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Insurance companies and insurtechs: a winning duo

From the creation of fire insurance after the Great Fire of London in 1666 to the invention of life insurance, the insurance sector has long been a driver of innovation. Pursuing this tradition, digital insurance start-ups, or insurtechs, have widely exploited the potential of new technologies to offer a new vision of insurance. These innovations are focused on three areas:

  • Creating value to facilitate interactions between insurance companies and policyholders or enable tailored services through a better understanding of clients
  • Redefining client proximity by offering a risk prevention service and making claim management more responsive and transparent
  • Setting suitable pricing based on big data, including data generated by connected objects

To remain market leaders and continue offering clients new solutions, traditional insurance companies have reacted fast, reflecing the emergence of these new competitors in their strategies. The main incumbents have not only brought logistical, financial and human means to insurtechs but invested their own internal resources in adapting a business threatened with obsolescence.

 

New external investments for traditional insurance companies

The first approach taken by traditional insurance companies has been to build venture capital funds to manage new expertise. For example, MAIF Avenir, a €125 million fund, has made a first symbolic investment in NUMA, a Paris-based incubator. Meanwhile, AXA Strategic Ventures has a budget of €200 million to invest in insurtechs, including start-ups specialized in connected objects to improve patient health monitoring.

The second approach has been to create incubators, with the aim of supporting start-ups in the seed phase. For example, Allianz, a German leader, has created French Tech Côte d’Azur at the Allianz Riviera stadium in Nice and opened it up to selected insurtechs from its international network. Crédit Agricole Assurance has done the same in Paris but widening the scope beyond insurance. The main objective is not to absorb start-ups but to provide support and reflect with them on future insurance services. Of course, the right ideas will be worth acquiring…

Other insurance companies have decided to support insurtechs in the same spirit as incubators but placing the focus on clients. For example, AVIVA has selected a number of insurtechs through an innovation challenge and then provided them with funds as well as a client portfolio, invaluable data for any newcomer on the market. The advantage of this solution is that it enables policyholders to be the first to access innovative solutions, and the insurance company to reposition itself as a pioneer.

 

New ways of working to define

Besides investing in insurtechs, traditional insurance companies have understood the need to develop a culture of innovation internally. Banks, insurance specialists and mutual insurance providers (e.g. Cardif, Covéa, Axa and Allianz) have developed high-tech labs combining internal resources and experts from start-ups. Société Générale Insurance has chosen a different path, creating a full-fledged company, Moonshot-Internet, based on an innovative idea proposed by five of its employees, and is planning to invest up to €6 million in the venture within 18 months.

Inspired by these new players, traditional insurance companies have even invested resources in developing a client-focused culture of innovation with new and more collaborative and flexible ways of working.

 

The partnerships initiated by traditional insurance companies with these start-ups and the measures implemented to change the digital culture internally will enable winning collaboration between traditional insurance companies and insurtechs – a move that can only benefit clients.

 

First published in FinTech Mag