EU authorities probe InsurTech industry
Written by Peter Walker
The European Insurance and Occupational Pensions Authority (EIOPA) has released a survey to collect views on the emerging InsurTech industry.
The industry body is aiming to get a better picture of those not directly active in the insurance value chain on InsurTech and the technology-enabled innovation in insurance that could result in new business models, applications, processes or products.
The survey focuses in particular on licencing requirements, barriers to InsurTech and its facilitation.
“The results will contribute to EIOPA´s work on mapping of supervisory approaches to InsurTech with the aim to identify and report on best practices and identifying possible regulatory barriers to financial innovation,” explained a statement, adding that the deadline for views is 12 August 2018.
Meanwhile, PwC and Startupbootcamp (SBC) InsurTech have reported on a research project exploring how the industry has rapidly evolved over the past three years since the boot camp was established.
In year one, the debate focused on how startups would disrupt the incumbent insurance sector. In year two, the emphasis moved to collaboration, as startups and insurers pondered how to combine the former’s technology with the latter’s customer knowledge, understanding of risk, and capital strength. These collaborations looked beyond front-end focused applications in order to solve problems throughout the value chain.
Now in 2018 this evolution is continuing, according to the report. Startups are increasingly coming into insurance from adjacent industries such as agriculture, property, health and transport, supporting insurers to offer new services to clients.
As well as a rise in the total number of applications, Startupbootcamp InsurTech has seen an increase in applications from adjacent industries as startups recognise that the insurance industry is ripe for innovation. This year, 61 per cent of SBC applicants were from beyond insurance. While 75 per cent of the 2017 SBC cohort were clearly from within insurance, 80 per cent of this year’s selection operate beyond the sector.
Other key findings from the report include the fact that artificial Intelligence is the primary technology for 41 per cent of SBC applicants. The clear challenge is how to integrate with the insurers’ existing technology, noted the report. “Rather than attempt to build cumbersome links with old systems, some insurers are taking the approach of setting up completely new technology infrastructure which will allow for easy integration of third party plug ins,” it added.
Insurers and startups are also increasingly looking at new products, with 84 per cent of surveyed SBC partners said that they are interested in finding an innovative solution in cyber, and 80 per cent are interested in business models linked to trends attached to the sharing economy.
Although startups are increasingly looking to partner rather than disrupt, threats will come from tech giants, telecoms and other industries, noted PwC. “Beyond these threats, startups have the potential to scale and collaborate to own the entire value chain – first moving reinsurers are already in pool position to provide the capacity,” read the research.
Jim Bichard, UK insurance leader at PwC, said that three years ago the hype was about startups disrupting traditional insurers, stealing customers and market share. “Now the talk - and increasingly the reality - is about startups and insurers working together to create meaningful partnerships.
“All parties are working together and learning from other sectors to solve problems within insurance and react to the changing outside world.”