InsureTech Connect took place in Las Vegas on 3 & 4 October. We’re breaking from our normal Bitesize InsurTech format to provide our initial thoughts.
1. Hype has declined
We have frequently commented on the level of hype surrounding InsurTech and noted that it was out of kilter with the impact – see our infographic. This year the hype has subdued and there was no mention of the ‘Uber-moment’. Blockchain is being seen as an enabler of new propositions rather than as an end in itself; peer-to-peer appears to have been eliminated as a proposition concept.
2. Pivot from distribution to enablement continues
Twelve months ago our analysis suggested that c.50% of InsurTechs were focused on distribution. We have seen an evolution since then to propositions which support incumbents. This has occurred both through startups pivoting their proposition (e.g. life platform Sureify, arguably Trōv) and through new B2B launches.
The consequence was a weighting of discussion towards the challenges of partnering with incumbents (unresolved) and corporate innovation management (inadequate) and examples of specific use cases where technology has improved the process.
3. Startups are clustering…
Not only are startups moving more towards B2B models, but they seem to be clustering around certain themes. For example:
- Drones and satellite imagery, e.g. Kespry and Orbital Insight are harvesting and analysing image data
- Data augmentation and AI, e.g. Carpe Data and Planck Re are ingesting and analysing data for various insurance use cases
- Digital engagement, e.g. Sureify are a platform for life insurers to deliver better customer experiences
- ClaimsTech, e.g. RightIndem are a processing and analytics platform for claims in various industries (Bitesize)
- P&C IoT, e.g. Ring have produced a smart doorbell
Commercial P&C remains underweight (but is coming increasingly into focus), as does life & health.
We think this is a natural evolution of an embryonic market: companies will inevitably cluster around areas where they see traction.
4. …which means that integration is king
Increased density of startups around particular ideas implies, in our opinion, that integration, and not the idea, is king. In other words, it’s not enough to bet on the principle that aerial imaging will be an important part of the insurance value chain in the future: companies need to select the right partner and integrate this into their proposition at least as well as their competitors.
We have already noted above that incumbents’ ability to integrate InsurTech successfully remains, in our opinion, the greatest inhibitor to the development of this sector.
5. We’re entering a post-POC phase
Over the last 12 months, companies and startups alike have been racing to agree POCs with insurers. We detect a certain weariness about POCs creeping in on both the insurer and startup side.
This is again, perhaps, inevitable. Last year the industry was focused on proving the general concept of InsurTech. Incumbents are becoming impatient and want to see a return on their innovation budgets, and startups want to see revenue against their cost of POCs. We expect incumbents and startups to become more selective about the POCs they start; in other words, only when both sides see business demand for implementation.
6. Not if but when
Despite the more sober atmosphere at the conference, there was general agreement that change (and opportunity) is ahead: it’s a question of when, not if. Mike McGavick, CEO of XL Group, gave an excellent presentation on the first day and pointed to the structural challenges of the industry – the uncertainty of policyholders about the efficacy of their policy at the time of loss, the low insurance penetration as a percentage of economic loss in natural disasters and the high cost of providing insurance. The industry will continue to change.
We will publish more thoughts over the next few weeks.
Oxbow Partners is a consulting firm with a specialism in InsurTech-led change. Our clients are insurers, reinsurers and brokers. If you are thinking about your InsurTech strategy or implementation, we would be delighted to hear from you.