
Munich Re buys IoT middleware startup, relayr, in deal worth $300M - AhmadM91
https://techcrunch.com/2018/09/04/munich-re-buys-iot-middleware-startup-relayr-in-deal-worth-300m/
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theomega
There is an interesting overlap in insurance and IoT: The big insurance
companies like MunichRE are big in the business of insuring other companies
against downtimes of their (industrial) machinery. If you equip machines with
sensors, there is the chance of predicting downtimes (and unplanned
maintenance) and preventing them. So the insurance can offer better pricing.

Overall, a lot of stuff in the insurance business depends on having the right
data available. If you manage to collect the right(!) data using sensors, you
can get an competitive edge.

Of course, a lot depends if you can crack the data analytics problems around
predicting and preventing downtimes.

Disclaimer: Worked for Relayr

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Eridrus
At some point, what are you insuring against, if you know which machines will
fail? This reminds me of the pre-existing conditions debate in healthcare - if
you only insure healthy machines, then what is the point of buying insurance?
Sure, catastrophy insurance is good, but I wonder if better data may reduce
the size of the insurance market. Not necessarily bad for those being insured,
since they could do preventative maintenance, but I wonder if the insurers are
at all concerned.

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dsr_
The insurance company wants to pay out less money, so they offer a reduction
in premium cost for behaviors that they think are worth that differential.

Suppose you have a thousand doohickey machines that cost 10,000 each to
replace in an emergency, of which 50% is the doohickey cost and 80% of the
rest is the emergency labor cost ; a ten year lifespan, and an observed
failure rate of 1% per year.

In a normal year, you need to replace 100 doohickeys at a cost of a million.
Over ten years, you replace 1000 doohickeys at a cost of ten million. Your
insurance company charges you 1.02 million a year whether they have to replace
900 or 1100 in that particular year. It costs you a little more on average,
but it keeps you from experiencing a catastrophe.

Now the insurance company gathers data from your doohickeys that predicts with
90% reliability that a doohickey will fail within a month. If they can pay the
1000 non-emergency cost of the labor (plus the 5,000 part cost), then they go
from a 10,000 outlay to a 6000 outlay. 4000 savings x 90% x 100 doohickeys
needing replacement is 36000.

So the insurance company offers you a reduction from 1.02 million per year to
985,000 per year if you install the realtime doohickey monitoring system.
That's a great savings for you, a good savings for the insurance company, and
everybody is happy...

unless it turns out that the realtime doohickey monitors have lousy security
and leak valuable personal information to anybody who guesses the password
(which is password321).

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hobofan
Kind of surprised by a sum that high.

From everything I've heard from people close to the company they've been
struggling really hard to close big contracts (and spending a lot of
time/money/effort on building prototypes for that), and they've been
hemorrhaging employees the last year.

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cominous
I can confirm this - I got similar information from several employees. The
market is extremely hard and doesn't scale well. They did a great job solely
by surviving and I'm really happy, that their hard work is rewarded now.

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tnolet
Pretty cool to see company I shared an accelerator and an office with being
sold for this generous sum. I just don’t see how a Berlin IOT startup and its
culture is going to thrive under a Munich insurance company. Very curious how
this pans out.

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otoburb
Are the cultures very different between Munich and Berlin? Your comment
implies this and would be interested in hearing about this for those of us
that have only infrequently visited other cities in Germany such as Frankfurt
or Düsseldorf.

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supahfly_remix
Munich Re is in the (re)-reinsurance business, but they apparently own HSB
which appears to be telecom-related so it could make sense to buy an IoT
middleware startup. Can anyone explain the relationship between these Munich
Re and HSB? They seem to be two different, non-complementary lines of
business.

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detaro
From my understanding, HSB is the industry arm of Munich Re. For insuring
industrial facilities, expertise in auditing those is needed, and they also
sell that expertise. IoT fits in there as a way of collecting more data,
improving the quality of their risk assessment, selling monitoring equipment
also means being able to avoid insurance cases, monitoring of SLAs that are
insured, ...

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supahfly_remix
Thank you for the explanation. Never thought of insurance companies having an
interest in IoT.

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jon-wood
I work at Neos, where we’re using IoT in the context of home insurance. Almost
all our investors are insurance companies (including Munich Re who underwrite
our policies).

Insurance is all over IoT, and indeed anything else with the chance of
reducing risk - it’s what they do.

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supahfly_remix
Wow, good to know. I know.Progressive insurance used to have a.dongle to
monitor driver behavior for a discount. It predated.the term Not and used.the
2g network.

