InsurTech start-ups can revolutionise the industry

InsurTech companies, the catch-all term for technology vendors targeting the re/insurance industry, have the potential to change the entire structure of the sector.

“New ventures are starting up across the globe, with $9 billion of entrepreneurial venture capital funding them,” Paul Mang, chief executive officer (CEO) of analytics at Aon, told Monte Carlo Today.

“Where there is innovation, the important ideas will evolve into some sort of partnership between start-ups and carriers.”

He added that it is likely that the industry will be disrupted not from the outside, but rather from within.

“The current participants in the industry will possibly need a little prodding but that will change the industry from within in a fluid way,” said Mang.

In 2015, the US property/casualty industry experienced its 10th consecutive year of reserve releases, which resulted in $7.3 billion in favourable development book.

However, Mang noted, this was the smallest reserve release by the industry since 2006. If this trend were to continue, according to Mang, the profitability of companies’ core operations would inevitably play a more important part. And this is where new technology can make a difference.

“New ventures are prompting insurers to rethink their core operations and we have the opportunity to improve efficiency across the value chain. Much like insurers, InsurTech companies are looking at our value chain and focusing energy on areas where there are real opportunities,” he said.

He warned that the industry could do a better job of going back to its roots as a problem-solver.

“In the current market conditions, insurance should be increasingly relevant. We have the opportunity to do more as we are the ultimate big data industry.”

Mang added that insurers have become more conservative as the market has evolved, but that he fully expects a renaissance for the industry.

On trying to close the protection gap, he is looking forward to working with new technology, such as satellites and drones, and with innovators to collect better and more meaningful data around the globe.

“Data and analytics is the glue that allows you to match risk with capital. We’ve done a great job in some areas but we can do more,” he said.