Can InsureTech change the landscape of insurance as a whole or will it just enhance parts of the value chain? Conventional wisdom says the latter but the appearance of a model called “Reinsurance as a Service” [HT to Daily Fintech] could have far wider repercussions.
Traditionally insurance (in all its very diverse/speciated forms) is in three layers. Brokers. Insurers and Reinsurers. Traditionally you would deal with a broker. They would get the policy from a an insurer (eg Aviva who we had on the show in LFP048). Insurers in turn would re-insurethemselves with aptly named – er – Reinsurers.
We’ll talk about how Reinsurance as a Service might change that “stack”.
Andy is the CEO of Digital Partners, Munich Re’s entity for interfacing between it and the Insuretech world. MunichRe is one of the worlds largest reinsurers. To give you an idea of what that means it has around 43k employees, €50bn of revenues and €276bn of assets.
Incumbents across FS are trying all sorts of approaches to the Fintech phenomenon. Judging by results to date Munich Re have found one of the best avenues. In a relatively short time they have established partnerships with a number of InsureTechs, none of them “tangential”, including Bought by Many (stars of LFP027), Blink Innovation, Next Insurance, Simplesurance, Slice, So-sure, Trov, Wrisk.
Topics discussed on the show include:
19 trips to Australia in 3yrs – “it’s very far away”
Andy’s career – 10 yrs at Oliver Wyman and recently having run Munich Re’s Life business in the UK, Africa and Asia Pacific
the logic behind leaving a “large role” behind to a more small scale structure
Munich Re’s thinking about approaching the Fintech wave
reactions across FS to Fintech
selling JCBs online
“re-reinsurance” works via Reinsurers sharing huge risks amongst themselves
insurers and reinsurers capital and business models over time
“in any value chain the value resides as close to the customer as you can get”
A specialized type of insurance agent/broker that, unlike traditional agents/brokers, is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.
Typically, MGAs are involved with unusual lines of coverage, such as professional liability and surplus lines of insurance, in which specialized expertise is required to underwrite the policies. However, MGAs also write some personal lines business, especially in geographically isolated areas (e.g., western Oklahoma, North Dakota) where insurers do not want to set up a branch office.
MGAs and disintermediation
what InsureTechs want
the potential upcoming change in the Insurance model from Broker-Insurer-Reinsurer to Distribution-Technology-Capacity
why this is fundamental for the development of InsureTech
Reinsurance as a Service – cf plugging into electricity coming out of a wall…
banking vs insurance with respect to Fintech
how InsureTechs can interface with Insurers/Reinsurers/MunichRe
what InsureTechs bring to the table
“InsureTech could revolutionise insurance”
insurance still being bought on price alone not price & quality
the impact of price-driven sales on insurance cover levels
how to solve the utterly different timescales between startups and BigCos
how this new model relates to the existing structure of the industry
why this is in many ways “back to the future”
“just trying to make insurance like the rest of the internet”
what areas Digital Partners are interested in at present
Digital Partners offer four things in their proposition:
Product design, data analytics, underwriting & an explicit willingness to experiment with new products
Venture Capital investment
Technology (starting from the back, partners start from the front, meet anywhere desired in the middle)
in the US, a couple of European countries and next year perhaps, Asia
they are looking for distribution propositions in any line of business