quarterly-insurtech-briefing-q4-2017
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Quarterly InsurTech Briefing<br />
Introduction<br />
Who Benefits from Modularization?<br />
Our Thought Leadership feature further focuses on the<br />
InsurTech sobering phenomenon and the associated<br />
growth of incumbent interest in technologies addressing<br />
their back-office needs. With technology moving forward<br />
at an unprecedented pace, incumbents are increasingly<br />
electing to outsource functions to highly specialized new<br />
entrants, renting evolving modules of technology that<br />
can be tailored to suit their individual needs. Though this<br />
approach may be more cost effective, it further fuels the<br />
question of whether incumbents will allow value in the<br />
industry to shift towards new entrants. In time, market<br />
participants will come to understand which module in<br />
the chain generates the most value. It is plausible that<br />
automation in distribution will shift value towards efficiency<br />
of internal processes that support cutting-edge modeling<br />
and underwriting engines.<br />
Who Were The Winners In <strong>2017</strong>?<br />
Our (re)insurer innovation survey shows that innovation<br />
does not necessarily correlate with geography, size or<br />
even underlying product. Four companies voted to be most<br />
innovative: Munich Re, Lemonade, AXA and Swiss Re vary<br />
in size from the hundreds of millions to over $30 billion,<br />
focus on personal or commercial lines products, insurance<br />
or reinsurance and have global or local platforms.<br />
Hundreds of InsurTech startups are looking for their place<br />
in the insurance value chain. To summarize the year, we<br />
cataloged 100 companies to watch into four categories,<br />
including the top 25 companies in product & distribution,<br />
business process enhancement, data & analytics and<br />
claims management. We believe that these categories<br />
represent the current frontiers of innovation in insurance.<br />
Over half of InsurTechs target distribution and product<br />
design, with data & analytics and claims management<br />
representing relatively smaller segments. We expect the<br />
business process enhancement category to grow based<br />
on the current level of incumbent focus on this area.<br />
Incumbents Fuel Investment Momentum in Q4<br />
$697 million of InsurTech funding in Q4 rounded off <strong>2017</strong><br />
at a total of $2.3 billion, a 36% increase from $1.7 billion<br />
recorded in 2016 and the second highest total for any<br />
year to date. (Re)insurers, directly and through corporate<br />
venture arms, are increasing their activity in the sector<br />
and expanding their focus to invest in a broad range of<br />
technologies with potential applications to their core<br />
(re)insurance businesses. 35 private technology<br />
investments by (re)insurers in Q4 and 120 private technology<br />
investments by (re)insurers in <strong>2017</strong> are the highest totals<br />
recorded in any quarter and year to date, respectively.<br />
I want to thank you for all the comments and guidance<br />
we received during the year. We are very grateful for the<br />
positive response to our Quarterly InsurTech Briefing to<br />
date. We want to continue to improve it, and as ever, we<br />
welcome your feedback and suggestions.<br />
Transformative<br />
Value<br />
New Products<br />
& Services<br />
New Value Chain<br />
External Capital Playground<br />
Incumbents<br />
Rarely Win<br />
Market<br />
Focus<br />
Sobering of InsurTech<br />
User<br />
Focus<br />
Incumbents<br />
Always Win<br />
Improvements to<br />
Legacy Systems<br />
Customer Centric<br />
Solutions<br />
Incremental<br />
Value<br />
Quarterly InsurTech Briefing Q4 <strong>2017</strong> 2