Insurtech: investors are focused on practical implementation

Insurtech: investors are focused on practical implementation

In an interview with Lisa Moyle, portfolio director of InsurTech Rising, we dive into the importance of partnerships and investments with insurtechs. She recently hosted InsurTech Bytes – a podcast for the future of insurance, which has kicked off with a panel of insurtech investors and partnership pioneers. 

2016 saw a lot of hype around insurtech, with record levels of investment. How is the insurtech sector maturing?

There has been huge flow of capital into insurtech in a short space of time. Compared to fintech and banking and payments more broadly, the journey from birth to maturity has been faster and more seamless.

Alongside Oisin Merrins, editor of InsurTech Rising, I recently launched a podcast – InsurTech Bytes. The first edition features a panel of investors, who highlighted that that given that there are only three end to end digital insurance propositions globally, collaboration and partnership have been at the heart of the insurtech sector.

Oisin felt the hype is subsiding a bit as investors are focused on practical implementation and identifying what part of the value chain the next wave of innovators will target.

We’ve seen a lot of distribution related insurtechs emerge, but what are the big ways insurtech can augment the insurance value chain?

As the second wave of innovation comes to fruition, Dan Smith – managing partner at Exponential Ventures – noted in InsurTech Bytes that the focus will be on disruption around particular parts of the value chain; the back and middle office. A key impact, from the view of incumbents and noted during a conversation with Moshe Tamir at InsurTech Rising last year, is the extent to which insurtechs can support the broader process of digitisation.

Also key is the extent to which insurtech can bring new and previously unserved customers into the market. 

Corporate VC – how is it connecting insurers with insurtech partners?

Jannat Shah, associate at AXA Strategic Ventures, noted, there are two important and key incentives to partnering from the incumbent’s perspective: the identification of particular problems to be solved and the opportunity to launch new business and do things differently. Collaboration is happening although it can face any number of challenges around speed, and the potential cooling impact of internal processes within large institutions.

What propositions have you seen that have really innovated on the core of insurance?

There has been a great deal of innovation around distribution with only three full stack insurers. The propositions coming to market have supported innovation along the supply chain and will, no doubt, be turning their focus to new areas of opportunity but at the centre sits the customer and the aspiration of a frictionless user experience.

Where are the biggest areas of opportunity?

One area of interest highlighted by both John and Dan during InsurTech Bytes was the potential role of reinsurers who may well be the equivalent of a challenger in the space; albeit incredibly well capitalised and armed with vast amounts of data. They could post a real threat to small and mid-sized insurers. Reinsurers are proceeding quietly and somewhat below the radar as they need to balance long term business relationships with insurers with what is a real opportunity in a fast evolving landscape.

Another area of interest and deserving of more attention are commercial lines and our investors were clearly keen to see more propositions in that space.

Life and annuities were also highlighted as areas that could benefit from some innovative attention.

As discussed during InsurTech Bytes, cyber insurance is an area of massive opportunity and risk, listen the full podcast for a discussion of a potential tech driven catastrophe.

The potential to change behaviour and drive better outcomes for individuals remains an important challenge and opportunity for insurtechs.

Is Brexit having an impact on investment decisions?

Given the logic driving investment decisions and impact of trading rules, Brexit will, of course, have an impact. It may well take well over a decade before we can fully assess the effects.

The impact on start-ups will largely be driven by the impact on investment trends and the way in which the policy/regulatory landscape evolves. The role of incumbents in protecting the UK as a leading insurance centre is crucial and a responsibility which they cannot ignore.

Listen to InsurTech Bytes to hear the full discussion of the role corporate venturing plays in demonstrating initiative and intention around innovation in incumbents and draws attention from insurtechs.