“Songdo is a city, not a startup”, we hear you say. This is true – but Songdo is also the largest private development in history and was “launched” in 2015 so, with a bit of creativity, it meets our criteria.
Songdo is also the “world’s first smart city”. That means that technology is built into everything. Examples include: an underground waste disposal system that is connected to each building to remove the need for refuse trucks, sensors to monitor everything from water to traffic flows, and a “telepresence” system to allow residents to communicate in virtual reality.
Sensors are an increasingly hot topic in insurance. Insurers in Europe and North America are starting to incorporate them in their propositions. These include AXA (Maison Connectée), State Farm and American Family. Startups are also embracing the trend; Neos is a UK MGA startup that has built a connected home insurance proposition (see our Bitesize profile here). The trend is coming through on the industrial side too: Munich Re’s corporate venture fund (run out of Hertford Steam Boiler) is, for example, investing in sensor startups regularly for its engineering proposition.
But what we’re seeing in Europe and the US is baby steps. Korea is the real deal.
It is clear that a smart city has a fundamentally different risk/insurance profile to a traditional city where residents are slowly installing sensors. Apart from driving demand for more technologically-aligned propositions, the claims profile is likely to be very different for insurers. For example:
Connected devices will help people avoid losses due to absentmindedness, like leaving the gas hob on;
Sensors will stop things breaking as quickly as their signals trigger repairs;
FNOL (first notification of loss) will move from a delayed phone call to an instant electronic signal
For insurers who are serious about IoT, a study trip to Songdo might be helpful. Failing that, they should call Oxbow Partners as it’s a space where we’re doing a lot of work.
Chris leads engagements across strategy and transformation, focusing most of his time on global reinsurance and UK & Ireland retail insurance.
Chris started his career at Munich Re where he was a D&O underwriter. During this time, he gained his ACII qualification. He then moved into consulting, where he has spent 20 years advising (re)insurance management teams around the world on topics including strategy development, operating model redesign, governance optimisation, underwriting transformation and innovation. Chris lives in London and spends a lot of his time with clients in Bermuda and Continental Europe.
Chris frequently authors Oxbow Partners papers and articles. He was the lead author on our InsurTech Impact 25 series. He is a dual British and Austrian citizen and speaks fluent German.