Article written by Dexter Cousins

Insurance On Demand: The Future of Insurance 002

I welcome Mitch Doust, Global Head of Business Development with Trov, an innovative insurance on demand product and one of the most talked about Insurtechs on the planet.

Mitch has a unique background. When we first in 2008, he was an auditor with EY. It was very clear, even back then, that Mitch had a lot more to offer the world than reviewing financial statements! A move to Suncorp gave Mitch his first glimpse of Insurtech, as part of the Suncorp Ventures team. What followed is a global adventure and Mitch making a big contribution in the startup and Insurtech scene.

Can you share a little more about Trov?

MD - People know us for our insurance on-demand mobile app. It gives customers the power and capability to insure individual assets, one item at a time, in any time increment or fashion that they want.

So simply go to the app, select an item you wish to insure and turn protection on and off as and when you want. The app allows us to track the time insured all the way down to the second. Customers can, in real time, initiate, manage and cancel policies, as and when they want.

How did Trov begin?

MD - Trov didn't start out with a mission to provide an on-demand insurance product. When we started five years ago, the central thesis was very much around cataloguing information about the assets people owned. Then figure out ways in which to use that information to empower our user base.

From the concept of creating value for our users, we created the mobile app. Then, started to think about how we could use that information to deliver even more value to customers. One of the things we discovered was a need from people to protect, on a small scale, physical things.

We also noticed a big shift in lifestyle and behaviours. The way emerging generations engage with insurance is different to older generations. Young people are not buying houses or cars as they used to. However, they are spending their money on things that are important to them. Today, young people tend to live a more mobile and global lifestyle.

Upon realising this shift, we set out to create a product that fits into the millennial lifestyle. Thus, the Trov product was born. Trov is live in Australia and the UK. We are about to go live in the US. The plan is to go live in Canada and Japan next year and then Germany after that.

We hear a lot about the Lemonade story here in Australia. There appear to be two very polarising opinions.

It's an amazing product and will disrupt the major insurers.


Great marketing but no different to any other insurer.

What kind of reception has Trov received?

MD - Trov is often talked of in the same breath as Lemonade. We love what they are doing from a user experience perspective.

Both Trov and Lemonade are designing a product for a younger generation, providing access to better insurance experiences. However, Trov are approaching the problem from a different angle. Lemonade is taking a high-level view on change in the insurance business model and creating a fantastic customer experience, which is a great thing to do.

Trov has taken a different approach. Instead of using an existing insurance product we decided to create an insurance product from scratch and design it on behalf of the customer. We began by atomising an insurance product down to the smallest possible part. Our intention being to create a product that could be flexible, dynamic and relevant to customers. We wanted to design a product where we could recreate other insurance products from a fundamental version. Our theory being that once you break the insurance value chain down to the smallest possible unit, you can rebuild it in whatever form you want.

Trov’s core innovation is;

A better user Experience.

An underlying software platform that enables us to price and deploy risk products in real time, down to a very small unit of time.

People assume the on-demand product delivered by our mobile app is the innovation. However, the back-end platform is as much of an innovation as the product.

There is a lot of interest in the Trov model.

Who are your key partners?

MD - When Trov launch in a new market, we always require underwriting capacity as we are not a licensed insurance company. Suncorp is the inaugural insurance partner for the Australian market. And were instrumental early on in helping us to think about how we should design an insurance product and experience for customers.

Trov partner with AXA in the UK market. We have a broader strategic partnership with Munich Re which has opened the door to the USA. Munich Re support Trov in other markets and on other products.

How have you found the appetite for collaboration and innovation with large insurance companies?

The appetite is there. Since Trov started, the whole Insurtech scene has exploded. It's now a massive industry, separate from the insurance industry. We have spoken with every major insurer globally. And every one of them has a desire to be innovative.

Where the rubber hits the road is in committing the resources and showing the risk appetite to innovate. Insurers are more than happy to get into a conversation about innovation, execution is far tougher. Many Insurers become constrained by their internal processes and IT systems. It takes a certain amount of will from key decision makers within these organisations to get things across the line. At certain times, you need highly respected people to put their reputation on the line.

That's probably the biggest challenge right now.  But that is symptomatic of many industries, not just insurance.

What is your take on the role Artificial Intelligence will play in the insurers of the future?

MD - There are huge implications for machine learning and AI that will eventuate in the next couple of years. Without a doubt, they will have a big impact on how insurers run their business.

The prevalence and advancement of AI and Machine Learning technologies will only exacerbate some of these issues. There are obviously huge opportunities for these technologies to supercharge the analytical tasks that insurers already perform. However, I think the biggest threat will come from outside the insurance industry. As I mentioned before, the insurance industry and insurance companies have a strong bias towards their own data.

AI and Machine Learning will enable other companies, with access to large datasets, to find causal or correlated relationships between seemingly abstract factors and risk. It will create more effective and efficient risk measurement and pricing capabilities. Think telematics in cars. Could Tesla, as an example, provide a more effective car insurance solution than a traditional insurer.

Machine Learning techniques enable someone to extract inference from huge amounts of data without an initial hypothesis. Anyone with a big data set could theoretically unearth a better model for insurance pricing, for both old and new products.

Emerging technologies will create threats to insurers outside of the traditional competitive sphere. Insurers should be wary of companies that have access to data about how their customers behave.

What will happen to traditional function, claims, underwriting, actuarial etc?

MD - Insurance is a data business and always has been. What's changing is the breadth and type of data that is becoming available to insurance companies.

Insurance companies have a great capacity to analyse data and crunch numbers. Where I think Insurers are at most risk is the models used, and the skill sets are becoming outdated.

Let’s consider how an insurance company approaches underwriting and pricing. They collect a huge, historical data set and then analyse the data to create a product. Companies like Trov are very different. We collect real-time information on how customers interact with the product. And we can pull in data from multiple different data sources.

So, the question we ask ourselves is 'How can we use dynamic and real-time data to deliver better products and pricing.’

I am yet to see a large Insurer with decent capability in this area. Many Insurers have closely held biases towards the historical data they collect. Sometimes they struggle to wrap their head around how they should price new products that haven’t existed before and don’t have a significant historical data set behind them.

Out of all the countries, you visit, which country would you say is making the greatest strides in Insurtech?

MD - Insurance markets are structured very differently in almost every country. However, the two countries that stand out for me are Australia and the UK. Both are predominantly direct markets, and both have a favourable regulatory framework. The USA is very heavily regulated with a very strong broker distribution model. Making it more difficult to get your product in front of potential customers.

London is the place that stands out for me. Mainly because of the open regulatory framework, and a long history with the insurance industry. If you intend to build a new insurance product, London is perhaps the most favorable and advanced place to do it.

In London, you have access to all the major insurance companies and reinsurers. Part of the reason Trov went with Munich Re is their large balance sheet. We partner closely with the digital division of Munich Re and they have a very flexible, entrepreneurial mindset towards deploying capital.

You've worked in a huge insurer. You have spent the last few years in the Insurtech industry. Will insurers eventually be replaced by Insurtech?

MD - Over the last couple of years, we have witnessed a huge surge of capital flowing into insurance technologies. Every major insurer has a venture fund. But I still don't think that the entrepreneurial community has figured it all out yet.

The clear majority of innovation by startups focuses on user experience. It makes sense as that's where most insurance entrepreneurs experience the pain point. From my perspective, having come from the insurance industry, I’d like to see tech companies innovating product.

The user acquisition issue is only the tip of the iceberg. There is a propensity to focus the effort, energy and intellect spent on innovation, on one thing, in isolation. Whether that is deploying capital, managing risk, customer experience, distribution.  If all innovation focuses on customer experience for an existing product, where is the impetus for the rest of the industry to change?

The real question is not;

Will Insurtech replace Insurers? 


What role does a technology startup play in the insurance ecosystem?

Many people talk about disruption. Will Lemonade or Trov supplant the insurance companies? I don't think that's ever going to happen.

However, disruption of the value chain will happen. Insurance companies have traditionally owned the entire value chain. Now technology companies can take parts of the value chain and do a better job of it.

User experience, pricing, data, even claims management are all up for grabs. It could be any individual activity across the whole spectrum of insurance.

In conclusion, I don't think Insurtech will replace insurance companies.

What does the future hold for traditional insurers?

MD - Insurance companies must ask themselves; What in the insurance value chain are we really good at?

There are very clear examples, such as regulatory licensing, access to capital, risk management and balance sheet management. Insurance companies own this space. But in most cases, they're not the best at customer experience and they probably shouldn't be.

The insurers who will thrive in the future are those honest with themselves and focused on their core strength. It is crucial for insurers to interact and partner with other companies providing a better solution.

By using this approach, insurers can create multiple pathways, from balance sheet capital right through to the customer. The Insurers who do this will be super successful. Nonetheless, it's a difficult thing to do for companies who have an emotional attachment to their brand.

Founder of Tier One People and host of the Fintech Chatter Podcast.

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