From Croydon to Berlin: The geography of insurance disruption

A view of Berlin

There is constant talk of disruption and digital innovation in the personal lines insurance market, but when it comes to concrete facts about where it's coming from, all we have is – often wild - speculation.

So with the market convinced about its inevitability I decided to take a different slant on where disruption might come from in terms of companies (Google, Amazon, Apple, eBay ...) or industry sectors (telecommunications, retail, motor manufacturing ...), and instead look at previous market disruption and see if the geographic location of the disrupters can give us any clues.


CROYDON - Telephone-based insurance - 1985

Croydon - often ridiculed for its aspirations to be the New York of the South - but its footnote in modern insurance history is writ large. Currently enjoying the patronage of LV, Croydon was the place chosen by insurance entrepreneur Peter Wood to launch his phone-based insurance company Direct Line in 1985.

Sadly for Wood and the legacy of the insurer, the business pulled its last staff from the area over a year ago, leading the Direct Line founder to say: "I for one will be sad that the inauspicious birthplace of direct telephone insurance may soon be sporting a 'to let' sign".


WALES - Aggregation/price comparison - 1999 onwards

Okay, this is cheating, but it cannot have escaped many commentator's attention that three of the main four insurance aggregator brands are headquartered in Wales, with Confused and Go Compare representing the South, and Moneysupermarket standing for the Borders.

Launched in Cardiff in 2001, Confused was touted for a sale in 2007 but today still remains part of the Admiral Group family, with its new mascot Brian the Robot aiming to win some ground in the free toy space from Compare the Market's meerkats.

Rival Moneysupermaket predates Confused as it was established in 1999 to compare mortgage products, before later dipping its toe into the waters of insurance. Headquartered in Ewloe, the firm listed on the London Stock Exchange in 2007.

Now fully owned by Esure, Go Compare was formed in 2006 by former Confused business development boss Hayley Parsons. It remains based in Newport, down the road from her former employer, although she has now departed.


NORWICH/OHIO - Telematics Insurance - 2002 onwards

Telematics might finally be moving into the mainstream in the UK, with the charge led by the likes of Ingenie, Carrot and - most notably - Insure the Box.

But it first came to the UK by way of a deal between Aviva (then known as Norwich Union) and the US giant Progressive, pioneer of pay-as-you-go insurance in the States.

Unveiling it in 2002, then programme director Robert Ledger said:"As a market leader we are always looking to develop new opportunities to deliver greater value and choice to our customers and we believe pay as you drive insurance is the future."

This may still be the case, but after numerous trials, the product was finally launched in 2006, only to be canned two years later.


TUNBRIDGE WELLS - Internet-based insurance - 2005

Founded in Kent by a group of executives who previously worked at Direct Line's big rival, Swiftcover opened for business in 2005 with a campaign based around the slogans "Click Click not Cluck Cluck" and "No Clucking Call Centres".

The business has interestingly had both a major victory and defeat at the hands of the Advertising Standards Agency. The win was in 2005, when its 'online-only' tag was unsuccessfully challenged. The loss occurred when ASA ruled that despite featuring Iggy Pop in its ads, Swiftcover would not have insured the ageing rocker.

BERLIN - Social insurance/Peer-to-Peer insurance

It is perhaps no surprise that one of the latest movements in insurance (peer-to-peer) comes has a birthplace in one the world's coolest cities, Berlin.

But with the birth of Friendsurance in 2010, co-founder and managing director Dr. Sebastian Herfurth has triggered a movement that has already seen a few imitators in Bought by Many and Hey Guevara in the UK and Inspeer in France.

Whilst it is early days, Dr Herfurth recently told Post that while he does not see this model replacing traditional insurance, it should "increase customer satisfaction and loyalty".

He added: "Many policyholders are annoyed at paying a lot of money for insurance they only rarely use, and many of them wish they were rewarded when they have no claims. This is why we developed our claims-free bonus, which allows policy owners to get some of their premiums back if no claims are submitted."

No wonder last year the firm received funding from two new investors including a Hong Kong billionaire.

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