“Customer inertia” is driving insurtech firms to partner alongside traditional players, perhaps explaining why more new entrants haven’t emerged
The insurance technology business is now receiving more than $2bn annually, as of 2017. Nevertheless, for commercial insurance buyers there is a lack of new entrants displacing traditional players.
The insurtech landscape was the topic of a presentation given in London today at Swiss Re’s offices in the Gherkin building at an event sponsored by the Europe Chapter of the CPCU Society, an insurance industry group.
One explanation is “customer inertia”, according to Chris Sandilands, a partner at Oxbow Partners, an insurtech advisory firm.
He defined this as insurance buyers showing little interest in their insurance partner and consequently settling for incumbent players they already know.
This is an explanation why there are not more insurtech start-ups – despite much hype – in recent years, with US firm Lemonade the much-quoted standout example, Sandilands suggested.
“It’s hard to say they’re selling like hot cakes,” he said.
Oxbow Partners worked on the Munich Re “Digital Partners” incubator set up between German reinsurer Munich Re, its HSB Ventures insurance subsidiary, and Mundi Ventures, a Madrid-based venture capital firm.
More start-ups are turning to “the supply side”, Sandilands explained.
“Insurtech might be a bubble,” said Sandilands, adding that this only made it more important that incumbent firms within the insurance sector “choose the right partner”.
Here’s a snapshot of the slide Sandilands used to demonstrate the proliferation among supply side insurtech firms.