In September we updated our InsurTech Overview and took a deeper look at the change that took place in the scene in just 100 days. This week we were invited so speak at the InsurTech Meetup in Berlin where we asked to take an honest look ahead. We gladly did so. Following your find a few of our (subjective) thoughts…
#1 InsurTechs are important. Every single one.
The industry needs them. They unmask market inefficiency’s and boost innovation as well as technological development. They put the customer back in the focus of the insurance approach. They speed up the change process within the industry.
#2 However many of the existing InsurTechs will not survive in their current form.
The business models we see on the market today mostly do not own an USP and are easily copied. That’s why they will either have to adjust their business models, disappear from the market or eventually be bought by a competitor, an insurance company or a service provider.
#3 There will be survivors.
Of the 47 InsurTechs in the DACH-Region we see, we believe that only 5 to 10 will still be in the market in 3 years. The ones that do survive however will manifest their right of existence in a highly competitive market. They will mainly compete with classical brokers, having the advantage of state-of-the-art-technology and highly automated processes.
#4 The InsurTech business models will change their market approach.
Sales business models and B2C focus will not go away but will take a backseat to more sophisticated business models that focus on data analytics, risk management and claims management. Many of the new players are going to be whitelabel-B2B-approaches that focus on providing better solutions to insurance companies.
#5 The emergence of many highly specialized FinTechs will initially lead to a decrease in customer satisfaction.
The advantage of being specialized will turn to a disadvantage when the number of small players competing for the customer awareness hits a critical size. The challenge is going to be, how different business models – start-ups as well as incumbents – cooperate with each other seamlessly so that the customer has ideally only a limited number of partners and customer interfaces. Cooperation will be king – far beyond sectoral boundaries.
#6 No InsurTech is disruptiv.
Business models are not going to change the industry, the sophisticated technologies behind the business model will! Disruption will start when game changers like peer2peer, blockchain, big data and artificial intelligence lead to the disappearance of intermediaries as we know them today.
#7 Everything will start and end with data.
Data is the natural resource of the 21st century. The companies that figure out the smartest and most efficient approaches to using the right data for the right purpose at the right time will be able to predict customer needs and decisions. If they are able to predict them, they will be able to change them. Those who will own the data will change the game.
#8 The time for change is now.
A highly conservative, dramatically slow and from politics and bureaucracy crippled industry meets a customer-centred and fully digitized generation of entrepreneurs that brutally unmask every little inefficiency that has been build up over the last decades in the insurance industry – and all that happens in market that is characterized by cheap money, crazy investment volumes and surreal performance expectations. There has never been a better time to revolutionize a market!
#9 The Change is just getting started.