Zurich Group invests in UK insurtech My Policy
Founded in 1995, My Policy is a prominent and well-established UK provider of data analytics and telematics insurance. The collaboration with Zurich Group, Switzerland's biggest insurer, will enable rapid growth of My Policy's recently launched usage-based product, JURNY, a pay-per-mile policy where consumers only pay for the miles they drive that delivers tangible real-world savings for consumers.
Zurich Group, which was founded in 1876, is a trusted European insurance giant. The investment in My Policy is a strategic move for the group, as it moves towards further digitisation. The completion of the investment will be confirmed before Q2 2021.
The collaboration of Zurich's existing underwriting experience and My Policy Group's high-quality data analytics and product design capability, including innovative products such as JURNY, looks set to be a win for the insurance industry.
The partnership ensures the continued support of Inflexion, a leading European private equity investor, as a shareholder in the group, as My Policy grows and provides solutions for the next generation of motor insurance.
The move will also result in Zurich's telematics equipment provider, Bright Box, being implemented into the My Policy model, generating opportunities for future partnerships with BrightBox's customers. These already include several international original equipment manufacturers (OEM).
My Policy and UBI
Usage-based insurance (UBI) coverage is becoming increasingly popular. My Policy operates a black box service where a device stored in the vehicle monitors use and the maintenance health of the car.
The market for UBI motor products is expanding globally and is mainly motivated by changes in driving behaviour. According to , the global UBI market is estimated to grow at a CAGR of over 29% to reach a market value of $190bn by 2026.
The market for telematics and UBI policies have been given a boost by the pandemic as driving habits have changed dramatically over the past year. An analysis of the UK driving behaviour by My Policy during the 2020 lockdown revealed, at its peak, a national decline in mileage of 63%.
However, before COVID-19, driving habits were already changing, with households driving less per week than in previous years. An estimated 40% have also considered installing telematics because of the cost-cutting benefits the technology provides.
Speaking about the collaboration,of My Policy, said, "In our ongoing effort to tailor our insurance to consumers' needs, we are aware that increasing our usage-based offering will benefit a greater number of clients as driving patterns change in 2021 and beyond.
“Zurich's investment in My Policy enables us to significantly boost our capabilities and this, combined with My Policy's new pay-per-mile platform, JURNY, and the ongoing support of Inflexion, will help accelerate our growth plans further and meet changing customer needs."
, CEO of Zurich Insurance Mobile Solutions, added, "Our collaboration with My Policy further highlights our commitment to providing user-friendly products to our customers in an evolving world. My Policy Group offers a smarter way for customers to insure their vehicle, whilst also giving them more control over their insurance costs."
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.