We keep hearing about the how the insurance industry is being disrupted through insurtech tech and other players entering or threatening to enter the market, Google again raising their head in the UK. When I hear this news for other industries - say NetFlix / Amazon / for TV/film - it is all about growth, new channels, targeting and increased efficiency. However, these stories just do not seem to be part of the conversation in the general insurance arena, except for China that is.
The insurtech market in China isn't led by the small start-ups one might expect. What there are is large digitally savvy incumbents—or large internet companies—commanding the emerging and still-growing market. Certainly, big Chinese insurers such as Ping An Insurance, Taikang Insurance Group, and Sunshine Insurance Group do partner with small innovative companies, but they also aggressively take the lead and drive innovation internally. This is not the western model.
Maybe western insurers think there is enough insurance - the global figures point to that - not much growth - certainly not stellar growth pushing penetration across the world.
The global economy (2018) is circa $90 trillion GDP. Insurance (nonhealth) is around $3,900 billion or around 4-5% of the economy, with P&C coming in at $1,500 Billion.
These are BIG numbers, but should the industry be proud of them? I think not.
These numbers leave many businesses and people all throughout the world grossly underinsured, particularly in developing countries, these communities need an efficient risk transfer mechanism that is effective and focused on the small enterprise.
Is there any growth?
The overall growth for the past decade (2008 – 2018) was +3.0 % - which for ANY industry in the modern age is very low! Remember we have had the internet for over 20 years, we have had mobile computing for 10 years plus, we have had insurtech growth for 5 years. This is a low growth rate especially when the vast number of people in the world are simply not insured or under insured. To put this in perspective, and with a focus on the $1,500 billion P&C insurance sector, a majority of this insurance premium, around 40%, is emanating from the US property sector.
What are the reasons for low growth?
In 2016, the weakness of the European market was to blame for poor growth, while in 2017 it was that of the US market. 2018's dismal performance is due to the -3.4% contraction of the Chinese life insurance market, which has a global market share of 12%.
The effects of this poor growth in the global insurance is that the penetration (gross written premiums as a percentage of GDP) rate has followed a downward trajectory in the past decade, from 6.3 in 2008 to an estimated 5.4 in 2018.
This is odd. On the one hand, global risks are constantly increasing – just think of climate change, demography, cyberattacks or geopolitical shifts. But on the other hand, people and companies worldwide are spending an ever smaller proportion of their incomes on insurance. The result is an ever-widening protection gap, be it with respect to natural catastrophes, cyber risks, healthcare or pension savings.
Is the main reason for this in an inability of the insurance market to develop, market and and sell products to its customers? I think it is. This is the opportunity for a digital insurance company.
The opportunity is to develop insurance solutions, with straight through processing, which people not only need but that they want at a point-in-time and value because it enables what they are doing in the moment. Do this, and the company would own a space that is woefully underserved today. To develop the 'iPOD' of insurance - $1,000 dollars of insurance in your pocket! Do this and you would be working in a space that does not have competition.
Micro Insurance Company will be that digital insurance company.
Our vision fully supports our clients’ growth ambitions by limiting the impact of our services on their processes, whilst delivering essential insurance cover for their customers.
At Microinsurance we are focused on changing the way business insurance is developed and processed. We are insurance with AI delivered through API's. We are in the forefront of that change; developing policies by the season, job, by the hour, by the day and by the Km, thus fitting our model to that of the platforms and the way small and micro businesses see risk. We are unbundling business policies so that the cover offered fits with peoples and business needs or the actual job or process being undertaken. Making Business Insurance transactional.