What to Expect as More Carriers Engage with InsurTech

Private tech investments involving insurer or reinsurer participation rose 49% between 2015 and 2016—and marked a 257% increase since 2014, according to data from CB Insights.

Strategy Meets Action reports that even mid-tier and smaller carriers are actively pursuing investments related to InsurTech, focusing primarily on both traditional and “new world” initiatives [see sidebar].

“Many of them have a win-win mindset—they’re focused on InsurTechs that can help their agents improve their technology platform, or those that can help the carrier better share their market appetite,” explains Mark Breading, partner at Strategy Meets Action.

“It’s competition using technology, which is not how it was traditionally done,” adds Bernhard Klein Wassink, partner, Global Insurance Customer & Growth Offering, EY. “It used to be competition was based on product features and commission structures. I have a hypothesis that you might see a reshuffling where perhaps some of this technology will create tighter linkages between groups of agents and their primary carrier.”

But when it comes to InsurTechs that aim to replace independent agents, “some carriers are just viewing those as another agent that’s just going to be one more part of their distribution channel,” Breading says. “They don’t necessarily see them competing directly, or at least that’s how they want to position it.”

That makes sense in cases where InsurTech partnerships focus primarily on new coverages and products that independent agents don’t currently sell—those that will create “new revenue streams,” Breading notes [see p. 38].

And note, too, that in some cases, carriers are struggling to bridge the gap between their independent agent arm and their venture capital Pleae make changearm, points out Ellen Carney, principal analyst, digital business strategy at Forrester Research, Inc.

“Part of the problem is the distribution side of the house isn’t talking to the digital innovation side of the house,” Carney explains. “In some cases, it’s more of a check-off thing—‘We’re going to launch an innovation lab, but we’ll just leave it at that.’ It’s not necessarily turning into something scalable within their organizations.”

Jacquelyn Connelly is IA senior editor.