A tech revolution is about to up-end insurance as we know it
Navigating the future of insurance will require new skills from startups and large companies alike.
Insuretech startups and incumbent insurance companies must learn to play nice if they're to survive the coming tech revolution. That's the major takeaway from the 2nd annual Insurtech Conference, which just wrapped up in Sydney.
Ben Webster is the founder of several insurtech companies and has seen first-hand how a clash of cultures can stop a good idea in its tracks.
As one of the conference's keynote speakers, he explained that established companies desperately need the sorts of fresh ideas that startups can bring to the table. Meanwhile, the insurtech startups desperately need things that until now, only established incumbents have been able to offer: underwriting capacity, help with licensing and compliance, and access to customers.
Two wildly different outcomes for two very similar products
Webster told a tale of two promising insurtech products that couldn't be more identical in the way they were conceived and built (he founded both).
But there's a reason the first one failed and the second one didn't, and that's because Webster launched the first one through a partnership with a large insurer where it was ultimately doomed by internal politics. The ill-fated product was called Device Cover, an insurance product for your gadgets.
Webster said large companies are extremely risk-averse and it can take them more than two years to bring a new product to market – and that's if they decide not to scrap it after all that time.
He says startups that follow in Device Cover's footsteps risk being chewed up and spat out by the industry.
"Many insurtechs will partner with incumbent companies but navigating large, legacy companies can be extremely difficult. It's a constant clash of cultures," Webster told Finder.
Webster decided not to let that happen with CyberCare, a cybersecurity insurance product for small- and medium-sized businesses. He knew he could no longer rely on a large insurance company to provide the needed underwriting, compliance and distribution support he would need.
That's because they couldn't offer a fourth necessity that all insurtechs need: to be left alone to innovate.
An insurtech-based solution to scalability
Taking matters into their own hands, Webster and his business partner Robin Barham built their own underwriting platform/insurtech incubator called Agile. As a tech platform, Agile allows Webster and his team to launch new insurance products like CyberCare quickly and easily. The platform currently powers 15 mostly niche insurtech products across a wide range of categories including aviation, marine, cargo and financial lines.
It's also a Lloyd's coverholder meaning it has direct access to underwriting capacity and the customer network required to make future product launches successful.
Webster said Australia is the perfect testing ground to fine tune the platform before taking it further.
"This is a very exciting time in insurtech. Australia is developing very quickly, with Agile and a number of other insurtechs paving the way to go global," Webster said.
Don't count the big boys out
Although his product directly challenges the existing insurance companies, Webster didn't fully count them out. Large companies like Munich RE and AXA are partnering with external accelerators or funding internal labs to test new ideas and work out ways to incorporate insurtech into their legacy structures.
A representative from Munich RE also attended the Insurtech Conference and discussed what insurtechs need to know about partnering with large insurance companies.
The conference was organised by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) in partnership with Insurtech Australia and InsurTechNZ.