AssurTech, competition or opportunity for traditional insurers?
AssurTech is multiplying in response to consumer expectations, seeking more flexibility, responsiveness and transparency. Thus, the world of insurance, like that of banking with FinTech,or that of law with LegalTech,is making its digital transition. We are now seeing new offers on the market to compete with traditional players. Although still in the minority in the insurance market, these new companies quickly managed to gain a place. This is particularly the case for the market leader, Alan, created in 2016. Bringing together more than 7,000 companies and thousands of self-employed people for their health protection, Alan had a turnover of 3.5 million euros in 2017, 20 million in 2018 and 50 million in 2019.
Artificial intelligence, improving the customer experience and customer loyalty
AssurTech companies and start-ups are harnessing new technologies to move lines and reinvent traditional insurance models. More than offering a substitute service, an alternative, they bring added value, responding to specific problems.
For example, Easyblue targets professional insurance customers (1). Created in 2019, it offers 100% digital insurance based on more fluid and faster digital processes. To achieve this, Easyblue uses artificialintelligence technologies but also a resolutely simplicity-oriented approach. Easyblue customers can subscribe online in minutes and receive immediate coverage and instant certification.
Always in a process to serve the customer, the start-up also offers a virtual insurance coach. Thanks to AI, it can support business leaders to better understand their needs and thus protect society as best as possible.
Other uses of artificial intelligence, conducting risk audits. These include a tailor-made insurance program for each client. Or fraud detection, the development of predictive solutions….
Digital, transparent, flexible and personalized, the Easyblue solution has already attracted more than 1,500 entrepreneurs in one year of existence. In addition, if the insured can fend for himself with the online interface, the start-up also offers the possibility to exchange with a human advisor. Thecustomer experience is at the heart of the success of innovative solutions.
AssurTech, initiatives across the value chain
AssurTech start-ups don’t just offer alternative offers to traditional insurance companies. In reality, the AssurTech market covers the entire insurance value chain. Distribution, sales assistance, brokerage,risk analysis, claims management, fraud, payment… Also, its clients are not only insured but may as well be insurance firms.
Among the offers on the market arecollaborative insurancestart-ups. Car insurance, health, animals… Companies such as Otherwise, WeCover or Vitality establish coverage offerings based on each customer’s habits. Vitality, for example, offers a whole program to monitor the health status of its policyholders, push them to consume better to be healthy and thus reduce the costs of their insurance.
We also see the emergence of the concept ofon-demand insurance. Luko, Lovys, Trov… all allow you to take out an insurance policy for an item in a short period of time. Surprising in a market that usually relies on the regularity of payments and seeks to reduce the risk of fraud, this offer seems to attract the attention of investors since as of 2016, Trov managed to raise 25.5 million euros.
While the most well-known offers are those for the end customer, many initiatives also flourish at the service of insurers directly. Shift, for example, uses AI to reduce insurance fraud and automate claims.
In Bordeaux, companies also specialize in providing services to insurers. The Shoyo Start-up offers a “data passport” solution. The subscriber thus informs his data directly in Shoyo and can share his access to his insurer to facilitate the process. Another Bordeaux solution, Widmee applies artificial intelligence technologies to optimize the business processes of insurance professionals.
Towards a collaboration between AssurTech and traditional insurers?
Proof that AssurTech has a bright future ahead of it, 2019 was showing record numbers for investment. Thus, the global AssurTech are the beneficiaries of 6 billion euros of fundraising in 2019. This is the equivalent of the amounts raised in 2017 and 2018 combined.
Moreover, the market structure of AssurTech is wrong with a contemporary rewrite of the quarrel between the Ancients and the Moderns. Innovative companies and traditional insurers do not necessarily compete but can actually collaborate. For good reason, in 2017, less than 15% of AssurTech companies were dedicated to reinventing the insurance business model (2). On the other hand, two thirds of them develop solutions that are intended to be offered to insurance professionals.
In the same vein, traditional insurance companies are realizing the importance of modernizing the solutions offered to their customers, without having to invest in this area. For example, in 2017, 43% were planning or working with AssurTech (3). By contrast, only a quarter had invested in the development of these start-ups. In particular, a difference in vision.
Traditional players believe that these collaborations represent a significant IT security risk, while startups stress the importance of managerial and cultural differences with these large groups.
AssurTech development and acquisition strategy
Traditionally, the insurance market has been a market where customers remain relatively captive. You don’t change your insurance like you change phone operators. Thus, it is the traditional insurance companies that hold an extreme majority of the client portfolio. To acquire their customers, innovative solutions often rely on association with other companies that already bring together customers. This strategy has already proven its worth in many areas. Starting with the partnership between Qonto and LegalStart, or Blablacar and Axa.
In traditional insurance, the cost of acquisition is particularly high. At the same time, the challenge for neo-insurers remains to meet their customers. Especially in France, the number of AssurTech players continues to grow. There were 47 actors in 2017, 106 in 2018 and 169 in 2019. In order to establish a place in this highly competitive market, start-ups and traditional insurers have a strong interest in allying themselves.
This is in particular the bias of theFrench Assurtech association. Created in Niort, the insurance capital, it brings together the major insurance players grouped groups such as Groupama, Inter Mutuelle Assistance, MAAF, Covea Group, Massif, MAIF… Its mission is to participate in the Digital transition of the insurance market,it collaborates with start-ups to develop, test and bring new solutions to market.
It thus allows to pool the assets of traditional insurers (notoriety, client portfolio, physical implementations…), and the know-how of AssurTech (flexibility, technology, strategy…). (2)
“100% digital insurance designed for entrepreneurs and independents”, Easyblue, press release of 11 January 2021