What are the main trends impacting the insurance industry in 2017?
Falling premiums and margins across most classes, saturated developed world with emerging markets flattering to decide again. A gradual undermining of the traditional distribution patterns, particularly in SME, led by reinsurers and new partners moving up the value chain. Time is running out for those stuck on legacy platforms with no plans to invest in digitisation. Increased levels of co-operation between InsurTech and incumbent insurers as the benefits of working together become clear to all.
About connected insurance, what are the opportunities for startups? Do they need a proprietary underwriting algorithm?
Connected insurance still remains about indications of policyholder behaviour and not yet about UBI and the ability to used detailed IoT data for real time pricing. The opportunities for start ups are limited when working alone. The true value lies in the conversion of connected world data into something that truly allows for risk prevention, mitigation and pricing. So, underwriting algorithms based on AI are key to the creation of real value, but they’re difficult for the startups to build without access to historical data or underwriters domain knowledge.
What are the advantages that InsurTech startups have over incumbents?
The right culture, freedom from pre-defined analogue ways of thinking and legacy technology, energy, enthusiasm and belief alongside access to the very latest technologies and ways of doing things
What are the main challenges for InsurTech startups in order to gain traction in the market?
It’s still difficult to get angel financing so at the start resourcing is constrained, interest in InsurTech remains limited to personal lines, lack of access to incumbent data to learn and create essential algorithms and the fact that InsurTech and incumbent insurers still work in largely parallel ecosystems so only a minority of incumbent market players have a known point of access.
How do you evaluate an InsurTech initiative?
My checklist is:
- Quality of the management,
- Quality of the idea,
- How much effort will it take to get to market,
- Have they raised enough money,
- Have they chosen to work with or compete with incumbents.