Insurer investment in insurtechs has had ‘significant impact’, but challenges remain

The significant investments made into the insurtech sector have had a significant impact, but challenges in aligning goals and maintaining successful partnerships remain, executives said during a panel at Hong Kong Fintech Week on Tuesday (Oct 29).

Over US$50bn has been invested in insurtech since 2012 around the year, according to a 2023 Gallagher Re estimate, and Asia has been a good recipient of that amount. “We’ve seen that propagate through the insurance industry, going into creating different models,” said George Kesselman, President and Founder of the Insurtech Asia Association.

But that investment has not gone into shiny new insurance products or amazing technologies, but it has gone into stuff that “happens behind the scenes,” said Kesselman. “It feels like the big chunk of investment that’s gone in, it’s probably gone in a bit less visible… (they’re) small behind the scenes solutions that have really accumulated to make a big difference in insurance.”

The initial thesis that insurtech was going to be a huge disruptor has been proven wrong through the years, Kesselman added. “It is a lot more about collaboration.”

Collaboration has allowed Chubb to access markets they would not have been able to, said Isabelle Carvalho, Digital Head of Overseas General Insurance at Chubb. “Depending on the way we collaborate, we can add a lot of value to each other,” Carvalho said. “We’re always open to collaborate, it’s still our DNA.”

That has led to solutions that serve customers and insurers, like insurance comparison platform 10Life’s rating systems. “Back when we first launched, we received quite a lot of threats of lawsuits from insurers,” said Dennis Lun, 10Life’s Co-founder and group CEO. “But interestingly, those insurers are also now our partners, because we work together and understand the customer to create a better product and distribute products at a lower cost.”

Party alignment between insurer, insurtech, and customer

The two different speeds between an incumbent insurer and its insurtech partner — presents challenges in corporate alignment, Carvalho noted.

“Before (we launch a product with a partner), there are a lot of challenges that we have to overcome to make sure all parties are aligned, so that the partnership that was launched makes sense, and so that we have everything mapped out from an operational perspective, product value to consumer perspective,” she said. “But it becomes easier as you work more and more partnerships.”

Partnerships have to be customer-oriented, said Lun, even if this means conflict between an insurer and an insurtech. Insurers have told 10Life to change its Life Decoder – a robo-advisory tool – to present products with the highest commission, Lun said.

“You cannot tweak it because this is not right for the customer,” he added. “We put the same tool back into our digital brokerage, so customers can fact check their agents. Yes, your distribution, your team is important, but if your distribution team doesn’t have a call or have any prospects, it’s not going to be helpful.”

The best partnerships are ones where insurtechs and insurers seem to understand the problems they are trying to solve and the unique problems that they might face, says Rob Schimek, Founder and Group Chief Executive Officer of bolttech.

“You have to have a long-term horizon, and you have to be willing to move at pace,” he added. “If you can’t work in both of those two speeds, then you won’t be able to be successful as a partner, because the partner needs to understand the other side’s vision, and has to be patient.”

Insurers should avoid a do it yourself mindset, Schimek added. “The biggest challenge that we frequently face is a do-it-yourself mentality of every partner out there,” Schimek said. “It’s not about a do-it-yourself mindset; in some ways, maybe we compete, but we can also co-operate where we work together for the greater interest of society.”