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The Power of Interplay between Insurers, Investors and the Insurtech Start-Up Ecosystem

Insurtech, News

Dynamic, mutually beneficial relationships are continuing to form between agents in the insurance industry

While they have been slower to digitise and have traditionally remained more siloed, larger insurers are increasingly under pressure to keep up the pace with the ever-growing demands of their customer base. More than ever, they are also concerned with artificial intelligence, machine data analytics and sensoric devices to amp up precision, prediction and personalisation.

Having attended Insurtech Insights London this year, and in conjunction with our latest M&A market report, we explore the interplay between traditional insurance powerhouses and insurtech start-ups, and the mutual benefits thereof.


The rising importance of Insurtech

As early as 2016, a study by PWC highlighted that, while changes in customer-facing tech and deeper risk insights were being used by insurers ‘behind the scenes’ to perform functions that customers couldn’t see or weren’t in contact with, since then a shift has occurred towards more client-facing technology.

In the age of constantly available customer service, devices and complaints at the touch of a button, one size no longer fits all and policyholders expect personalised solutions. Insurers are thus resorting to artificial intelligence to fill in the gaps, e.g. in the form of chatbots or robo-advisory systems.

Meanwhile, to improve precision, deeper risk insights are essential. Currently, insurers use only 10 to 15% of the data they collect. Machine learning will therefore enable them to improve this and better use the data they have. Examples of this include telematics and real-time weather observation sensors, or in-car sensors to measure how safely policyholders drive.


The challenge

Broadly speaking, adaptation and evolution in this direction has been challenging for insurers. Few years ago, few insurers dealt with fintech and insurtech at all. Differences in management and culture, or in IT security knowledge and standards, sometimes posed a problem to traditional insurers looking to take on more innovative technology.

As a result, there has been a disconnect between the “disruption” of insurtech and the insurers’ ability to invest in or take advantage of the innovation.  


The solution

Insurers have discovered the perks of engaging in a mutually beneficial relationship, rather than autonomously developing and implementing the technology spearheaded by insurtechs they initially, perhaps, believed to be their “competitors”.

For insurers, cooperation with fintechs and insurtech start-ups is key to connecting management cultures and gaining the perks of an innovative mindset to help overcome obstacles.

For insurtech start-ups, these partnerships help bridge the regulatory and monetary gaps to enter the insurance industry. They also offer huge market opportunity and the prospect of long-term business as they can benefit from the reputation of large insurers.

Some insurtech start-ups are hosted in a special office space by their insurance partners, occasionally in a sort of “incubator” or “sandbox” environment which can yield fruitful brainstorm discussions and help identify the correct match between the insurtech’s core technological idea and the insurance provider it is serving.

According to 2019 data, Munich Re currently has at least 10 partnerships of this sort. Furthermore, in its partnership with Aviva, insurtech HomeServe secured not only investment, but access to new channels in the USA to add to its client and distribution base.


Benefits of both industry-specific and outsider start-ups

Start-ups which partner with insurance providers are sometimes focused on another industry altogether, regardless of its application to insurance – such as firms offering preventative services to property managers.  

Some provide industry-agnostic services but which now hope to serve mainly the insurance sector – for instance, firms offering customer service enhancement.  

Some investors both financial and strategic do not seek start-ups with a specific insurance background, believing there is no need for tech developers to have any inside knowledge to help change and improve the industry – start-ups spend a lot of time with insurers to solve their pain points anyway. For instance, a study carried out by PwC in 2018 claimed that 61% of the >1000 applications to their “startupbootcamp” for insurtech came from start-ups outside of the insurance industry.

Others, however, such as FC, require that 70 per cent of their insurtech targets for partnerships should have insurance- and IoT-specific knowledge.



Three years ago, the insurance industry was going through a period of worry regarding start-ups and new technology “disrupting” the traditional insurer ecosystem. For the foreseeable future, however, start-ups and large insurers are working together, and not against one another, to respond to new data and data insights; to cater to customer needs; to improve interactions, relationship and trust; and to enhance operational smoothness.


"Solution providers in the industry have seen emerging technologies penetrate the insurance mainstream. Typically, these new technologies offer solutions to underserved markets, enhance business models, or create new markets altogether."


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