LTP recently had the pleasure of interviewing Matteo Carbone, one of the judges of MEDICI Top 21 - InsurTech. Matteo works in Bain Financial Services and has spent most of his time advising many primary players in the Italian market. He is an expert on key issues and emerging trends in insurance and wealth management sector. He has wide experience with major international insurance groups.
LTP: Could you please describe to us what you do in 50 words?
Matteo Carbone: I’m an advisor, my field is insurance innovation and I’m proud to be at the top of your InsurTech's most influential power list. I’ve advised many international insurers since I joined Bain 10 years ago and last year, I created the Connected Insurance Observatory with Ania to spread the culture of insurance innovation.
LTP: Your definition of InsurTech.
MC: All the players in the insurance sector will be InsurTech – meaning organizations where technology will prevail as the key enabler for the achievement of strategic goals. Considering incumbents – insurance carriers or distributors – it is unthinkable for them to not pose the question of how to evolve their own business architecture by thinking which modules within their value chain should be transformed or reinvented via technology and data usage.
LTP: Startups vs. Incumbent: Disruption or Collaboration?
MC: I’m bullish about collaboration; the insurance sector will be characterized by ecosystems and the large part of the profit pool will go to the players able to integrate and manage complex and liquid ecosystems. I’m expecting to see boundaries between roles in the value chain to disappear and same players to collaborate or compete at the same time, depending on context. The collaboration approach between incumbents and newcomers has already been demonstrated to work well in the most mature InsurTech use case: auto telematics. The Italian experience – the only market worldwide where auto insurance telematics is already mainstream with almost 5 million active black boxes and a penetration higher than 16% – in those years, was due to the collaboration between Insurers and tech companies. These tech players were startups 10 years ago when they started to collaborate with incumbents, allowing all the market – including the small and medium insurance carriers – to use the black box for data collection in order to select risks and improve claim management.
LTP: Name main challenges for InsurTech startups.
MC: The insurance business has to crack a strange industry which is:
- Heavily regulated
- Characterized on one side by compulsory or semi-compulsory product and the other side by product sold, not bought
- Dramatically heterogeneous country by country
- With unique economics structure
- Requiring a long-term perspective
LTP: When you judge an InsurTech initiative, what are you looking for?
MC: I’m looking for initiatives able to create differential value on four axes:
- Profitability: Impact on the level of profitability of the insurance portfolio, for example, acting on the loss ratio level or on the cost level.
- Proximity: Contribution for creating improved relationships that are based on numerous touchpoints during the customer journey.
- Persistence: Increase of the renewal rate and thus, of stabilization of the insurance portfolio.
- Productivity: Impact on the top-line, in terms of new client acquisition, cross-selling or additional fee collection for services.
LTP: One advice for InsurTech entrepreneurs.
MC: Go out and study the insurance market. From my point of view, an InsurTech entrepreneur must develop a deep understanding of what the customers want and what the fundamentals of the insurance business are.
LTP: How long until we’ll be able to see an actual material InsurTech change on the insurance market?
MC: We have already seen some material changes – I’d mentioned it before, the Italian experience on auto insurance telematics. With regard the question, “When will telematics change the way you do business on auto insurance?” about 66% of the insurers who joined the Connected Insurance Observatory – more than 30 Insurance Groups including Generali, Axa, Groupama, Reale Mutua, HDI, Helvetia, Poste Vita, RGA, Swiss Re, Munich Re, Europ Assistance, Allianz Global Assistance, IMA, etc., – answered that they have already seen this impact.
MEDICI Top 21 is an international competition organized by MEDICI in cooperation with LTP, global banks and FinTech VCs to identify the most promising startups in each of the 28 FinTech segments. This leg of the awards is focused on the InsurTech space. Apply Now!