As interest and investment in the insurtech sector rapidly grows, many executives increasingly believe that what was once considered hype around this sector’s potential to transform re/insurance will now become a reality.
That will be one of the main themes of Intelligent InsurTECH Europe 2017 in London on October 3 where many of the key players in this market will be speaking.
Figures are increasingly showing that companies are putting real money to work in this sector as the benefits are moving beyond theories into realities.
Antony Elliott, Zurich head of business transformation and one of the speakers at Intelligent InsurTECH Europe 2017, said: “A few years ago, the insurance sector thought that these startups were coming to eat our lunch, now we see them collaborating and joining us instead.”
One example of this growing commitment to the market is evidence that global insurtech investments increased sharply in the second quarter of 2017 as re/insurers embraced the opportunities the sector offers, according to a new PwC report, Insurtech: The New Normal for Reinsurance.
Investment in insurtech by global insurers, reinsurers and venture capital firms in Q2 2017 surged by 247 percent to $985 million, compared to $398 million in the same quarter of 2016. Volumes also jumped compared to Q1 2017 when there was $283 million of insurtech funding.
“A change has happened and it’s hugely encouraging to see insurers and reinsurers increasingly viewing insurtech as an enabler rather than a competitor,” said Patrick Maeder, EMEA insurance consulting leader at PwC.
“This uptick in enthusiasm is vital to ensure the industry engages with innovators to help shape its own success. Neither party can survive this wave of disruption on its own and a collaboration between experienced industry players and new ideas and technology will result in new products, reduced costs and more engaged customers,” Maeder noted.
PwC predicts the rate of funding and investment will continue at a similar level and the report highlights an uptick in interest in insurtech from the reinsurance industry as sentiment turns from fear to bullishness, and from scepticism to collaboration.
The report notes that re/insurers have begun to realise how exploring new technologies and talent groups can help them play a leading role in transforming their industry. In this new world, collaboration is key. The report also states that “Now is the time for insurers and reinsurers to work with innovators to modernise the industry.”
“Insurtech innovators have rapidly established themselves as the backbone of innovation in this industry but re/insurers should not be overly concerned about startups directly disrupting their product offerings,” said Maeder.
“They should instead focus on what makes their business unique and where they see future growth coming from. Reinsurers then need to find the best way of directly working with this new wealth of tech-savvy talent to place themselves at the heart of what will undoubtedly be a transformation for their business and the wider industry.”
Insurers and reinsurers are accelerating their involvement in the insurtech industry, by either buying stakes in insurtech companies, or partnering with them, or providing capacity to new insurtech entrants in a move to remain relevant to customers.
Zurich, for example, is collaborating with accelerator Startupbootcamp, which supports early-stage tech founders to rapidly scale their companies by providing direct access to an international network.
Zurich sponsors the accelerator, participating in the annual selection, shortlisting, and pairing the startups with partners from within the company. The collaboration includes intensive coaching for three to four months where the startups receive advice and technological input from Zurich.
“At earlier stages, you’ve got much better chances to influence the direction of the startups, where it would be advantageous for us as a company,” Elliott said.
Zurich is looking at areas where it can cooperate with startups, some of which are focusing on customer interaction, on a proposition for millennials or on the back office, looking at how to improve areas such as claims litigation. Investing in them is also seen as a potential option.
Elliott believes that insurtech companies can help the industry become more efficient, effective and customer-centric. New ideas coming from insurtech startups could solve many problems and offer opportunities to improve products and increase efficiency.
“I do absolutely think there is potential,” he said. “Across the industry, a lot can be done better.”
Intelligent InsurTECH Europe 2017 is set to foster the exchange of ideas and experiences between the insurtech sector and the insurance industry. The event brings together executives from global insurers such as Allianz and AIG with insurtech startups to discuss trends in the market and opportunities.
Startups will be showcasing solutions to participants at the conference while speakers from major insurance companies will present and discuss real-life examples of how insurtech solutions such as blockchain or predictive analytics are transforming the industry.
Get the latest re/insurance news sent to your inbox every day - Sign up to our free email newsletters
Today’s Monte Carlo stories
Monte Carlo, Insurtech, Reinsurance, Insurance, Zurich, Antony Elliott, PwC, London Intelligent InsurTECH Europe 2017