The Monday mindset: 21 August 2017
Is insurtech losing its lustre?
Fintech zeitgeist! Every Monday, we might look back at last week; look ahead to this week; share a few thoughts (our own or others); or discuss anything that catches our eye.
This week, Oisin Merrins, editor at InsurTech Rising (Banking Technology’s sister company), ponders whether insurtech is losing its lustre.
It can’t go on indefinitely – the hype surrounding insurtech has to give way at some point.
The premature triumphalism, the bold claims that a new age has dawned, it’s all beginning to ring a bit hollow for some; they’ve heard enough PR messaging and are on the lookout for value and impact.
Admittedly, the growth of insurtech has been less oppositional, less bolshie than that of its fintech cousin: there haven’t been waves of challengers arriving on the scene threatening to dispossess the big players of their “lunches”, or whatever trite business metaphor is in vogue nowadays.
Yet a few questions have been cropping up in conversations with insurers, investors, and the like over the past few months that point to a growing sense of disillusionment, or rather a sceptical reluctance to indulge the hype that insurtech represents a simple panacea for insurance’s many ills.
- Traction: where are insurtech propositions gaining a foothold in the market?
Adoption curves are naturally set by consumer behaviour patterns, so customers need to be ready for a particular product or service. Many point to the poor take-up of usage based motor insurance or the failure to develop a compelling proposition around the smart home as evidence that insurtech initiatives have yet to succeed on a large scale.
Despite the much trumpeted shift to a more customer-centric model, has the excitement around insurtech created a bubble, with the industry looking out rather than looking in from the perspective of consumers?
- Innovation: where can we see real innovation on the core of insurance?
Customer experience, distribution plays, fine. But where can see evidence of fundamental transformation of the way in which an insurer operates? The back office might be a little less “sexy”, but its where innovation will deliver impact and value.
- Growth: how will insurtech contribute to market growth?
Some contend that insurtech solutions as they currently stand won’t grow the market for insurance – they’ll simply sell the same products in a different way. We’ve seen some niche managing general agents (MGAs) emerge – off the back of the sharing economy, for example – but how will insurtech drive market growth?
I do not want to rain on the insurtech parade, but let’s all agree that less hype is healthy. And the sceptics and cranks do raise important questions.
To end on a positive note, it’s particularly encouraging that insurtech has from the outset been defined by an ethos of collaboration, with the vast majority of start-ups being enablers of change for the established players rather than “lunch” poachers. It will be interesting to see how things develop once the hype dissipates and the knotty problems take centre stage.
Last week’s Monday mindset discussed a growing trend of celebrity endorsement in the fintech world.
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