New insurance business models enabled by blockchain

This information can be updated in a smart contract on a blockchain platform in real-time, enabling an automatic pay-out to the customer if the cargo is …

Blockchain is pushing the global insurance industry full throttle into the next stage of its digital transformation. With enhancing cost efficiency being a key objective in 2019, new technology combinations will become increasingly prominent as insurers digitize antiquated systems.

Blockchain’s ability to act as a common foundation that eases the transition to other next-generation digital technologies such as such as telematics, machine learning, robotics and artificial intelligence is widening its appeal amongst insurers.

The transition to digital technologies continues to be a top business priority for insurance CIOs in 2019, taking precedence over revenue and business growth. While insurers might not have experimented with blockchain as early as other financial services sectors, this pinpoint focus has united the industry and enabled it to move towards live deployment in an impressively short space of time.

Newly created roles such as Chief Digital Officer and Chief Innovation Officer are now commonplace across the industry, with firms vying to increase their market share by developing solutions that meet customers’ demands for innovation while increasing efficiency and profitability. Once data has been migrated to a blockchain platform, the potential to apply other technologies such as artificial intelligence (AI) to utilize this immutable, real-time information is vast.

Use cases

Dynamic pricing is an example of an emerging blockchain-enabled innovation that benefits both the insurer and the customer, with broad-ranging potential across health insurance, car insurance, property insurance and beyond.

Taking the case of shipping insurance, advances in technologies such as AI and telematics enable insurers to access detailed, real-time information about a ship’s location, age and condition. This means, if a ship enters pirate waters, its location data would automatically be updated on the blockchain and the insurer can make the necessary adjustments to its risk profile and policy pricing. The same applies in the converse scenario – for example if a ship is young, in good condition and doesn’t stray from safe waters.

Now consider that the ship is transporting refrigerated cargo, which is also insured. How does an insurer know whether a temperature spike is taking place in a crate at sea a thousand miles from its destination that could potentially destroy the cargo? Thanks to telematics, sensors in the cargo containers can communicate accurate information about temperature, humidity and atmosphere.

This information can be updated in a smart contract on a blockchain platform in real-time, enabling an automatic pay-out to the customer if the cargo is spoiled by high or low temperatures. This saves the insurance company time and money while providing the customer with a better experience.

Dynamic pricing also has huge potential in the health insurance space. Health insurers require a vast amount of information about a customer’s medical history and lifestyle in order to piece together a policy, and provision of false or inaccurate information is commonplace. Blockchain enables insurers to accumulate data from multiple verified sources with updates occurring in real-time, allowing them to carry out more frequent risk assessments and customize pricing accordingly.

Usage-based insurance (UBI) is another innovation currently reshaping the car insurance industry. Many cars now come equipped with connected features or advanced driver-assisted systems (ADAS), which is having a profound impact on the way auto insurers handle policies.

Traditionally, car insurance policies have been based on driver characteristics like age, personal information and accident history. With UBI, insurers are able to incorporate driving behaviour data such as speed and hard braking that is updated in real-time on the blockchain. In addition, telematics technology in the car can measure the time a driver spends on the road each day, opening up opportunities for pay-as-you-drive insurance policies that incorporate this data into a smart contract.

A digital future

These developments would be innovative in any sector, but when you consider the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic.

By harnessing the attributes of blockchain to automate manual processes and alleviate frictional costs, insurers have made the necessary investment to position themselves to take advantage of the myriad of opportunities and further efficiencies that blockchain – and its convergence with other new technologies – will deliver over the coming years.

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WINTON GROUP Ltd Sells 275663 Shares of Universal Insurance Holdings, Inc. (UVE)

WINTON GROUP Ltd decreased its position in Universal Insurance Holdings, Inc. (NYSE:UVE) by 93.8% in the 4th quarter, according to the company …

Universal Insurance logoWINTON GROUP Ltd decreased its position in Universal Insurance Holdings, Inc. (NYSE:UVE) by 93.8% in the 4th quarter, according to the company in its most recent filing with the Securities and Exchange Commission. The institutional investor owned 18,090 shares of the insurance provider’s stock after selling 275,663 shares during the quarter. WINTON GROUP Ltd owned 0.05% of Universal Insurance worth $686,000 as of its most recent SEC filing.

Several other institutional investors and hedge funds have also recently modified their holdings of the company. Zurcher Kantonalbank Zurich Cantonalbank boosted its position in Universal Insurance by 28.7% during the 4th quarter. Zurcher Kantonalbank Zurich Cantonalbank now owns 2,392 shares of the insurance provider’s stock valued at $91,000 after purchasing an additional 533 shares during the period. Rehmann Capital Advisory Group boosted its position in Universal Insurance by 4,433.9% during the 3rd quarter. Rehmann Capital Advisory Group now owns 5,486 shares of the insurance provider’s stock valued at $113,000 after purchasing an additional 5,365 shares during the period. LS Investment Advisors LLC boosted its position in Universal Insurance by 226.7% during the 4th quarter. LS Investment Advisors LLC now owns 3,208 shares of the insurance provider’s stock valued at $122,000 after purchasing an additional 2,226 shares during the period. Advisors Asset Management Inc. boosted its position in Universal Insurance by 119.0% during the 3rd quarter. Advisors Asset Management Inc. now owns 2,687 shares of the insurance provider’s stock valued at $130,000 after purchasing an additional 1,460 shares during the period. Finally, Eukles Asset Management acquired a new position in Universal Insurance during the 4th quarter valued at approximately $144,000. Institutional investors own 74.30% of the company’s stock.

NYSE:UVE traded up $0.56 during midday trading on Thursday, reaching $31.64. 271,948 shares of the company traded hands, compared to its average volume of 204,967. The company has a debt-to-equity ratio of 0.02, a current ratio of 0.66 and a quick ratio of 0.66. The firm has a market capitalization of $1.09 billion, a P/E ratio of 8.76 and a beta of 1.24. Universal Insurance Holdings, Inc. has a twelve month low of $30.30 and a twelve month high of $50.50.

The firm also recently announced a quarterly dividend, which will be paid on Monday, March 25th. Shareholders of record on Monday, March 11th will be paid a dividend of $0.16 per share. This represents a $0.64 annualized dividend and a yield of 2.02%. The ex-dividend date is Friday, March 8th.

In other Universal Insurance news, insider Jon Springer sold 7,000 shares of Universal Insurance stock in a transaction on Thursday, January 10th. The stock was sold at an average price of $38.34, for a total transaction of $268,380.00. Following the sale, the insider now owns 467,404 shares of the company’s stock, valued at approximately $17,920,269.36. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, COO Stephen Donaghy bought 20,000 shares of the business’s stock in a transaction on Wednesday, March 6th. The shares were acquired at an average cost of $31.50 per share, for a total transaction of $630,000.00. Following the purchase, the chief operating officer now directly owns 501,983 shares in the company, valued at $15,812,464.50. The disclosure for this purchase can be found here. Insiders have sold a total of 21,000 shares of company stock worth $756,140 in the last ninety days. 10.60% of the stock is owned by company insiders.

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About Universal Insurance

Universal Insurance Holdings, Inc, together with its subsidiaries, operates as an integrated insurance holding company in the United States. The company primarily offers personal residential homeowner’s insurance. It also underwrites homeowner’s multi-peril insurance; and fire, commercial multi-peril, and other liability lines of business.

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Institutional Ownership by Quarter for Universal Insurance (NYSE:UVE)

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Insurer Owes Intellectual Ventures $1.5M In Network IP Suit

After deliberating for about four hours following a four-day trial, the jury returned with a verdict in favor of Intellectual Ventures II LLC, finding defendant …

By Daniel Siegal

Law360 (March 14, 2019, 5:23 PM EDT) — A Texas federal jury on Wednesday found that a truck insurance company infringed a patent owned by licensing company Intellectual Ventures for technology the insurer’s agents and employees use to access…

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Deloitte Expects Robust 2019 Insurance M&A Activity

The appetite for insurtech capability is one of the “five buckets” that Deloitte authors separate potential 2019 M&A drivers. The continued creation of …

Several factors are pointing to 2019 being another solid year for mergers and acquisitions across the insurance industry, a Deloitte report concluded.

Deloitte’s annual M&A Outlook recorded 681 transactions in 2018 across the insurance sector, up from 621 deals in 2017. This surge include an 11 percent jump in insurance broker transactions (537 to 594) and a 15 percent increase in property/casualty deals (53 to 61).

The immediate outlook is for more of the same, Mark Purowitz, principal and M&A leader with Deloitte, told InsuranceNewsNet.

“Insurance companies are finally starting to figure out that they don’t have to build everything themselves, so they’re going to buy capability,” he explained. “We’ve already seen a handful of those acquisitions over the last few years by insurance companies who have invested in insurtechs.”

The appetite for insurtech capability is one of the “five buckets” that Deloitte authors separate potential 2019 M&A drivers. The continued creation of venture capital funds, some within insurance companies, along with the healthy number of viable insurtech targets makes this a ripe area for M&A activity, the report stated.

The other four buckets are:

  1. Cross-border deals. There is plenty of interest in cross-ownership from major insurers, Purowitz said, as well those who want to be major insurers.

“I think we’ll see more from the Japanese into the U.S. as they look for more strategic buys and platform plays,” he said. “They buy an asset here to get into the market and learn, and then they use that asset to expand. … I think there’s going to be more interest from the European players who need to be in the U.S. to be considered a global player.”

2. Middle market match-ups. Middle-market insurers, those Deloitte identifies as between $500 million and $2 billion in size, are being squeezed as InsurTechs change the customer relationship dynamic.

Many of these companies are looking around for partnership possibilities, Deloitte said. Many of them are mutual insurance companies seeking new structures to give them more flexibility.

“The mutuals are starting to feel a tremendous amount of pressure for the first time,” Purowitz said. “And they’re struggling to keep up with the technological advances, their balance sheets and their ability to spend. And they’re struggling for relevance because they were founded on this concept of community trust and the younger generation’s definition of trust is very different.”

3. Portfolio optimization. “Small-to-medium companies operating in the fragmented personal lines insurance market may pursue acquisitions to diversify into the small commercial insurance space,” the Deloitte report reads.

The Chicago-based Kemper Corp.’s $1.6 billion purchase of Infinity Property & Casualty Corp. in July 2018 is a perfect example, the report said. Kemper companies offer insurance for home, auto, life, health and valuables, while Infinity sells auto insurance in the specialty, nonstandard automotive segment.

“The combined company will have a more diversified portfolio across auto, home, life and health insurance,” the report concluded.

4. Private equity participation. With plenty of money in play, private equity firms such as Apollo Global are in the market, and insurance entities are always attractive buys, Deloitte said.

“In doing so they gain access to a stable business model, premium income, investable assets and capital, and a good source of short-term earnings, especially for asset-intensive lines like run-off insurance,” the report said.

‘Top Of Mind’

While regulatory barriers to M&A continue to fall, insurers would do well to keep regulatory concerns “top of mind” in 2019, the Deloitte report indicated. It’s no surprise that annuity and life insurance sales standards are regulatory issue No. 1.

“Perhaps the single biggest discussion item related to market conduct thus far has been the possible creation of new, higher sales standards for annuity and life insurance,” the report stated. “Regulators have been moving toward consensus that a ‘best interest’ standard might be appropriate for annuity sales, and the state of New York has already issued regulations.”

Likewise, cybersecurity and data privacy concerns continue to dominate regulatory discussions all the way to the international stage.

In the grand scheme, however, 2019 is expected to provide a continued opening for strong M&A activity between regulatory campaigns.

“The current regulatory environment appears more settled compared to the recent past and, absent a significant unexpected event, we see little prospect of major new regulation in 2019, especially in relation to bank and insurance capital,” Deloitte concluded.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].

© Entire contents copyright 2019 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

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Aon partners with insurtech Zesty.ai to tap AI for improved underwriting

Aon senior managing director and head of insurtech Jobay Cooney said: “We chose to partner with Zesty.ai as they have demonstrated they are an …

Global professional services firm Aon and American artificial intelligence (AI) start-up Zesty.ai have formed a strategic alliance to improve its underwriting data insights.

Pursuant to the terms of the collaboration, Zesty.ai will provide access to 130 billion data points on buildings and their surroundings which enable risk analysis and pricing.

The data is acquired though AI on regularly updated satellite and aerial imagery and other data sources – without ever visiting the premises.

Now, insurers using Aon’s distribution network will be able to assess their portfolio risk through Zesty.ai’s wildfire risk model.

Additionally, they can also obtain high fidelity property insights for underwriting both catastrophic and attritional risk.

Aon president and US CEO of reinsurance solutions business George deMenocal said: “Immediate access to new, useable and meaningful data insights is continuing to advance insurance underwriting.

“Instant insights on risk are becoming an increasingly important element for insurers as they modernise their underwriting platforms.

“This technology evolution, coupled with new partnerships, brings opportunities for Aon to deliver new products that meet clients’ needs today and tomorrow, in a transparent and efficient way.”

Aon senior managing director and head of insurtech Jobay Cooney said: “We chose to partner with Zesty.ai as they have demonstrated they are an innovative leader in this space and that insurers can derive value from their granular data and visual assessments.

“This value includes customer engagement, underwriting accuracy, inspection cost savings and post-event claims analysis – plus offering premiums that more accurately reflect the risk to their customers.”

Zesty.ai raked in a $13m investment in a Series A financing round in December last year, which was led by Luxembourg-based private investment fund Blamar.

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