Startup-Carrier Partnerships Will Change the Insurance Industry for Good

InsurTech is here to stay, and it will bring fundamental change to the insurance industry, said Andrew Rear, Head of Munich Re’s Digital Partners.

Indeed, in the recent history of InsurTech, insurance carriers along with the surrounding traditional elements of the ecosystem came under attack for the comparative inefficiency and lack of innovation, leaving aside the personalization element among other things. As new types of insurance products and influential technologies emerge, traditional models employed by large carriers do not seem sustainable in the long term and require work on appropriate re-application of vast resources and talent that carriers have accumulated over decades of work.

Insurance hasn’t really been on the radar of entrepreneurs in the past because it’s so complex and opaque, shared Francois Robinet, Managing Partner of AXA Strategic Ventures. Now they discovered that there are a lot of inefficiencies and problems that they can solve, meaning a lot of opportunities for innovation, he added.

Despite the general perception that InsurTech rivals the position of leading insurance companies, the full value of InsurTech for the industry will be uncovered in collaboration with traditional players. Industry leaders like MetLife, Aviva, AXA, Allianz, XL Catlin and others have recognized the importance of collaborative efforts, launching dedicated incubators and getting involved in other initiatives for various forms of collaboration. Moreover, some estimates suggest that large insurers have committed more than $1 billion to investments in startups in an effort to find new ways to grow.

Insurance is a business where there is a reason for scale and carriers that are truly open for change will probably absorb the leading new ventures, said Tom Hutton, Managing Partner at XL Innovate.

Leaders’ efforts already bare fruits - the startup community was able to build strong ties with traditional insurance companies in order to transform the way the business of insurance operates without the need to push anyone out of business in vain competition. Given that some experts estimate the insurance industry lagging 3-5 years on a digital maturity curve, such cooperation is well-positioned to facilitate a quality transformation.

One of the ways InsurTech will aid traditional carriers is in bringing down the distribution costs. Mentioned earlier Allianz earlier this year acquired a minority stake in InsurTech startup Simplesurance with an aim to distribute its products in Europe. Established in 2012, Simplesurance has developed software that enables customers to buy products online and purchase corresponding insurance coverage in a few steps and completely paperless.

At the end of November, InsurTech company Wrisk, which was founded earlier this year, has entered into an agreement with Munich Re’s Digital Partners business unit, under which Munich Re companies become the exclusive carrier for Wrisk’s business underwritten in UK, Europe and USA. Digital Partners will also provide Wrisk with access to some of its underwriting platform services.

Mid-December, Munich Re also announced a partnership with Next Insurance, in which companies will work on launching a product targeting commercial photographers, who will be able to buy, renew and maintain policies online. Earlier, mid-November, Munich Re also entered into a partnership with InsurTech startup Blink Innovation, with an aim to launch what Blink claims to be the first real-time resolution flight interruption insurance.

Another InsurTech-carrier partnership has been forged the same time – major insurer AXA has partnered with Silicon Valley insurance startup Trov to launch an on-demand, mobile-first service aimed at millennials in Britain.

"The big change in the world is the generation that lives their life on the supercomputer in their pocket is in control of the narrative between them and their products and services. We give them [insurers] a bridge to this emerging generation with zero technological integration required," commented to BI Scott Walchek, the Founder and CEO of Trov.

The list of interesting and important for the industry carrier-startup partnerships goes on, extending to partnerships with financial technology startups and others: AXA + Ant Financial, Manulife + Indico, Allstate + Openbay, Allianz + N26, Hannover Re + Ladder, Zurich + Cocoon, Genworth + Roostify, and many other mutually beneficial partnerships bringing tech-enabled innovation into traditional insurance business.

As InsurTech funding and support is being largely powered by large insurance companies, the number of collaborative efforts will only accelerate over time. At the end, the prosperity of InsurTech should not necessarily translate into the demise of traditional players, but can be achieved in powering large companies and enabling their transformation with mobile technology, IoT, social connectivity, blockchain and other factors.