Regular readers will know that I love innovation. Informing about something new is, after all, the prime purpose of journalism. And the more so, if you can do this before those with something new choose to release the story “officially” – a word that in the financial services context all too often means “purifying” the message through myriad layers of compliance.
What is exciting about innovation is not just the ideas, or even the risks taken by the entrepreneurial folk behind them. It’s about a challenge to the accepted order, it’s the proof that someone with a concept can take on the forces of the multi-billion giants, sometimes showing them up for the dinosaurs they are.
What do you require besides an idea, a willingness to take a chance, and the ability to talk up your concept, to launch a new protection product? You need the practicalities of insurance – underwriting, systems, and a way of marketing your product.
The first requirements have always been essentials for anyone looking to do something new. And they remain tough. But the second list – the practicalities – have never been easier. And this means it’s simpler than ever to turn your idea into reality, and it’s also easier to challenge.
Take Graeme Godfrey and Simon Dryan, for instance. The pair, who have known each other since early childhood, will launch Active Cover in early 2017 – the website, cleverly illustrated by a female athlete, is already collecting the email addresses of those interested. I’ve signed up.
Active Cover will sell on the idea that “sport injuries do happen”. Plus there’s the slogan “Ready, Steady, Snap” which sounds painful but will resound with anyone who has either experienced or knows someone who has suffered one of those inexplicable accidents such as breaking a leg when there is no one else anywhere near you and the pitch is perfect.
It’s marketed as “affordable annual insurance for those unexpected setbacks. Simple to take out and packed with reassuring benefits to ease you quickly through the process from diagnosis to recovery. You’ll be up and running in no time.” That’s the promise. How this will translate into premiums and policy conditions is still under wraps.
Godfrey, aged 50, is a former Association of Medical Insurers & Intermediaries treasurer who sold his “Best Go Private” business with its £3.1m a year premium income to consolidator Chase Templeton in summer 2015 for an undisclosed sum.
Dryan, 49, helped set up Shinpad Insurance in 2012 – it covered football teams and employed ex Liverpool, Newcastle and England star Michael Owen as “brand ambassador”. Shinpad does not currently seem to be marketed actively – Dryan is still a director but the other five have gone their own ways.
The duo both have insurance experience, and entrepreneurial drive. But not the finances and other necessities to set up on their own to prove they can do something better. So they’ve teamed up with Lorica Insurance Brokers as “appointed representatives”. Lorica provides the broking, and other back-ups, and equally importantly the regulatory framework.
The missing piece in the jigsaw is underwriting. Step forward Chubb, the US giant which, in common with a number of Lloyd’s of London players, likes backing new ideas which do not involve a long-term commitment. Annual insurance cover fits the bill – it would be far harder to find underwriting for a 10 or 25 year product. But no one needs that anyway – new market entrants are hardly likely to want to duplicate life or critical illness cover (and some of those already in it would love to exit).
The big trick the two need to pull off is to differentiate themselves from the competition. Oddly enough, if you look up Dryan’s details on one websites fed with Companies House information, you get an advert for a rival sports injury insurer.
This is not a new market so they will have to produce something bigger or better or cheaper. One plus point is Lorica’s an appeal to high net worth individuals (as well as to SMEs) – the better off are more likely to take part in sports and worry about costs of injury.
Just how they will do this only time will tell – Dryan is a poker player and is keeping his cards close to his chest.
No two innovators will take exactly the same route. But from next spring, any disrupter with a great idea will be able to find the back-up they need from – amongst others – St Albans-based Opal Information Systems. This technology firm will repackage its Pandora package for small firms including start-ups.
Currently, Pandora is only available in bespoke fashion to major banks and insurers. Next year, it will be off-the-peg for smaller companies.
It’s sold “as a full-lifecycle product administration software with cloud-based technology so it’s plug into a browser and go.
There is no need to buy hardware, employ computer support, license software or arrange maintenance. The selling point to allow insurance experts to get on with insurance, not to worry about the nuts and bolts of systems.
The result is speedy product testing and launching. Once into a market, Pandora will issue, alter and update policies, manage the claims process, and produce more management information that you might probably need. Opal claims it can get a system up and running in your corporate logo colours within sixty days.
Opal boss Eoin Lyons says jokes about Pandora’s box and all the nasties spilling out are banned. But that misses the point.
When Greek top god Zeus wanted to punish humanity for Prometheus’ theft of the fire, he gave her a jar (not a box) which she was not to open under any circumstance. But impelled by her natural curiosity, she opened the jar, and all evil such as misery and disease which was contained escaped and spread over the earth. It’s one of the many world myths to explain why gods have inflicted bad things on humanity.
Pandora is Greek for “all-gifted” so once she realised what she had unleashed on the world, she rushed to close the lid, but while most of contents had already escaped, there remained one thing at the bottom. And that was Hope.
Hope is what powers innovators and disrupters. And stops the industry from dying on its feet.