(Image source: Digi.me blog.)
Digi.me and Personal just announced a merger (backed by SwissRe along with eBay founder Pierre Omidyar’s fund and several other VCs). The new combined company, Digi.me, is devoted to putting you in control of the new personal data ecosystem. In a 2005 article for The Futurist Magazine titled “Managing Your Most Valuable Asset” I compared the “personal information asset management opportunity” to what the mutual fund industry had done by aggregating the assets of millions of small savers into the most powerful institutional investor in the world.
Today the five most valuable companies in the U.S. are Apple, Google/Alphabet, Microsoft, Amazon, and Facebook (ranked in that order as of May 2017). In the case of Google and Facebook, 90 percent of their value is based on selling our digital footprints to advertisers. Google and Facebook now capture about 85 percent of the market for selling our search and web page click data to advertisers in the United States. Doing a little math using their market capitalization puts the current market value of all digital footprints in the U.S. at approximately $1 trillion.
The digital ad market topped $69 billion in 2016 and is projected by eMarketer to reach $105 billion by 2020. To provide a little context, using a few insurance industry market size examples, total U.S. homeowners insurance premiums in 2015 were $89 billion and total life insurance claims paid (group and individual) were about $74 billion.
What if we created a new insurance product category that empowered ordinary people to negotiate a share of these digital ad revenues while also managing and protecting their other personal information assets (e.g., health data, media licenses, etc.)?
Group Negotiations – The insurance industry has a long history of bringing groups of people together to manage asset risk. That includes experience in selling personal insurance products to employer groups, associations, and customer groupings such as large retailers e.g., WalMart, Costco, etc. These group contracting strengths could be a key asset in building the market for personal information asset management.
Blockchain, Smart Contracts, and Those Terms of Service Agreements – Think about it. You’re presented with a “Terms of Service” agreement from any of the major online services and what do you do? Do you make a counter proposal? Of course not! Your only real option if you want to proceed is to click the “I Agree” button. The insurance industry has experience in administering complex contracts. This is a key set of strengths that most of the startups trying to tackle the personal information asset management space today just don’t possess. The digital ad networks and the networks of networks (called digital ad exchanges) have evolved into an amazingly efficient marketplace. From the time that you swipe or click to the time your search result or new page is displayed, a global auction typically takes place to sell the ads that you’ll see next. The auction is completed within a fraction of a second and several participants in that process are then paid. Even before Blockchain introduced the power to broadcast terms of service agreements to a public ledger, we had the possibility for individuals to be represented in these auctions. There was just no commercial entity to represent our interests in these micro payment transactions.
Claims & Asset Management Expertise – The third major insurance industry strength has to do with having an infrastructure to monitor and enforce agreements. In insurance we call this claims processing. When players in the marketplace come to understand that there is a powerful institutional entity looking out for the interests of the individual (via litigation if necessary), certain abuses around the use of personal information will largely go away over time. And since the insurer will probably be paid a percentage of revenues generated from assets under management, we also have an entity with an ongoing and continuous interest in expanding the personal information asset categories being managed and protected (e.g., media licenses, inventions, health and fitness data, etc.).
Personal Information Asset Management products should respect the fact that individuals “own” their information assets and have a right to protect these assets, profit from their use, and even move the management of their information to a competing asset manager. The talk around InsurTech is focused on the potential for digitally savvy tech giants and startups to disrupt the insurance industry and that will almost certainly happen. But another possibility is that the time is right for the insurance industry to disrupt the marketplace for personal information assets.
Insurance of the Future: Prevention, not Reaction – SAP Exec