I have been observing accelerated activities in the InsurTech space, and nowadays also on the incumbents’ side. This is really good news! As an illustration I have selected some interesting and groundbreaking news and information from startups and incumbents from recent weeks and included my comment on them. However, let’s start with FinTech first, since this movement is still more mature and adult than its little sister InsurTech.
Companies like Deposit Solutions (open banking platform for deposits; with B2C channels), N26 (mobile bank; challenger bank), Scalable Capital (digital wealth management; robo advisory) and Smava (private loan; crowdlending platform) are well-known representatives of the FinTech movement over here. They made the German FinTech location known in the entire world, and they have even more in common: they have identified a need in the market and developed successfully and uncompromisingly a marketable service. In fact, these mentioned companies count as financially well-funded.
Otherwise, the question arises who will ultimately win the race for customers and for the financial ecosystem – banks or insurers? Or won’t it be either of them? The race has just begun and it is a marathon.
Thanks to Tech and other influences like the Payment Service Directive 2 (PSD2; in force in the European Union since 2018), banking and insurance services will grow closer together. Thus, I believe in a renaissance of bancassurance. There is a company worth to mention in the same breath: Finleap.
Finleap is a crossover company builder that provides technology to build digital solutions in banking, insurance and asset management. You will already find a bank, an asset manager, an insurer and many other companies in the Finleap universe. They have already developed several puzzle pieces for an ecosystem “Finance” and they just need to combine them to a unique financial cockpit. Then, the final puzzle piece that is missing in this ecosystem is an AI-based finance butler which is taking care of one’s finance automatically and optimal. Fiction, pie in the sky or just a stone’s throw away?
Regardless, this arranged ecosystem attracts local investors and partners but also foreign investors like Ping-An (Chinese conglomerate which mainly deals with financial services). They just decided to invest in Finleap about almost 50 million US-$1.
InsurTech is catching up
Berlin-based digital car insurance start-up FRIDAY secures fresh money2 from media partners as well as from its mother company Baloise, a Swiss-headquartered insurance group. In the same breath, WEFOX, another Berlin-based InsurTech, announced a Series B funding of 125 million US-$3. The later InsurTech aims high and intends to “become the largest insurance company in the world”. Watch out FinTechs, InsurTech is on the fast lane! What about a merger? I love the idea of #FinSurTech.
AI in insurance
Undoubted, artificial intelligence (AI) is getting more and more a trending topic, also in insurance. The top dogs of insurance are already playing around with AI and they are keen to push it further. For example, Munich Re, the large reinsurer with headquarter in Munich, just secured its partnership shares in the German Research Center for Artificial Intelligence (DFKI)4.
AI is already doing a great job in playing Chess, Go and is doing better than humans in lip reading and other stuff. It will be easy for AI to advise a person better and continuously on financial issues as well. Now here is the crucial question: do people prefer to trust people or machines?
Vienna Insurance Group (VIG) just founded its own corporate start-up called “viesure”5. Thereby, VIG goes a different way than most insurers, which only seek for new ideas and innovation externally by connecting to one or several labs and hubs. The aim of viesure is to make interaction with customers simpler, faster and more transparent on a purely digital basis.
Simplicity is also the credo of the Deutsche Familienversicherung. I have to admit that the name is a little bit dull and old-fashioned (translated as “German Family Insurance”). And really nobody would expect that behind this name is a little insurer based in Frankfurt that is said to be the first German InsurTech6. Anyway, since December 2018 this digital pioneer in insurance is listed on the stock exchange7. The IPO brought in around 50 million euros and will further fuel the expansion. In spring 2018 the CEO Dr Stefan Knoll (also the founder of the company) declared to double the number of customers by the end of 2019 – that would be impressive one million customers. I will keep an eye on that and I expect some more IPOs!
Life is changing, too!
I am more than happy to see more and more activities also in the life insurance space. While some consultants and opinion leader tell us that technology in life insurance is only for the optimization of processes, I totally disagree. It is also about new products, new services, new sales channels – pretty new everything! Trailblazers in life insurance and retirement provision are for example:
- myPension: retirement provision with a digital unit-linked product based on ETFs
- Prosperity: retirement provision with a digital unit-linked product
- Vantik: retirement provision with a digital fund investment
- Vlot: flexible personal life risk products
Nonetheless, it is also worth to mention that with its product “Fourmore”, top dog Allianz has already entered the world of digital life products in Germany, too.
So, what’s next?
Insurers have deeply analysed the InsurTech market in the past few years and found out that the InsurTech start-ups are doing a great job.
Insurers also figured out that all of these start-ups – independent from the level of current funding rounds – are not a real threat, up to now.
Insurers fear the market entrance of Amazon & friends.
Unfortunately, the full truth has not dawned upon insurers yet. They have not all yet understood that offence is the best defense and that the numerous start-ups deliver the tools and instruments to survive. Insurers have a superpower and they need another superpower in order to deal with the big techs in the future. InsurTech will deliver this second superpower and pave the way for insurers.