsurTech initiative based on 4Ps: on technical Profitability, Productivity, Proximity with the clients, and Persistency of the book of business. Why to invest resources in something is not impacting on any of these aspects of your business?

The main challenge is to resist to follow the hype. It is obviously easier to create and follow a checklist of the most quoted buzzword than to develop critical view designing the approach which fit better. It is easier and less risky from a managerial perspective replicate what others (maybe the market leader) are doing than to propose something different motivated by your view.

XPRIMM: In your opinion, is the fast spread of these technologies depending also on the local culture? Which are the factors that explain best the significant differences that exist even among mature insurance markets in what the latest technologies adoption is concerned?

M.C.: I think each market has his specificity and must find the technologies which fit better with its needs. That being said, there are contexts where the innovation is promoted by the availability of capital, tech skills, more friendly regulation etc, ...

XPRIMM: In the last few years, 1500 InsurTech startups collected funding of about USD 19 billion USD. What would you advise InsurTech startup founders?

M.C.: To do their homework and to study the insurance fundamentals. The higher your knowledge, the higher your ability to innovate the insurance model. Obviously, you need to deal with some mental bias due to that knowledge, but ignorance is not a good thing to deal with the insurance business. I'm shocked when I'm talking with InsurTech folks who confuse the combined ratio with the loss ratio - affirming that combined ratio describes the difference between insurance premiums collected and amounts paid to the customers due to claims - or who ignore the concept of insurance float.

XPRIMM: Recent financial results in the US market has shown that some important start-ups are losing money and they did not show so far, a great underwriting result. Do you think this will change in the next couple of years?

M.C.: Each player has his history and his specificity, so it is first of all difficult to generalize. When we talk about the future, we must consider how all of them have great teams and a pile of cash to finance their trial & error exercises. I did - together with Adrian Jones - an analysis of the income statements of some of those players. One key takeaway is the necessity of more realism when we digest the words of a founder before standing-up all together and clapping the hands. Their announced superiority of their business model in addressing underwriting or claims management, as of ability to influence behaviors, as of other special effects are not here today, are not current capabilities are fascinating and ambitious wishes.

The figures have shown these approaches haven't demonstrated to work better than the traditional ones as of today. Let's see how they will improve themselves but let's wait to see the wishes become true before to choose an idol to follow.

XPRIMM: Interned of Things, Blockchain, Artificial Intelligence, Drones, Mobile - which one do you think will have the biggest impact on the insurers' business from CEE & CIS in the forthcoming period? How can insurers create their value proposition?

M.C.: If I must pick one, I have to say Internet of Things. But I'm biased in that answer. I dedicated my career to spread the innovation culture and promote the adoption of this technology creating the IoT Insurance Observatory. It is an insurance think tank specialized on the insurance IoT has aggregated more than 50 Insurers, Reinsurers, tech players, and institution both in North America and Europe. It has provided a unique international perspective, a constant update on the best practice and pitfalls, and connected people and ideas to help them to understand the opportunity to use of IoT in the insurance value chain. In a nutshell: some insurers have been capable of improving the technical profitability through the usage of IoT data on their processes, some insurers have done an incredible job in enhancing the proximity and the interaction frequency with their clients leveraging their data, others have created and consolidated knowledge about risks and their customer base.

XPRIMM: Currently, telematics is not very popular in the CEE or CIS markets, for example, in Romania there are couple of thousands, while in the Russian market about 50,000 of car owners have "smart" hull policies. What are the chances for the improvement of this segment, considering the low level of premiums?

M.C.: Telematics - like any other insurance IoT approach - is based on a bundle of an insurance contract with services (based on IoT data). The same data necessary to deliver the services allow the insurers to generate value improving the way they asses, manage and transfer the risk. This value can be shared with the customer through incentives, cashback, and discounts in order to deliver superior value proposition to the customer. So your point is correct: the lower is the premium compared to the service cost, the lower is the potential to generate these synergies. But the cost of the technology is reducing, so many things - that were "impossible" a few years ago - can also be done in the markets characterized by average premium lower than the western one.

XPRIMM: You are one of the most influential voices in InsurTech and telematics. What motivated you?

M.C.: I love the insurance sector and I enjoy so much the discussion. I'm spending more than 2 hours daily - fragmented in thousands of micro-moments - discussing with the almost 170.000 insurance passionate follows me on LinkedIn and Twitter. I took 200 flights in the last 12 months to discuss insurance innovation with the members of my IoT Insurance Observatory and at more than 40 insurance conferences from San Francisco to Dubai. You can't do this if you consider it only a job.

Related articles

Lloyd's Brussels subsidiary granted regulatory approval

Lloyd's announced its Brussels unit has received license approval from the National Bank of Belgium. Vincent VANDENDAEL will take up the post of CEO of the newly established Lloyd's Brussels in addition to his role as Lloyd's CCO.

2018-05-24

TALANX reconfirmed its FY2018 outlook for the Group's net income

Hannover-based TALANX Group announced its Q1 GWP was up to EUR 10.6 billion, 8.3% up y-o-y, while the Group net income dropped by 8.4%, to EUR 218 million "mainly as a result of the one-off effect of the US tax reform as well as the higher share of profits attributable to minorities".

2018-05-17

ALLIANZ 1Q results are on track to meet FY 2018 targets

German insurance group ALLIANZ announced its 1Q 2018 operating profit was down 6.0% to EUR 2.8 billion. "The main drivers for the decrease were EUR 142 million currency translations and EUR 148 million benefit in the prior year related to our corporate pension administration".

2018-05-17

CROATIA Osiguranje, 1Q2018: net profit up by 50% y-o-y

Adris group's insurance arm, CROATIA Osiguranje, posted a net profit of HRK 101.5 million (~EUR 13.7 million) in 1Q2018, up 50% y-o-y. Its consolidated GWP went up by 7% y-o-y, to HRK 1.10 billion (~EUR 148.6 million).

2018-05-10

ON THE MOVE

TOP EVENT

FIAR 2018 - Motor Insurance Conference (I & II): with the right use of technoloogy, clients' expectations and MTPL insurer's profitability may go hand in hand

The first and second parts of the Motor Insurance Conference taking place at FIAR 2018 focused on the new MTPL Law in Romania and the way it changed the market after almost 1 year of implementation, as well as the consequences of the new legislative framework and the operational challenges this brings, but also the most suitable solutions for balancing regulation, insurers' appetites and customer expectations on the MTPL market.

16.05.2018

FIAR 2018: Brokers' Conference (II): digitization and technology are needed for efficient operations, but will not replace the human touch in consultancy

The second part of the Brokers' Conference taking place at FIAR 2018 analyzed the impact of European Union's legislative overhaul - IDD & GDPR -, also bringing into debate study cases and real-life scenarios of what the brokers face on the market, and, last but not least, trying to see whether digitization and InsurTech could truly lead to disintermediation.


15.05.2018

Brokers' Conference (I): Until 1 July, when we will see the final version of the IDD, we cannot say for certain if we are ready and how ready we actually are

The second day of debates at FIAR 2018 started with The Brokers' Conference, the event dedicated to the mediation market in Romania and in the CEE region. The first part of the conference focused on a market overview and also analyzed the challenges of the IDD implementation, as well as the potential impact of IPID for MTPL and PAD.

15.05.2018

INSURANCE IN A DIGITAL WORLD Conference: capacity, consistency and culture are the three key success factors in the digital transformation of insurers

The INSURANCE IN A DIGITAL WORLD Conference, taking place at FIAR 2018, brought into debate the impact of digitization on the insurance industry. The first part of the conference focused on risks & opportunities of digitalization for both industry and consumers, as well as case studies and best practices: BigData & IoT, BlockChain, Peer-to-Peer, and AI.

14.05.2018

Insurance Market Trends Conference (II): GDPR and IDD, European regulations affecting all business lines, as well as the compliance with the Solvency II framework, are the main challenges ahead for the Romanian market

During the second part of the Insurance Market Trends Conference, taking place at FIAR 2018, the debates focused on the current situation in Romania and the sustainable development for a growing and stable insurance market, as well as the challenges and opportunities for the local insurers.


14.05.2018

See all