Using proven approaches helps innovation

Farming is not a romantic business; it is tough work with tight margins – but essential for feeding a growing number of people. What can innovative ideas and technology contribute to offer new and growing business opportunities in this area? That was the question at the beginning of an ideation process which the Munich Re innovation team and external ideation specialists started in December 2019.

The number of ideas from the ideation workshop was impressive: over 50 basic ideas in 6 clusters filled the funnel. They covered topics like the guaranteed freshness of products, smart ideas for supplying energy to greenhouses, or ideas for improved carbon-business in forestry.

18 candidates made it into the idea specification phase, 5 ideas were further elaborated in the Innovation Lab in Munich and 2 ideas finally made it into the exploration phase. As always during innovation journeys, the most compelling ideas emerge after pivoting and focusing on “problems worth solving”. The most promising idea focuses on how to unlock agricultural carbon markets. This topic is very near to Munich Re’s DNA and matches several strategic imperatives.

Carbon markets are in transition and are gaining importance. Starting in 2021, the Paris agreement will change them drastically: carbon prices will rise and so will the relevance of forestry and farmland. Companies are aiming to offset their carbon footprints to reach their ambitious goals by 2030. But carbon markets today suffer from inefficiencies: they are opaque and fragmented, they are not easily accessible for buyers or sellers, and they do not cover rising worldwide demand. Now is therefore a good time to innovate.

During the next phase, the explore phase, the identified needs and business models have to be validated. A dedicated team has been formed to execute the market, product and customer work streams.

Stay tuned over the next few months to find out how this idea will develop along our innovation journey − or simply talk to our experts!

Contact: Andreas Heger

At the beginning there was a pressing question: how can insurers speed up hurricane response and improve the claims experience for clients? Many insurance companies face huge challenges after a hurricane. The number of claims can be extremely high. As a result, companies may have a limited number of loss adjusters, restricted access to affected areas and limited ability to gain on-the-ground insight. This makes it difficult to plan and allocate resources efficiently. But severe losses always are a “moment of truth“ in the relationship between an insurer and its customer. That is why it is so important to offer customers the best possible experience in a situation where they are often completely devastated and literally homeless.

The idea which was born in the Munich Re Innovation Lab was convincing: if insurers learned of claims much earlier, then loss adjusters could be quickly deployed to the ravaged areas, claims could be paid faster, houses could be repaired earlier and consequential damages could be avoided. And last but not least, clients would be happy to get back to normal life much sooner. In response, the innovation team gathered the experts needed and began to build a new product in the Munich lab.

The Remote Industries hurricane tool suite was developed and piloted with insurance carrier clients. Aerial images of the area affected by a hurricane right after the event and a machine-learning algorithm were the heart of the idea. These pictures, combined with portfolio data from the insurer and global natural catastrophe and loss data from past events, a video inspection tool and a simple web interface made it possible to start automated claims processing right from the desktop. Thus, insurers’ cat response could be made less hectic, easier, and more efficient.

Feedback from clients was very positive. However, the initial fees seemed to be prohibitive due to the expenses of the high resolution aerial imagery. That was a setback, but not the end of the idea.

The Remote Industries team is in the process of renegotiating to reduce the production cost especially on the imagery side. And in a slight pivot, the team is further validating market needs on the underwriting side. Moreover, it continues to evaluate the existing technologies with other business cases, such as underwriting, pricing, and risk assessment. In addition, the team is testing the solution with other types of events.

As the Remote Industries team spoke to potential clients during the sales process, they identified their interest in having the video inspection module available outside the hurricane tool suite. Being agile, the team quickly began to further develop the remote inspection video tool as a standalone product that would allow claims adjusters to inspect, report and settle a claim in real time. This was expedited with the COVID-19 crisis. In an effort to help insurers quickly address the real problem of the inability to do onsite inspections in many locations, the team began offering a 60-day trial to claims professionals, independent adjusters, as well as a new identified audience, building inspectors.

Computer vision technology and machine learning applied to high resolution imagery will definitely change both the claims and underwriting processes, making them smoother and more accurate. As shown with Remote Industries, the key to innovation is identifying a problem, assembling the right team of experts, using cutting-edge technology, listening to your customers and being agile to adapt quickly to the changing world around us. Watch for more from the Remote Industries team in the future.

Contact: Thilo Horner

When digitalisation started to disrupt many industries it was clear that the insurance industry would not be an exception. Munich Re put a strong focus on innovation and digitalisation very early, as it realized that digital disruption has the potential to reshape markets faster than perhaps any force in history. In order to stay ahead of the development, in 2016 Munich Re established its own global start-up – Digital Partners (DP). On the one hand, DP was striving to win the confidence of and subsequently to partner with disruptors who are changing the way insurance is experienced by customers. On the other hand, it helped Munich Re to support its traditional clients, insurance companies, to navigate the changing world of risk and find opportunities to grow in this space.

As Andy Rear, CEO of Digital Partners framed it: “DP is an enabler for insurtech businesses who are changing the way insurance works, or making insurance fit for the new sharing, gig, and mobile economies.” That includes those looking to engage customers online, through mobile or social media, and those who are developing new approaches to insurance products which are a better fit to the way people live their lives in today’s world.

How did it all begin? In late 2015 Andy Rear met Steven Mendel, co-founder of Bought By Many, a company which was engaging with their insurance customers through social media. A great idea, but as a broker, Bought By Many could not control the whole customer experience. So the idea was born to build a new kind of insurer together, with Munich Re doing the insurance work in the background and the start-up concentrating on selling innovative products and building a great customer experience. That was the beginning of the Digital Partners business model, offering Munich Re’s expertise and capacity to start-ups who want to sell insurance products fit for the new economy, use new data for underwriting, or find new ways of distribution. A pioneering endeavour in the insurance industry.

Today DP is no longer a start-up. It is a known player in the ecosystem, providing insurtechs and digital distributors with a comprehensive, go-to market partnership, built on the financial strength and expertise of Munich Re. The team operates globally and comprises 95+ professionals from diverse backgrounds covering insurance, banking, actuarial modelling, consultancy, project management, technology, and the start-up scene. It partners with insurtechs as well as fintechs, scale-ups, disruptors and mature companies to innovate and digitise insurance along the whole value chain. DP offers not only global, multiline capacity, but also product design, data, technology and venture capital. Its ambition is to build a more engaging proposition for insurance customers by experimenting with new product offerings, designs, pricing models, distribution or engagement concepts.

Contact: Andrew Rear