5 Questions with Insurtech Influencers – Rick Huckstep
We continue the series of interviewing insurtech influencers to find out their views on the most promising start-ups, obstacles to market disruption, impactful and attractive fields for funding, and much more. We have already published stories with Robin Kiera and Paolo Cuomo, so don’t forget to check out these, too!
This time, we have a futurist, creator, and entrepreneur Rick Huckstep sharing his thoughts. Enthusiastic about the tech economy and a start-up investor himself, Rick believes automation and decentralised finance to be the most impactful fields in insurance to lead the way. He also points out that insurance as a sector needs an overhaul, since it is inefficient and hamstrung by old ways of working that are simply not fit for purpose in a digital age. Read on to find out more exciting insights from Rick!
Please name three of the most promising insurtech start-ups in 2021. Why exactly these?
1) Sugar Insure
Sugar is a great exemplar of insurtech. They are using technology to solve a genuine problem that isn’t addressed by traditional insurance. If you live in an informal dwelling, such as an unregistered house or a shack, you can’t get insurance. Earlier this year I interviewed Ntando Kubheka, the CEO and Founder of Sugar.
Hadiel is a digital health insurtech based out of Nigeria. The tech platform relies heavily on data-driven insights and machine learning to aggregate all stakeholders across the health insurance ecosystem. Like Sugar, Hadiel is providing insurance to an underserved market, making health cover both affordable and accessible.
Pula uses digital technology to provide easier access to insurance for small farmers across the mass market economies of Africa, LATAM, and Asia. These are markets underserved by traditional insurance products. They were named “InsurTech of the Year 2020” at the Africa Insurance Awards.
What is the biggest obstacle for insurance start-ups that holds back market disruption and meaningful change?
Over the past 5 or 6 years, I’ve seen many start-up pitches from insurtechs that all promise to “disrupt” the insurance market. With the exception of Lemonade, none of them are actually very disruptive. Not in the same way that ZhongAn has redefined insurance in China.
Lemonade stands out, because they redesigned an insurance business model that is genuinely different from the traditional model in the West - theirs is a vertically integrated business, operating a tech platform that administers insurance coverage in a convenient, customer-centric experience. And, their business model operates well within the Western regulatory environment.
For start-ups and incumbent insurers, the problem is that we have a catch-22 between the way insurers work and the regulatory environment they operate in. The tight coupling restricts disruptive innovation, because the regulations force a traditional insurance approach. But they also reflect, and protect against, bad behaviours that we’ve seen from insurers.
China broke this deadlock when they gave licences to Alipay and WeChat, and now they are more disruptive across the whole of fintech than any other country in the world. Unless and until Western regulators are willing to give regulatory permission to the likes of Amazon and Facebook, I don’t believe we will see any true disruption from insurtech.
If you were to establish your own insurance start-up, which problem would you solve, and why?For me, insurance is, first and foremost, a safety net. It’s a backstop you know is there and that you can rely on if something bad happens. In the 21st century, this “peace of mind” we get from insurance should be available and accessible to everyone, regardless of their circumstances. But it isn’t. Traditional insurance products have failed to meet the needs of the poorest and most disadvantaged people on our planet. If I was to start an insurance firm, it would be to make insurance fair, affordable, and accessible to everyone on the planet.
Which insurtech field will be the most impactful and attract funding in 2021?
Automation. Whether that is AI or robotic process automation, machine learning or language processing, any tech that automates the manual insurance operation is going to get traction. The reason is simple: the vast majority of insurance processes are routine and repetitive. Automation tech can replace human effort in 99% of the insurance value chain…and it will.The emergence of DeFi will take this one step further, subject to navigating the regulatory environment. Because DeFi (smart contracts on the Ethereum blockchain network) will not only completely automate insurance processes, it will also disintermediate the insurance ecosystem, removing redundant insurance providers from the value chain.
The future of insurance: what makes you hopeful, what worries you?
We will always need insurance. It is not a sector that is going to go away. But it is a sector that needs an overhaul. It is inefficient and hamstrung by old ways of working that are simply not fit for purpose in a digital age. Which is why I see a great future for insurance as technology is applied to streamline operations and adapt insurance to the “new normal”.
In a post-Covid world, agency is with the individual. The “one-size-fits-all”, fixed-term, restricted small print insurance product is not going to cut it anymore with a generation of side-hustlers who expect insurance to fit into their way of living.
Nothing worries me about the future of insurance, because I only see progress. It is not a question of whether, but when. This is an inevitable path.