Insurance Shed | Q&A Oliver Werneyer, CEO and Co-Founder, Imburse
Updated: Mar 23
Oliver Werneyer, CEO and Co-Founder at Imburse was kind enough to talk to me about Insurtech in a Q&A format recently.
Read more to understand about this growing sector. Read the interview and learn more about what insurtech is, how it works, who can benefit from it, and future predictions.
1. The current state of insurtech
Due to all the current investment going into Insurtech, this sector has seen a massive shift to operational and technology solutions, moving away from initially very distribution-focussed propositions. Insurtech started with the mantra “Insurers don’t know what their customer wants. Insurers offer bad customer experience. We can do it better and people will buy insurance from us”. Start-ups were fuelled by their disdain for insurers, the “bad” experiences people had, and the belief that prettier interfaces will lead to massive sales. This has matured a lot in the last few years where there is a significant shift in Insurtechs to be technology or solution enablers for the major incumbent insurers in the market. It’s less “us versus them” and more “better with us”. This is reflected in where and how the money is invested in Insurtech, i.e. bigger tickets into technology and operational solutions for the insurance market.
2. How insurtech is changing the industry
The incumbents across the insurance market have built up large operations, capabilities, and customer bases over the years. The upside of this is that these immediately have a much bigger reach, make a bigger impact, and can run services at scale and profitability more quickly. Nonetheless, many of these capabilities and operations are not scalable across multiple incumbents (e.g. pricing, assumption setting, reserving, underwriting, etc.). Specifically, those aspects that incumbents see as their core competencies. What the incumbents need and are looking for are solutions and technologies in areas that are not their core competencies. These include areas such as payments, core systems, customer support, interfaces and portals, and many more.
Insurtechs that are really solving these problems, in an enterprising, off-the-shelf way, really help incumbents deliver efficiently, improving customer experiences and reducing costs. Payments is one of the key areas where insurers can benefit from partnering with innovative solution providers.
3. The benefits of insurtech for consumers and businesses
At the most basic level, customers want to have a seamless buying experience, great ongoing support, and the delivery of the product promises. Customers perceive a massive increase in the value of the product when the sales process caters to their demands. For instance, with user-friendly interfaces, various payment technologies including real-time pay-outs, efficient servicing and support, and transparent product delivery.
For businesses, the question is how to deliver this in the most non-disruptive way, as fast as possible, with the resources available and in a future-proof way. Incumbents have to weigh up keeping the existing business running with the resources they have AND investing into the business to grow it. Any investment in non-core areas is expensive and risky due to a lack of expertise and capacity. Equally, any intervention into the business-as-usual operations is seen as risky.
However, both areas can unlock an incredible amount of value to the business. Insurtechs today are great enablers to incumbents in reducing costs, accelerating speed to market, launching new products, and entering new markets. They are the real strategic enabler to the business, allowing it to then allocate and focus its existing resources on its core competencies and to move faster in that area too. This is why technology and operational insurtechs are seeing an increased amount of investment and success in the insurance market.
4. What to watch out for with insurtech
As Insurtech moves to address more of the operational pains of incumbents, it puts incumbents in a position to more quickly react to changes in customer expectations and behaviours. Incumbents can evolve their proposition to better meet customer needs, bring their distribution channels into the twenty-first century, launch new products, and more. These are aspects that increase the top line and reduce the bottom line. The more direct ability to cater to and react to customer needs will see more prominent participation and evolution in the “embedded finance” or “embedded insurance” arena. Insurtechs are really pushing incumbents closer to the customer, into new distribution channels and with new products.
5. The future of insurtech
Insurtech as a concept will continue to exist, but the main players and focus areas of the space will shift. The really successful insurtechs of today will become a part of the industry. Guidewire, for instance, was once a core-system start-up and is now one of the main core-system providers. As incumbents modernise their technology stacks and their capabilities/features, their focus will move to reduce the number of components in the insurance value chain and move up the value chain (get closer to the customer).
As the insurance space gets more efficient and more crowded, we will see an increased M&A activity, a laser focus on operation efficiencies, and a maximisation of features and capabilities. Insurtechs will increasingly look to tackle these topics for the market, possibly reducing the solution distance between customer and cover (e.g. reinsurers closer to consumers). Insurtechs make operational assimilation easy for acquired companies and for those that allow incumbents to rapidly build and launch new features to differentiate themselves from competitors. They deliver all of this in the most operationally efficient manner. For the area of payments, Insurtech is taking a leading role in making it easy for insurers to connect to the global payments ecosystem in order to access and deploy any of its offerings and capabilities in minutes, into any product or proposition.