Digital Insurance Agenda

How to Create New Business Models for New Revenue Streams

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Apr 22, 2021

IAG, Insurance Australia Group, is the largest general insurance company in Australia and New Zealand. But moreover, they live and breathe innovation. In terms of vision, strategy and making this happen, they are way ahead of similar size insurance carriers. That’s why we we’re very pleased that Inge Cootjans, the director of IAG’s Firemark Labs sat down with us to share their journey and plans. Firemark Labs focuses on creating, acquiring and partnering with cutting edge ventures which operate beyond the traditional insurance vertical, in ecosystems such as ‘work’, ‘shelter’ and ‘mobility’. A perfect way to get access to new customer segments and to open totally new revenue streams.

Roger:
Last year, IAG announced setting up a new division, focused on strategy and innovation to build a technological edge. Digital is really top of the agenda at IAG. Can you share a bit more?

Inge:
“Yes. For us, the objective of digital strategy is really to accelerate and enable our corporate strategy, informed by our technology strategy. What we’re trying to do is really capture the value and the potential that’s created by digital technologies and capabilities. This involves thinking about how we can deploy that and put us ahead of competitors or disruptors that might enter the category.

If you zoom in on our digital strategy, you can see that it stretches across three different horizons. First, we try to digitize our core business, and the way we work. Second, we also try to grow value through innovation and innovating how we serve and what we offer our customers; increasing our customer base and the relationships that we have. The third horizon is more around reimagining the business, creating new digital businesses, new offerings. Entering new markets outside of insurance, to actually bring in new to IAG customers. This also includes new digital models, and offering connected products and services.”


Roger:
Looking at the third horizon, I think that’s where Firemark also comes into play. Can you share a bit about what Firemark is? There is Firemark Ventures, Firemark Labs in Singapore, Firemark Labs in Sydney and Auckland. Can you explain a bit more what they do and how they differ?

Inge:
“Of course. Firemark was created a few years ago, acknowledging the fact that we needed to look beyond insurance. We needed to look at insurtech, but also beyond insurance. So, we set up various labs that enable us to unlock some of those opportunities.

At Firemark Labs we use evidence based kind of experimentation models to rapidly dive into opportunities that we see; and shape those opportunities. We identify new ventures, but look especially at desirability, feasibility and viability. And how we can shape these opportunities in a way so that they link to our purpose; which is ‘we make your world a safer place’. It is about really addressing the customer need and removing customer pain points. Of course we also look at the various assets that are in place to create ventures that we can actually scale. We’ve developed a framework that enables us not only to identify those opportunities, but all the way to scaling ventures as well.”

Roger:
So, Firemark Labs ANZ is about creating new ventures and new business models yourself; not necessarily in insurance. How about Finmark Labs Singapore?

Inge:
“Firemark Labs works of course along similar principles. Their focus is probably slightly more tech focused. They have direct access to the Asian economy and interesting technologies that we see there. They partner also with startups and universities, and they explore more data driven business models. Business models enabled by intelligent and simple technology.”

Roger
And of course, there’s also Firemarks Ventures …

Inge:
“Yes, that’s correct. Firemark Ventures have a mandate that really makes them focus on data kind of spaces, like artificial intelligence and machine learning, data analytics, computer vision, cybersecurity, etcetera. They find opportunities and startups to invest in, that align with the various ecosystems that we focus on; mobility, work and shelter.

To give an example: one of the investments that they made is in Hyper Anna. Hyper Anna is a voice enabled artificial intelligence data analytics tool, that we at IAG also use. We apply Hyper Anna to our data, which then creates insights for us as a business.”


Roger:
Nice name – Hyper Anna … Can you give a few examples of other portfolio companies?

Inge:
“Yes, so if we look at the mobility space, for example, we’ve got a venture called Mobility AI, which is an AI and analytics platform. They really help us to combine data from various sources to create valuable insights for IAG. And they enable us to develop various new products and services, like for example usage based insurance. They will help us to develop protective risk and repair services for drivers, and safety kind of products as well, for example.

Safer Journeys is an example of that. It is a concept that is linked to and informed by Mobility AI. Safer Journeys is an automated crash detection service. It immediately prompts a response from the Safer Journeys Rapid Response Call Center in case of a collision. It collects data while you’re driving, so it knows how fast you are driving and how you’re turning corners etcetera. In case of a collision, it helps us to identify whether it is a low or high impact collision. And in case of the latter, we reach out to see if you need support. Or we will alert emergency services to come and assist right away.”

Roger:
I also came across a company called Carbar …


Inge:
“Yes. A while ago, we started to explore the vehicle access space. We acknowledged that vehicle ownership will look very different in the future. Less people may actually own a vehicle or they will be looking for more flexible solutions. When we were exploring that space, we came across a company called Carbar. They feature subscriptions, comparable to a lease. So, you have your own vehicle in front of your house or in your garage. But it offers much more flexibility. You only need two weeks notice to wrap up the subscription. And you can also change vehicles up to four times a year without any additional cost. It really offers much more flexibility to the user.”

Roger: 
When you mention Mobility AI, Safer Journeys and Carbar, I can’t help noticing that all of these three portfolio companies are not operating in the insurance vertical. They’re all active in an adjacent industry, in the mobility ecosystem, more than in ‘traditional’ insurance.

Inge:
“Yes, that is true. I think, previously, we were probably overly focused on the day to day and on the insurance business. As an organization, we realized that we need to look beyond insurance. So, we’re looking to see how we can actually address some of the needs that customers have more holistically. So not only looking at insurance, but also beyond. Just like what I mentioned before; the world of mobility has changed, vehicle ownership is changing.

But we are looking also at fully autonomous vehicles, electric vehicles. We’ve seen a massive uptake in that space. This will disrupt the industry. So we need to evolve as a business with that as well. This also applies to our homes. Home is no longer only a place where we live, but especially since covid, the home has become a place where we work a lot more than we probably imagined to. It’s also become a place where we socialize with colleagues, although maybe via screen. It has evolved and changed. So, from a business point, we definitely saw the need to look beyond, and evolve beyond insurance.”

Roger
Especially when ventures are operating in adjacent industries, there’s always a lot of debate with regard to the distance between ventures and the parent company. How did you organize that at IAG?

Inge:
“I think there’s a lot of different ways to go about it and lots of schools of thought about what methodology of what is actually best. We actually try different models. We have ventures that we invested in, that operate at arm’s length, without little interference or little things attached to IAG. We also have ventures that we build ourselves, that sit a little bit closer to home, and actually also sit in the same building. And we also have ventures that we spin out. So, we are trying different models; spinning in, spinning out, building them ourselves. I don’t think we necessarily have it right all the time. It also depends on the founders team that you work with, the stage of the venture, the complexity of the venture. I don’t think there’s one size fits all. You just need assess on a regular basis what’s best.”

Roger 
On the one hand, all those ventures create new assets, and new competencies that could be very, very well used by the parent, by IAG. And on the other end, of course, all the assets and competencies that the parent has acquired over decades can be very useful to the venture. So, how do you make sure that or how do you enable that they really use each other’s assets and competences? How do you secure that value flows back to the core? Or, taking the other perspective, how do you cope with the corporate immune system?

Inge:
“Yeah – we do quite a lot in that area! What we do is we engage stakeholders very early on. To really understand what the assets are and just really try to understand both sides; like how we could actually benefit equally. We run what we call ‘synergy workshops’, where we bring in both the the teams from the venture, as well as key internal stakeholders, to discuss ‘what have we got and what could we potentially do with that’. So, clarifying and defining what we actually use as part of that synergy, what’s included and what’s not. It is very important to have the clarity around that quite early on, so that both parties have a clear understanding of ‘yeah, this is what we can work with’. We can then develop a roadmap and take that into the business or into the venture; we can then we can bring in the right resources and put it onto roadmaps as we go.

We need to keep doing that across the portfolio of ventures as well. Because the ventures that we build and ventures that we invest in will bring in new assets, and we develop new assets internally as well.”

https://firemarklabs.com.au/

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