Industry participants advocated for “co-creation” with startups, emphasising strategic alliances and partnerships as a means of fostering innovation and collaboration in the insurance industry on the second day of the Insurtech Insights Asia 2023 conference in Hong Kong.
Kevin Angelini, Zurich Head of Strategy and M&A, Asia Pacific, at Zurich Insurance put forward “co-creation” as a way of engaging and collaborating with insurtechs.
Zurich Insurance invites the startup community to work with it in what is called the Zurich Innovation Championship, which is conducted every other year.
“So, I really look forward to having insurtechs come and help us solve our problem segments, which will be set up across five or six different verticals,” Angelini said. “We’ve got this approach where we work together so we can see what innovations and capabilities the startups can bring,” said Angelini.
“We have been exploring this model. So, moving into co-creation is our way of engaging and partnering with companies. Those companies that are more successful will be put through our accelerator. If both sides are convinced, Zurich can even consider funding the startups.”
However, Angelini noted that there is a fine line between running an innovative enterprising culture versus having a startup become a corporate division, when companies try to bring them in.
“I think bringing (a startup) in-house is probably not the answer. We are quite happy to have strong strategic alliances, such as commercial partnerships and equity partnerships,” said Angelini.
John Zheng, chief investment officer and chief finance officer of Mitsui Sumitomo Insurance China, agreed that co-creation is a feasible way for traditional life and property companies to work together as it is harder for big giants to innovate.
Mitsui Sumitomo Insurance has set up global digital hubs in different cities to collaborate with startups and create innovations in its property insurance and life insurance products.
In Shanghai for example, it is collaborating with startups in the EV insurance sector focused on battery technologies. The group also collaborates with some small startups focusing on AI, Zheng said.
Zheng thinks the idea of co-creation has merit but warns there are obstacles to be faced.
He said that while startups “love the SaaS (software as a service) way,” insurers prefer when solutions are developed in-house, citing data security and data privacy as examples. The problem with that however is that “the cost will be double, even triple, or 10 times.”
“I think that the co-creation will be a very feasible way for the future,” Zheng said. “But still we also have challenges, especially from compliance.”
Building confidence
APAC Managing Director of CoverGo Adrit Raha said that one of the opportunities startups can tackle is to give confidence to CIOs and CEOs of big companies that the work that a startup or young company can scale in a meaningful, objective way.
“We call it land and expand. We go in, we’d sort of look at an agreed timeframe of maybe three to six months, we’d look at one business objective,” he added. “Hopefully, it builds confidence and then allows us to continue to do more.”
“The biggest challenge that we come across is core legacy systems,” Raha added. “When you think of an insurance company, the standard culture is, why fix something that’s not broken? Not realising that, you know, whether it’s blockchain or GPT, or whether it’s AI, it’s coming.”
“No CIO ever got fired for spending US$20 billion with IBM and failing,” he added. “And that’s an interesting thing to think about.”
