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2023: Sticking to the basics, super fast claims and prioritising payments

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Vitesse
January 31, 2023
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https://vitesse.io/news/2023-insurance-market-outlook

A 2023 insurance market outlook from Phillip McGriskin, CEO of Vitesse

What does 2023 look like at Vitesse?

Despite the economic challenges for many businesses, Vitesse ended 2022 with a very fair wind. A lot of the hard work we had put in over the preceding years produced significant results, and we see 2023 very much as a year of continuing to capitalise on last year’s success and hard work.

We have a few key objectives for the year ahead.

We’ll continue our partnership with Lloyd’s of London and our joint efforts in ensuring market-wide adoption of the Faster Claims Payment (FCP) solution. I’m happy to share that in this regard, we’re ahead of our targets and the signs for continuing this trajectory look very positive.

Beyond Lloyd’s of London and the London market, where we have been very successful, our focus for 2023 is to continue to build our presence in the company / non-Lloyd’s markets and further into other geographies such as the US. In line with our customer’s feedback, we’ll be looking very closely at this region, in particular, this year.

Looking inwardly and post our successful 2022 fundraising, scale will be a theme for 2023. Last year saw a big focus on bringing on board the best people and technology to support our plans, and we’ll continue this in the coming 12 months.

Further on the scale theme, our people (as it is so crucially important for any business to get this right) are a significant focus for 23’. We were fortunate to bring in our first VP of people, Milly Richardson, during 22’. Milly joins with a wealth of experience in how to help us bring out the very best in individuals whilst ensuring our teams are engaged and fulfilled. We’re looking forward to reaping the benefits of putting our people first.

And then, in line with the growth that we saw at the back end of last year, and the growth that we’re anticipating this year, there’s going to be a lot more practical development in the business across technology, product and all the supporting functions. New tech, better processes (we’re always learning) and a constant mission to make things better for our customers.

What are you most excited about?

I bet no one has ever answered “insurance” to this question. But there’s a first time for everything. Insurance.

We have put a lot of effort into cracking the insurance industry, which is not known for its speed of movement. The insurance industry is heavily regulated, and quite rightly, they are very exacting about their partners. They’re especially cautious of new entrants to their close-knit community. We have proved that we can deliver quickly and successfully, and the market is now keen to work with our products; I’m excited to be in a position where the market perceives the value in what we’re doing, and it’s now up to us to ensure we continue to deliver.

I’m also excited to see us reap the benefits of the effort we have put in with our insurance prospects and customers. Specifically, I refer to the FCP solution. Until recently, a lot of the work on this project has been about specifying, building and advising the market about it and making sure they’re ready to come on board. This year, we’ll see them come onto the solution, and towards the end of the year, we’ll see significant volume come through. That will be super exciting for us because that’s a massive change for Lloyd’s of London and the market. And it’s a big feather in our cap in demonstrating how we can effect change in the broader market.

Do you foresee any challenges to overcome?

Our business economics run somewhat countercyclical to how you might see other payments businesses operate. The way we provide our services – which include both a payment and regulated treasury function – means that in a high-interest rate environment, we see more upside than perhaps some of the other companies out there.

The economy is probably the biggest concern for most businesses this year. Fortunately for us, we’re dealing with insurance, which is a need that people have regardless of the economic climate. For us, the way that the economy has moved means that the combination of both payments and treasury capability gives us a lot more opportunity to show upside. So, it’s probably a more positive outlook than a challenging one.

What were your favourite parts of 2022?

Vitesse has been in existence for a few years now, and we’ve put in a lot of work to get where we are. At times it has been an uphill struggle because of the pace of change in our chosen customer vertical, but we’ve always known that the vertical was right, and we’ve known that the need for our products was there. We have also known that with the right type of working partnership with our customers, they are excited to adopt our solutions.

So, to watch all the people in the business that have been pushing so hard against a slow-opening door, and to see that door start to move a bit faster and for our teams to see the benefits of their hard work is the most rewarding thing.

Engaging with colleagues more about building the company for the future, rather than the day-to-day focus of keeping us going, is exciting and seeing the effect that has on people is fulfilling for us all here at Vitesse. That’s our favourite bit!!

Further on the theme of looking forward and giving back – and the excitement that provides – as the company scales up, we’ve become more mature in our outlook, and we now have the luxury of thinking more about the world and environment around us.  So, we have made significant developments in our ESG program, and we now have a board within the business that is looking specifically at ensuring we are doing the right thing in the right way.

We’ve joined a charitable foundation that gives us access to a whole range of charities that we can now support. So I think from a social perspective, it’s definitely fair and right to say that we’re starting to pull up our end a little bit more than we’ve been able to do historically, and I think it’s nice to be able to give something back. It creates a good vibe.

More inwardly looking, as a business, we have done a fantastic job in bringing our staff together through fun activities across 2022. I took part in the painting and Prosecco night and absolutely loved it. My painting was a major problem. I have zero painting ability, but it was brilliant fun.

Our Football Fives tournament for the insurance market that took place early last year was also superb, and I’m looking forward to this year’s tournament in May being even bigger and better!

What trends do you see growing across the insurance industry? Or any new ones?

The insurance industry has historically been quite cautious about lots of change, so I don’t think we’re going to see any massive wind down of activity or programmes as we have seen in other sectors.

But I do believe, given everything that’s happened in relation to the broader economy, businesses will be more cautious about where they’re spending money. They’ll need to know that they will see a return on that money.

For insurance, because of how the economy has changed, this whole concept around treasury optimisation will be much more critical for them. I’m expecting to see businesses less willing to leave money lying around in insecure structures or structures that aren’t generating returns. I think scenarios like this lead to our conversations about providing these services.

How do you see the payment space, specifically, evolving this year?

The last few years have seen a lot of people trying everything. We’ve had the cryptocurrency craze come through, which I’m happy to say I’ve been on record every single time I’ve been given a chance to say don’t go anywhere near it. That seems like the right call. I think that one has burned out.

We’ve seen open banking come up, and it has definitely shown many upsides, but it’s been slow. I think it was uncertain whether the card companies would allow the open banking gold rush to happen. But I think now, these card companies themselves have had to get involved in open banking, and I expect we’ll see a gradual move towards that and the blurring of the line between a debit card, a credit card and an open banking payment.

I think there will be less new developments for the consumer as people button down and just try to stick to the basics and make the core business work. That’s not to say there won’t be innovation – there will always be innovation. It shouldn’t be as scattergun as it has been for the last 10 or 15 years.

People will be a lot more focused on what they need, why they need it, how much they’re willing to pay for it, and what they’re willing to forego to have the opportunity to try the new product.

What innovations in insurance are you most excited about in 2023?

We’ve been doing a lot of work with Lloyd’s of London to optimise how they pay claims. Taking a hundred-year-old marketplace that has not been the most efficient in settling claims and allowing them to do it almost in real time is groundbreaking and hugely exciting.

We’re also seeing more of a customer focus; insurance companies are no longer just willing to send out the good old paper cheque. They’re looking to give their customers a choice, and we’ll see that become more mainstream.

And then we couldn’t look at a 2023 insurance outlook if you didn’t use the word parametric. Those covers are coming through along with embedded finance.

Embedded insurance products and your parametric covers are not a million miles away from each other, and I think we’ll see more of those appear.

What do you think the biggest challenges for the insurance sector will be in 2023?

Given the natural disasters we’ve had over the last 12 months, the industry will have to do a bit of a reset. The reinsurance prices are going to go up, which means the premiums are going to go up, which means people will have to decide whether or not they still want all that cover.

I think the most significant challenge will be getting the underwriting and reinsurance businesses back into a profitable state given what’s happened in the world – droughts, floods, winter storms – which have taken a bite out of the insurance market.

The challenge this presents in specific markets will be in keeping the economy going by ensuring that insurance covers are in place so that people can invest and business can take place. Nothing happens without insurance. If that’s not there, it’s a big problem. So making sure that in places like Florida (where the ability to buying re/ insurance is no longer a given), they can keep that cover there, but also keep it affordable for businesses in what’s already a high-inflation/high-cost environment.

It’s also appropriate to talk about the cost of living crisis, which will be a big challenge for the insurance industry. With rising prices, people will have to decide what covers they’re going to maintain – is that house contents insurance, good health cover, travel insurance, pet insurance, or phone insurance?

My closing comment is, that through 2023, Vitesse is looking forward to continuing our excellent growth trajectory, and to being the payment partner of choice for the insurance industry. We’re going to continue to scale but we’ll also continue to innovate, bringing real value to our customers and to the end consumer.

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