The Tip of the Iceberg: InsurTech Activity in Life and Health insurance and Pensions and Investment



Oxbow Partners will soon publish its latest report, this time examining InsurTech activity in the life and health insurance, pensions and investment (“LHPI”) markets. The report is sponsored by RGAX

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LHPI  an InsurTech leader or laggard? 

We note that most InsurTech commentary is about general insurance – Lemonade, CoverWallet and other big names. It’s easy to conclude that LHPI InsurTech is a laggard. We argue that this is not the case. 

On the one hand, some parts of the LHPI market have seen major proposition disruption, arguably eclipsing anything that has happened in general insurance. Vitality, a brand set up by South Africa’s Discovery Group, has transformed the life and health insurance product in several countries including the UK and Germany. Oscar is a US-based health InsurTech; founded in 2012, it is now valued at over $3billion. 

But despite the successes – and we describe many more in the report – it is also true that LHPI InsurTech activity is patchy. For example, investment is highly concentrated, to a small number of mostly health-related players. 

So overall, it is fair to say that whilst there have been some breakthroughs in the LHPI world, the overall InsurTech landscape is far less lively. Why is this? 

We point to five possible reasons: 

1. Low customer awareness and demand 

It is no secret that around the world people are either uninsured or underinsured and this is particularly acute in the LHPI space. In the UK in 2018, less than one third of UK adults had life insurance; equating to 8.1 million households – three million less than the number of properties with mortgages. P&I is no different. In June 2019 the World Economic Forum estimated that retirees in the UK will outlive their savings by 11.5 years. The same report found that the eight countries with the largest retirement savings market still had a savings gap of $70 trillion – forecast to grow to $400 trillion in 2050. We profile some LHPI Distribution InsurTechs trying to change this. 

2. Low consumer trust 

LHPI products are fundamentally guarantees that policyholders or their families will be taken care of at their most vulnerable times. Over the years, as incumbents have got larger and as relationships between customers and insurers have become increasingly distant, consumer trust in an incumbent’s ability to make good on this guarantee has decreased. In the pensions space for example, hidden charges and well-publicised corporate pension fund deficits led to a survey finding consumer trust in pensions providers lower than their trust in both banks and energy companies. Can InsurTechs like yulife change this with their friendly and gamified propositions? 

3. Limited access to customers 

Much of LHPI business is distributed by intermediaries. In the UK for example, 81% long term savings and investment products were bought through independent or restricted advisers in 2018. In many cases where business is intermediated, incumbents have limited insight into their policyholders, sometimes not even up-to-date physical addresses, let alone e-mail addresses, and are unable to engage with customers in any meaningful way as a result. We profile some InsurTechs either trying to reach customers directly, or helping collect better customer data through the value chain. 

4Challenges with risk modelling 

Approaches to modelling mortality, longevity and morbidity risks to underwrite policies have evolved slowly in risk-averse companies, where potential long-term downside often outweights short-term upside opportunities. A new generation of data and analytics companies with a focus on LHPI are emerging, for example Lapetus Solutions which became famous for its app which guessed people’s ages from a selfie – a cunning way to train an algorithm. 

5. High operating costs 

LHPI incumbents often have high operating costs, driven by historic consolidation activity that has saddled them with enormous legacy costs. The executive’s focus is therefore on big-ticket cost-cutting initiatives, and not on innovative revenue-upside. We profile some companies helping defeat legacy system costs. 


How can incumbents ensure they are on the front foot? We believe they should take several actions. 

At the highest level, incumbents must be clear on the centrality of innovation to their strategic objectives. Is innovation an existential question, a strategic opportunity, or a tactical tool? Few LHPI incumbents have answered this question as clearly as even their general insurance counterparts, let alone other industries. The very fact that innovation feels unimportant might be a reason to investigate options further and make a bold, market-changing move. 

Setting a vision will help to define actions and embed innovation across the group. All too often InsurTech partnerships are still driven the quality of an opportunistic sales pitch rather than as the result of a clear strategic scouting and selection mission. 

Incumbents must focus on nurturing talent and building the future of the workplace. It is no secret that the insurance industry as a whole has an image problem. Historically poor customer service, mandated products (e.g. car insurance) and reports of sexual harassment at major firms and markets have all contributed to negative perceptions. For LHPI incumbents, this reputational problem is particularly acute, as propositions seem removed from the life of a young twenty-something.  

More detail on these incumbent actions, as well as three others, can be found in the last section of our upcoming report. Subscribe to our mailing list to get the report in your inbox first. 


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About the author

Lucy Alphonse is a Consultant at Oxbow Partners. You can reach her at

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