Quarterly InsurTech Briefing – Q2 2017

Article Synopsis :

The roots of the InsurTech revolution can be traced to the internet boom of the 1990s and the simple notion of transitioning traditional commerce to the web. As insurer websites grew more sophisticated and aggregator engines emerged to reduce distribution costs and improve customer experience, consensus emerged that the fundamental value proposition for many insurance products is partially diminished by online distribution.

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InsurTech funding grew 248% in Q2, to $985 million, with over a quarter of the total coming from reinsurers

But technology and connectivity continue to serve as catalysts for the modular economy, where products and services in any value chain are repeatedly dissected into modules that interact with each other seamlessly for the benefit of the ultimate consumer. As consumer demand shapes the end product, some of the modules increase in relative value, while others become commoditized and lose value.

This, the second edition of the “Quarterly InsurTech Briefing”, from Willis Towers Watson Securities, explores in-depth the following topics:

CLAIMS MANAGERS – INSURERS OF THE FUTURE?

Claims management is one of the insurance industry value chain’s most underestimated modules. It’s a $170 billion global industry currently controlled approximately 90% by incumbents that’s booming with innovation.

The quality of claims management can be a highly powerful driver of customer satisfaction and retention. Executives estimate that a customer experiencing a personal auto claim is up to 40% less likely to renew their policy, regardless of the outcome.

WHERE IS THE TRUE VALUE IN THE INDUSTRY?

InsurTech investors are asking, Where will the revolution truly begin? Is it in new approaches to distribution? Different approaches to underwriting? Or is it the ability to effectively securitize risk and find access to the cheapest possible capital?

For investors building their thesis around disruption driven by risk mitigation, claims managers are particularly attractive. The report contains interviews with executives of established claims management companies and reviews the universe of claims-focused start-ups to gain insight into how the claims management industry will evolve within the insurance value chain.

Case studies are provided on more effective management of high-volume / low-complexity claims. There is also a discussion on Crawford’s acquisition of WeGoLook (WeGoLook provides a crowdsourcing network of 30,000+ “Lookers” that collect desired data/pictures of a loss within hours of notification).

THE RISK MITIGATION DILEMMA

One of the most disruptive scenarios potentially resulting from the InsurTech incursion is a change in the underlying function of the insurance value chain, from volatility management (paying claims) to risk mitigation (making losses smaller). The report’s incumbent-strategy feature looks at Allstate’s progress to-date on their initiative to optimize claims management processes.

THREAT V. OPPORTUNITY

Whether disruption beckons or opportunity unfolds is primarily a matter of perception relative to a company’s position in the value chain, amplified by how or the extent to which it chooses to embrace or reject innovative technology.

INSURTECH INVESTMENT REACHES RECORD LEVELS

InsurTech funding volume increased 248% to $985 million across 64 transactions in Q2, a new high-water mark. The $289 million of early stage funding and 27 technology investments by (re)insurers during the quarter also represent record levels.

DATA CENTER

The back half of the report contains detailed tables containing investor and financial information related to:

• InsurTech funding in the aggregate
• InsurTech investments in P&C
• InsurTech investments in L&H
• InsurTech investments by Re-insurers

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