Guy Carpenter’s Claude Yoder and Vicky Carter discuss the challenges, risks and opportunities of insurtech for re/insurers

Insurtech has the potential to alter the corporate dynamics of the re/insurance industry and by so doing create unprecedented challenges, risks and opportunities for re/insurers. Critical to success in this fast-evolving environment will be the ability of organisations to harness these technological capabilities effectively, explains Claude Yoder, global head of innovation and product development, and Vicky Carter, vice chairman, responsible for global strategic advisory at Guy Carpenter.

“Insurtech represents the fundamental forces of data, analytics and technology (DAT) advancements pointed at improving the insurance landscape – the qualities of Insurtech will be with us well into the future,” Claude Yoder says. “It also represents the ever-expanding start-up community that grows by 150-200 companies per year. These new firms are striving to change the ways in which insurance is transacted.”

Over the last three years, in tandem with the rapid growth in the number and range of start-up Insurtech firms has been the increasing expansion of these capabilities beyond the data-rich healthcare sector and into the property and casualty arena as new data sources emerge and analytics approaches mature.

“This dynamic is making the Insurtech proposition an ever more compelling one,” Yoder believes. “While several of the initial wave of Insurtech firms came in the form of ‘full-stack carriers’ seeking to disrupt the industry, the new model is based on working in partnership with carriers. These companies are offering expansive capabilities across the insurance value chain – from customer interaction to underwriting and claims – with the sole purpose of enhancing carrier performance.”

However, with new start-ups entering the Insurtech arena at a phenomenal rate and over 2,000 entities already occupying this thriving space, establishing how best to interact with this constantly changing and expanding environment is a major challenge for many organisations.

“The first stage in any attempt to enter the Insurtech space in a meaningful way,” believes Vicky Carter, “is to establish a detailed understanding of your current baseline capabilities and in tandem a clear understanding of your overarching strategic objectives. Only then can you consider how best to interact and connect with the expanse of Insurtech capabilities that are now available.”

The vastness of this thriving ecosystem, however, means that cutting through the densely packed start-up operations to access those which offer the greatest potential to have a meaningful impact on your organisation is extremely difficult.

“The only way to really get to grips with the immensity of this environment and be able to engage with InsurTech in a proactive way is through collaborating with entities which are currently at the centre of this change,” Carter continues. “That includes public-sector bodies conducting research in this area, think-tanks, academia that can provide the range of different lenses that are needed to see through the multitude of start-ups out there.”

In July, Guy Carpenter launched the Insurtech Alliance in collaboration with Numerati Partners, a firm with the mission of advancing and fostering the next generation of scalable data-intensive risk and liability management enterprises, with its ecosystem comprised of scientists, engineers, academic institutions, public and private sector entities and non-governmental organisations.

“We set up the Insurtech Alliance to help clients make optimal decisions that enable profitable growth as they navigate this space,” Yoder explains. “The sector is moving so quickly that you need these unique technical skills to understand and test which new capabilities are going to work for you. Essentially, it’s a fitting process that focuses on clients’ specific strategic goals and current capabilities and distils down those solutions most likely to accelerate strategic execution.”

Once that distillation process has been completed, it is then a case of conducting comprehensive research and technical evaluation of those start-up capabilities in order to find the right partners, followed by validation, testing and deployment support.

“The Insurtech proposition is forming an increasingly prominent presence on the re/insurance stage,” Yoder concludes. “The surge of start-ups seen in recent years is set to continue with the capabilities they offer evolving at a similar pace. It is imperative therefore that companies secure their positions in the front row so they can immerse themselves fully in the benefits of the Insurtech experience.”