In January, Intelligent Insurer hosted a panel of insurtech and insurance transformation experts to gather predictions for the insurtech landscape and advice on partnering for change.
Opening the panel, David Clamp, founder and chair of The Camelot Network and panel moderator, said: “Every insurer and reinsurer knows that change is on the way. This will be either tech-driven change or customer-driven change and that will transform, over time, the way we operate and our businesses.
“At the same time, thousands of insurtechs have launched in recent years. Some are succeeding, some aren’t, but they’re all challenging what we’re doing. They’re driving great learning from within the insurtech world and across the insurance space.”
An infant industry
Carl Bauer, founding partner at Eos Venture Partners, believes that insurtech, as we see it now, is just scratching the surface of what is to come and that much has changed in recent years.
He said that the “first accelerator and the absolute game-changer” has been the mobile phone, which created mobility and transferability of data and tracking.
“There were still a lot of excuses out there until COVID-19 in terms of ‘we have the time, this is going to be gradual’. Suddenly the world hit a massive turbo button which, as we all know, has accelerated digitisation.
“2022 is going to be a continuation and acceleration of what we’ve seen. This is not a linear curve for us, this is an exponential curve,” he added.
Eric Joost, chief technology and global markets officer at CAC Specialty, is confident about the future of insurtech but warned that not every venture will be successful.
“2022 is going to be a continuation and acceleration of what we’ve seen.”
Carl Bauer, Eos Venture Partners
“I’m very bullish on where this all goes. There’s going to be injuries and some car crashes along the way, but you can see bright spots of what this stuff can do if you dig in. It can be very impactful but the idea has to get some legs, it has to fit into the ecosystem,” he said.
Joost advised that insurtech applications must be looked at in the insurance context, rather than outside the insurance world. As an example, he explained, while blockchain was going to take over insurance four years ago, people are now realising “that, as valuable and interesting as blockchain is, in say the crypto world, it’s very expensive to run in the insurance world and doesn’t really get you that much additional value”.
Joan Cuscó, global head of transformation at Mapfre, said that a lot of money is “being poured into these newly born unicorns and they are transforming traditional parts of the value chain”.
However, he added, unicorns are not all we need to focus on.
“The new things coming are what we need to keep our eyes on, mainly being new types of risk that no-one was caring about, because it was not profitable for traditional insurers to tackle them. But now, with technology-based insurtech, you can underwrite those risks and all the services around the core insurance products.”
The next generation
On the topic of transforming the value chain, Bauer is confident that insurtech will touch every single point of the value chain within insurance.
“It’s going to have a very active role in terms of the existing insurance proposition and the next generation of the insurance proposition which will go from protection to prevention to prediction,” he said.
According to the panellists, transformation across the sector is crucial.
“With technology-based insurtech, you can underwrite those risks and all the services around the core insurance products.”
Joan Cuscó, Mapfre
Cuscó added: “Every single piece of the value chain that insurtechs are trying to transform needs to be transformed. Every single thing that’s on their agenda should be on our agenda as big carriers and traditional companies.”
In agreement, Joost said: “Before we were talking about insurtech, there were plenty of people talking about how to optimise the business. The insurtech piece is an accelerant to good ideas to run your business better.”
It’s clear that the insurtech landscape has changed in recent years, developing new ideas and becoming a real threat of disruption but also bringing promise to those in the insurance industry who work with insurtechs to transform.
When Bauer co-founded Eos five years ago, he spoke to insurance CEOs. Simplifying their answer, he said that they were very interested in insurtech and believed that they had everything under control with a head of innovation in place.
Fast-forward five years and a lot is changing, with insurers realising they need to create an ecosystem through partnerships, multiple allocations of capital, and the possibility of having to rethink how to organise entire divisions away from their verticals.
“The biggest threat for established insurers is not so much whether x, y, or z insurtech is going to eat their lunch and they’ll end up in bankruptcy, but really a question of ‘is my neighbour going to integrate this in a much faster and better way, as they can really eat my lunch?’.
“Insurance CEOs of incumbents are now realising it’s not if but when, and the moment of true rapid change is approaching fast,” Bauer said.
To view the full discussion visit: intelligentinsurer.com
Images, from top: Shutterstock / Photo Spirit
