RBC Capital Markets: InsurTech Conversation with Oxbow Partners
September 14, 2017 Chris Sandilands
Kamran Hossain, Director in RBC Capital Markets insurance team, recently asked Oxbow Partners about their views on InsurTech which was published in a research note on 13 September 2017. Kamran’s summary of the Oxbow Partners view is copied below; the full research note can be downloaded from the link.
1. InsurTech is not a new phenomenon
Oxbow Partners defines InsurTech as young technology businesses with a proposition targeting the insurance industry. Based on this description, InsurTech is not new, however what is new is the frequency with which InsurTech businesses are launching. Despite this increase, InsurTech investment volumes are still lagging FinTech volumes for now due to the relative unattractiveness of the insurance market to entrepreneurs and the practical difficulties of launching an insurance startup.
2. All parts of the value chain should benefit from InsurTech
Oxbow Partners believes that Insurers will benefit from InsurTech in data, policy admin and claims functions. Data is the focus of many startups, however Oxbow Partners is most bullish about the potential for a revolution in the claims process. InsurTechs should help insurers’ claims processes to benefit from an increasingly connected world and the Internet of Things. InsurTech will inevitably change insurance products of the future, at present there is a battle between those that want to make insurance easier (such as Lemonade) and those that want you to care more about insurance (Trōv, Brolly) with the first of these groups gaining more traction at present.
3. Insurers are using different models to interact with startups
The insurance industry is using three main models to interact with startups at present: innovation teams, incubators and direct investments. A good example is Munich Re, which has an innovation team, an incubator and also makes direct investments into InsurTechs. Oxbow Partners believes that the right approach differs from company to company, but it is generally more sceptical about the impact that a Corporate VC can have.
Royal Bank of Canada Capital markets Research note