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Is Collaboration The Future of Insurtech? With Bdeo, New York Life Insurance, Vitesse and More

For 50-odd years, the way insurance has worked has remained the same. But in the last few years, catalysed by the pandemic, the rise of digital solutions and insurtech looks to break down historical insurance preconceptions have emerged.

The emergence of fintechs uprooted legacy systems in the financial sector. What had previously been believed to be irreplaceable was now being replaced. This was and continues to be especially prominent in the insurance sector. It begs the question of whether collaboration is the way forward for the insurance and insurtech industry or not.

To discuss this, we reached out to Bdeo, New York Life Insurance, Distributed Ventures, Vitesse, and Cognizant.

If the past is anything to go by, partnerships are the way forward
Julio Pernía Aznar, co-founder and CEO of Bdeo
Julio Pernía Aznar, co-founder and CEO of Bdeo

Using motor insurance as a basis for his argument, Julio Pernía Aznar, co-founder and CEO of Bdeo, the motor and home insurtech, evaluated how partnerships have sped up customer service in the insurance sector: “Historically, it has taken more than five days for the average customer to get an insurance plan for their vehicle.

“From the first time they start searching online for an insurance plan to signing the contract, they may need to interact with at least two people.

“I believe that some of the most impactful collaborations we’ve seen over the past few years involve the insurance companies that have partnered with insurtech companies. These have resulted in a significantly shortened average onboarding process for their new clients. It offers a nearly instant underwriting customer experience via a self-guided process – as well as partnerships which enable insurers to provide their customers with immediate attention in the event of a claim.

“For example, large insurers like Mutua Madrileña have integrated our self-guided image capture solution into their customer acquisition process. It allows their customers to take images of their vehicles through an app. Then, it uses artificial intelligence to detect pre-existing damages and provide an insurance quote in minutes.

“We have also partnered with Zurich Mexico to connect their customers with virtual adjusters via a video call to attend to a claim in real-time. This allows the company to resolve the entire adjustment process in less time than it would have taken the adjuster to physically visit the scene of the incident.”

Together stronger
Joel Albarella, Senior Vice President and Head of New York Life Ventures at New York Life Insurance Company
Joel Albarella, Senior Vice President and Head of New York Life Ventures at New York Life Insurance Company

Joel Albarella, senior vice president and head of New York Life Ventures at New York Life Insurance Company, analysed how incumbents must not only want to seek out collaborations. Rather, they have no choice to seek them out or risk their services’ standards falling behind that of their competitors.

“Assuming that ‘collaboration’ refers to enablement, we very much agree. Founded in 2012, New York Life Ventures predates the concept of ‘insurtech’ which affords us a unique perspective on the changing opportunities at the intersection of insurance and technology.

“While insurtechs were first focused on industry disruption and redefining the consumer experience, we are now seeing more focus and emphasis on partnering with incumbents and independent agents to enable efficiency and enhanced customer engagement. We’re excited to see this happening across the middle- and back-office as well.

“Considering today’s prevailing technology trends and shifting economic environment, the opportunity has never been greater for insurtechs and incumbents to partner for shared learnings and growth.

“As the industry becomes increasingly digital, the opportunity for value creation via collaboration expands exponentially. An incumbent’s ability to test, learn quickly, and allocate resources to new capabilities that can unlock value is crucial. Executing this effectively will also enable incumbents to better compete for talent with a more complete and holistic value proposition.”

Collaboration is investing in the future
Alex Carvalho, an associate at Distributed Ventures insurtech collaborations
Alex Carvalho, an associate at Distributed Ventures

Alex Carvalho, an associate at early-stage venture capital firm Distributed Ventures, pointed out how initially, incumbents might be hesitant to embrace collaboration. However, he went on to explain how this might be harmful in the long term.

“Collaboration is a key driver of change in the insurtech industry, resulting in companies strengthening their expertise and sharing ideas on how each player can enhance the consumers’ experience. The goal of collaboration in our industry should be focused on improving the consumer experience and maximising their dollars’ efficiency.

“There are several players working on the infrastructure that will power the industry. It will be easier to create new companies and products on these rails. For example, new MGA’s (managing general agency) will work with old carriers to provide better and more specialised solutions with lower targeted loss ratios.

Lone rangers won’t last long

“Trying to solve everything by yourself doesn’t usually work. New entrants that had solely believed in the D2C model are now relying on brokers for distribution. This is because in many cases customers still want relationships, advice and human interaction. Both new and old players now realise that while many things in our industry are broken, there are also numerous things that work and can be improved. Ultimately, we can’t recreate the whole industry at once.

“The industry will certainly change for the better as new players strive to make an impact and incumbents try to keep up with innovation. The question is whether to join the innovation revolution or not. Players in the insurance industry who operate within oligopoly-like cornered markets might have the least incentive to embrace collaboration. They’ll exhibit reluctancy to an idea that could potentially deteriorate their own margins. However, the lack of willingness to collaborate poses the risk of losing business in the long run.”

Collaboration has long and short-term benefits
Dan Brennan, Head of Partnerships and Customer Success at Vitesse insurtech collaborations
Dan Brennan, Head of Partnerships and Customer Success at Vitesse

Growth can only be achieved by identifying weak spots. The evolution of tech in the insurance space has enabled insurers to have real-time insights into damage losses said Dan Brennan, head of partnerships and customer success at Vitesse, the cross-border payment service.

He commented: “The parametric space has grown in the past few years, allowing insurers to have real-time insights into damage losses. That helps them, but the actual end goal is to make sure that the customer gets the money they need faster. So we will see an ever-increasing number of partnerships within this industry.

“The immediate future of insurtech is going to be focused on these partnerships. To give insurers, brokers, DCA, and coverholders access to all those innovations and the benefits that those insurtech companies are bringing, they will have to partner not only with themselves to cover multiple strands of that development, but also with multiple insurers to try and deliver those benefits to the maximum number of people.”

Speed meets experience

Insurtechs complement incumbent insurers too well according to Craig Weber, head of strategy, insurance at fintech, Cognizant. When asked if collaboration was the future of insurtech, he said: “We certainly think so.

“There are enormous, shared benefits to insurers and insurtechs that can collaborate successfully. Particularly with the current constraints on the labour market, it would be extremely difficult for players on either side to build out their talent stack sufficiently to support all the new business models that are emerging in response to consumer demands for more speed, transparency and convenience.

“What’s more, players on both sides bring very specific cultural characteristics to the game. For example, insurers know how to play the long game, and are exceedingly skilled at managing distribution relationships. Insurtechs understand speed and experimentation, with teams that tend to approach problem solving in an agile way.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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