Insurance’s Digital Tipping Point: Silicon Valley

Insurance a $5 Trillion Digital Prize
With $5 Trillion in premiums, an incredibly low level of customer satisfaction, aging infrastructures, an analytically based – high volume business model, and a “wait until we have to” approach to innovation, insurance is now fully in the sights of the most disruptively innovative engine on the planet, Silicon Valley.

Inside the Insurance Tipping Point – Silicon Valley | 2016
The tipping point for insurance is here, Over 75 digitally born companies in Silicon Valley including Google, and Apple are in the process of redefining the rules and the infrastructure of the insurance industry. Join us for an inside look at the companies and trends driving that tipping point and insights on how to capitalize on it at #insdisrupt.

It’s one thing to listen to all of the analysts talk about the digitization of insurance and the disruptive changes it will bring. It’s quite another to immerse yourself in the amazing array of companies, technologies and trends driving those changes. This post is the first of an ongoing series that will give you an inside look at the visions, culture and disruptive innovation accelerating the digital tipping point for insurance and the opportunities that creates for companies bold enough to become part of it.

A look Inside the Tipping Point

Venture firms are catalysts for much of Silicon Valley innovation, and insurance has their attention. Here are a few examples of firms fueling the digital future of insurance. Frank Chen, of Andreessen Horowitz sees software as rewriting the insurance industry, AXA insurance has established an investment and innovation presence here. Others like Lightspeed Ventures, Ribbit Capital, and AutoTech Ventures, are investing in data and analytics, new insurance distribution plays, and other technologies that will change the shape of insurance.

New Business Models
Companies like Metromile, Zenefits, Stride Health, Collective Health, Climate Corp, Trov, and Sureify, are using technologies to redefine and personalize insurance and the experience customers have with it.

Rise of the Digital Ecosystem – Expanding the Boundaries of Insurance
Digital Ecosystems are powerful innovation catalysts and accelerators with power to dramatically reshape industry value chains and the world economy. They dramatically expand the boundaries within which insurance can create value for customers and increase the corners from which new competitors can emerge. Silicon Valley is home to companies acutely aware of how to establish themselves as a dominant and disruptive platform within digital ecosystems. That includes Google who is investing heavily in the Automobile space with Google Compare and self driving vehicles, and has acquired Nest an anchor point in the P&C – Smart Homes market.

Fitbit who is already establishing health insurance partnerships. And let’s not forget Apple. The Apple Watch already has new insurance related partners. It has clear plans for the Smart Home Market, and has recently launched AutoPlay, it’s anchor entry into the auto market. There are rumors of Apple’s plan to develop an iCar. And that’s just what we know about. There are a host of other companies placing digital ecosystem bets in Silicon Valley as well. GE – who is driving the Industrial Internet of Things, Parstream, with an analytic platform built for IoT, The IoT consortium, Jawbone, Evidation Health, Misfit Wearables, icontrol Network, GM and its advanced technology lab, carvi, and DriveFactor, now part of CCC Information Services. Then there are the robotics, like 3D robotics, the RoboBrain project at Stanford University, and Silicon Valley Robotics an association of makers.

Customer Engagement and Experience – New Digital Rules, New Digital Playbook.
When your customer satisfaction and trust is one of the lowest in the world and companies like Apple and Google enter your market place, it’s really time to pay attention. There is a customer value-creation and design led innovation culture in the valley unrivaled in the world, and the technology to back it up. Companies like Genesys, and Vlocity are working on perfecting the omni channel expereince. Hearsaysocial and, declara, are working on next gen social media to help customers and the insurance industry create better relationships.

Many of the next generation of insurance products will be context aware, opening the door to new ways of reaching and supporting customers. Companies like mCube and Ejenta, are working to provide sensor based insight and the analytics to act on it. Trunomi, Beyond the Ark, and DataSkill via cognitive intelligence are developing new innovative ways to use data & analytics to better understand and engage customers. Lifestyle based insurance models are being launched like Adventure Adovcates and Givesurance, And some of digital marketing automation’s most innovative new players like Marketo, and even Oracle’s Eloqua are rewriting and enabling a new digital generation of marketing best practices.

Big Data and Analytics – Integrated Strategies for the New “Digital” Insurance Company
The techno buzz says big data and analytics are going to impact every business and every business operation. When you are a data and analytic driven industry like insurance that deals with massive amounts of policies and transactions that’s not hype, its a promise. The thing about big data and analytics is that when its approached in operational silos, it provides a tactical advantage. When a common interoperable vision and roadmap is established, it creates a huge strategic advantage.  That knowledge and the capability to act on it is built into the DNA of “born digital” entries into the insurance market like Google.

The number of companies working on big data and analytics within the valley is staggering. We have already discussed a few in the Customer Engagement section above. Here are a few more, In the area of Risk, RMS is building its stable of talent in the big data space, Actian is delivering lightning fast Hadoop analytics, Metabiota is providing epidemic disease threat assessments, and Orbital Insights is providing Geo based image analysis. In the areas of claims and fraud, Palantir, ScoreData, and Tyche, SAS, are adding powerful new capabilities for insurance. Improved operational effectiveness is being delivered by Saama Technology with an integrated insurance analytics suite, Prevedere with data driven predictive analytics, Volumetrix with people analytics, and Sparkling Logic to help drive faster more effective decision making.

Insurance Digitized | Next Generation Core Systems
With insurance boundaries expanding, integration with digital ecosystems, increasing reliance on analytics, and the demand for personalized and contextualized outcome and services based insurance models, core systems will have huge new set of requirements placed on them. The requirement for Interoperability between systems and data and analytics will grow dramatically. Companies like Guidewire, ISCS, and SAP are building a new generation of cloud based systems, Scoredata, and Pokitdoc are bringing new capabilities to claims. Splunk, Symantec, and FireEye, are addressing emergent cyber risks. And, companies like Automation Everywhere, Occulus Riff, Suitable Technologies,and Humanyze are enabling the digitally blended and augmented workforce. And there is the latest investment wave that includes, Artificial Intelligence, Deep Learning, and Machine Learning that core systems will need to incorporate.

Surviving the Tipping Point – Becoming One of the Disruptive Leaders
This is a small sampling of the technologies, trends and companies just within Silicon Valley that are shaping the digital future of Insurance. The changes these will drive are massive, and they are only the tip of the iceberg. On top of that an Insurance Tech meetup group open to all the insurance related companies within Silicon Valley was just announced by Guillaume Cabrere, CEO of AXA Labs and already has 64 members.

For established companies to survive the tipping point and thrive on the other side of it requires more than handing “digital transformation” off to the CIO or marketing team. It requires a C-Suite that has become an integral part of the community and culture building the digital generation of insurance companies. For technology companies and next generation insurance companies it requires building collaborative partnerships with established and emerging players. This blog series is designed to inform and accelerate that dialog and partnering formation.  It will include a series of interviews with disruptive leaders from industry and Silicon Valley. If you or your company would like to be a part of that series, please let me know.