1、NAVIGATING THE DIGITAL DECADE: 25 EMERGING TECHNOLOGY-LED BUSINESSES WELL PLACED TO HELP INSURERS SUCCEED Oxbow Partners is an advisory firm exclusively serving the insurance industry. Our clients include the worlds leading insurers, reinsurers, brokers and private equity investors. Our Management C

2、onsulting team helps clients on growth, operations, technology and M in this report we have called it the “digital decade”. Incumbents are finally going to be forced to face the technology challenges that have been put off for years. As one client said to us, “we must now finally accept and address

3、the legacy debt that we have inherited from previous management teams.” Compounding this imperative are forces from outside the insurance industry. The impact of technologies such as AI and 3D printing will not pass insurance by. Technology companies which have literally millions if not billions of

4、customers are maturing and accelerating their monetisation strategies. In this report we consider the impact of these potential “super- gatekeepers” on the industry. The InsurTech market continues to develop. However, we note in this paper that it is also losing its special status. Insurers and brok

5、ers are, quite rightly, no longer seeing InsurTech as an end in itself, but a facilitator of change. This presents both opportunities and threats to InsurTechs. This years Impact 25 Members are innovative companies with the ability to create and reach new premium pools and accelerate incumbents digi

6、tal transformation. Along with our Advisory Board, we spent five months reviewing over 100 companies to select this years Members. We believe that our rigorous review process distinguishes the InsurTech Impact 25 from other InsurTech lists. We are also excited to be launching Magellan, our insurance

7、 technology navigator, with this report. Magellan ( gives subscribers access to our proprietary database of over 2,000 established and InsurTech vendors, and allows them to share information with colleagues and interact with vendors. It has been instrumental in powering the insights for this report.

8、 We hope you find the report valuable. Christopher Sandilands Partner Greg Brown Partner WELCOME OXBOW PARTNERS | 5 This years report has benefited from the support and insight of our Advisory Board. These industry leaders have helped us with both the selection of Members and analysis of 2020 themes

9、. We are grateful to them for giving their time generously. Thanks Oxbow Partners would like to thank the InsurTechs who applied for inclusion in the Impact 25, successfully or not, for their considerable efforts providing information about their businesses. We would also like to thank Lorcn Hall fo

10、r his help managing the analysis and selection process, as well as preparing the profiles. OUR 2020 ADVISORY BOARD Paolo Cuomo Director of Operations, Brit Insurance Co-Founder of InsTech London Sam Evans Founding Partner, Eos Venture Partners Jonathan Hughes Managing Director, RGAX EMEA, part of RG

11、A Stefaan de Kezel Director Innovation and Business Development, Ageas Group Arslan Hannani Vice President of Innovation, Travelers Will Thorne Head of EMEA, Specialty and Lloyds Ventures, SCOR Global P Amazon Web Services provides hosting services to millions of SMEs, large companies and government

12、s and could become a dominant sales channel for a range of add-on services like cyber insurance; and Facebooks exploitation of user data for commercial purposes is well documented. In time, these companies could become the primary access routes to many risk pools. In that scenario, the current domin

13、ance of the large brokers in certain risk pools will be dwarfed by the power of these super-gatekeepers. NEW GENERATION OF EMBEDDED PRODUCTS / INVISIBLE “GUARANTEES” Manufacturers using data and fl exible risk capital to create new business models such as “equipment as a service” COMPANIES WITH UNPA

14、RALLELED B2B CUSTOMER ACCESS New generation of digital service providers has access to millions of businesses and the potential to harness the data they process DIGITAL BUSINESSES OUTSIDE INSURANCE WITH DEEP CONSUMER ACCESS A new generation of digital, non-insurance businesses is seeing potential to

15、 integrate or distribute insurance products Crucially for insurers in the 2020s, some of these technology companies dwarf even the largest insurance groups when it comes to available resources. Indeed, this has arguably been the biggest change over the last decade: the market value of the FAANGs 6 h

16、as gone from roughly equal to that of the top 15 European insurers to being nine times greater. Unsurprisingly, most incumbents now fear a move by a large technology company more than disruption by a startup. This is, in our view, a reasonable conclusion, not least because the traditional argument t

17、hat technology companies avoid regulated activities is being weakened as, for example, data becomes more regulated. But a move by such a player does not signal the death knell of incumbents. There is no guarantee that a non-insurance entity would want to carry insurance risk; incumbents must establi

18、sh how they can connect to these super-gatekeepers and serve their needs effectively. Often this will be through nimble, technology-led InsurTechs. We have called the big technology companies gatekeepers and not disruptors for a reason. 5 6 Facebook, Amazon, Apple, Netflix, Google Source: Oxbow Part

19、ners Figure 3: Potential super-gatekeepers to premium pools OXBOW PARTNERS | 9 TOP 15 EUROPEAN INSURERSFAANGs 46% 54% 12% 88% Finally, the next decade will be characterised by an ever-fuller smorgasbord of technology opportunities. Some of these have been developed in other industries and are ready

20、for use at scale in insurance, for example AI and machine learning. Others, like domestic IoT, are becoming common but are in the trough of disillusionment for insurance as carriers struggle to find profitable business cases. Finally, technologies such as blockchain remain in development as innovati

21、on pioneers try to identify mainstream use cases. Incumbents will need to identify and deploy appropriate solutions, either independently or with the help of technology partners. Go for broke? So, is this an argument for carriers to go for broke and disrupt themselves? Only to an extent, in our view

22、. We have argued consistently that insurance is unlikely to be turned on its head by a disruptive technology-led entrant, in the same way that retail or mobility has been by Amazon or Uber. 8 We believe that in the next decade, at least the big technology firms will be profitable intermediaries for

23、those carriers who can deploy capital efficiently. At the same time, risk carrying remains a somewhat niche-interest business model, and the challenges of mass distribution have been laid bare by the experiences of various InsurTechs. On the other hand, insurance is changing. 2030s winners will have

24、 defined a corporate strategy that was based on a clear understanding of the emerging mega-trends. Innovation will have been an integral part of this for reasons we describe later in this report. They will have executed better than their peers and in particular had feedback loops between execution a

25、nd strategy to ensure continuous data-driven reprioritisation. The workforce will have been empowered to deliver, leading to a reputation that allows the company to recruit the best talent in particular scarce, industry-agnostic resources like data scientists. There is no reason to go for broke, but

26、 a need for radical change. 7 This analysis is partly driven by the differences in dividend policies between insurers and FAANGs. Insurers have typically paid large dividends over the last decade whilst FAANGs have reinvested profits in their businesses, with associated compounding effects on market

27、 cap. 8 https:/www.insurancetimes.co.uk/insurance2025-2019/there-will-be-no-uber-moment-for-insurtechs-2025-speaker-chris-sandilands/1430599.article Source: Bloomberg Figure 4: Market capitalisation of top 15 European insurers vs. FAANGs 7 10 | OXBOW PARTNERS Are there Barbarians, Trojans or Samarit

28、ans at the gate? It is important to remember that there are two types of InsurTech: Distribution InsurTechs and Supplier InsurTechs. The former category tries to acquire end customers and needs (re)insurers as capacity providers. The latter develops technology which could help insurers, reinsurers o

29、r brokers do business more effectively. They are vendors and require incumbents as customers. Distribution InsurTechs include brokers, MGAs and full-stack InsurTechs. Many of these businesses took a somewhat confrontational position when they first launched, often talking about “fixing a broken indu

30、stry”. Lemonade had the most aggressive rhetoric when it launched (“instead of making our money from denying claims, as is the norm within the industry, we treat your premiums as if its your money”). 9 However, these Barbarians have largely morphed into Samaritans over the last few years as they hav

31、e understood that they can only “fix” the industry by obtaining capacity from established carriers. They now position themselves as long- term partners to help insurers unlock growth in new segments. Indeed, some have stopped competing against carriers at all by becoming Supplier InsurTechs. Trv and

32、 Slice are examples of full pivots from distributors to suppliers, while several companies like Impact 25 Member ottonova now licence their system to incumbents whilst maintaining their own sales channels. 10 Even Lemonade has significantly dialled back the rhetoric, although it remains committed to

33、 the direct channel. A more negative reading of current trends is that InsurTechs are becoming not so much Samaritans as Trojans. Samaritan business models could be a stealthy, interim step to gain scale before untethering and once again competing against incumbents. For example, 2018 Impact 25 Memb

34、er Zego recently obtained its carrier authorisation whilst 2020 Member Dansk Sundhedssikring is waiting for one. Becoming full stack possibly something of an emerging trend will allow these successful intermediaries to manage their capacity more strategically and shift volume away from their origina

35、l “long-term partners”. This scenario could play out even if InsurTechs do not move towards full stack models. Instead, they could, for example, become the primary, digital interface to the new premium pools mentioned in the previous section, and command outsized commissions from incumbents by doing

36、 so. Alternatively they could become monopolistic or oligopolistic providers of a critical service such as, arguably, the catastrophe modelling companies have become. In other words, one could argue that InsurTechs are simply using their industry partnerships to develop their business models in orde

37、r to subsequently pivot back to Barbarian business models. Insurers and brokers need to determine how to get sustainable value from their partnerships. Findingproduct-marketfit:Balancingprogresswithreality Whether Samaritans or Trojans, Supplier InsurTechs need to find their product-market fit the d

38、igital term for an attractive proposition and sustainable business model. We see many InsurTechs still searching and some will fail because they never find it. Some founders will blame a lack of vision in the industry, but this is a superficial reading. We believe that successful InsurTechs will hav

39、e developed a solution that moved their clients forward but crucially understood their context. Some startups are, in our view, developing solutions that are too sophisticated for todays market. Consider a company that is using satellite imagery to measure the amount of fuel in various ports storage

40、 facilities. 2. INSURTECH IN 2020 9 10 (paywall) OXBOW PARTNERS | 11 These companies already sell their data to hedge funds who can use it to day-trade financial instruments against their view of demand and supply. In this case the precision of metrics is essential. The insurance market is relativel

41、y simple: participants make binary choices about whether to underwrite a risk or not, reinsure some of it, and then hold the net for a set period of time. Insurers normally need to understand expected risk cost only to the extent that they can compare their price with a market price; if the market p

42、rice is too low, there is no value in knowing by how much as they cannot trade that perceived under-pricing. Source: Oxbow Partners Figure 5: Trading financial assets vs. insurance risk Sorry, Im going to decline this storage facility as fi nancial performance was poor last year. TRADING INSURANCE R

43、ISK CSS NJS DSE FKJ LOL JKJ 291.32 890.32 43.32 69.22 213.59 -20.56 +5.97% +6.02% -11.45% +23.63% +2.25% -5.14% NVI OTN FIOE QWV MPF PUM 291.32 890.32 673.32 16.22 63.59 10.56 +7.35% -45.89% +6.24% +2.63% +14.60% +1.84% RUL QDV RRS VCH NI9 REW 291.32 890.32 43.32 69.22 213.59 890.76 -2.53% +6.02% +1

44、1.45% -23.63% +2.25% -5.14% CSS NJS RRT SFX ZWG VFA 291.32 890.32 43.32 69.22 13.59 -93.56 +5.97% +6.02% -11.45% +23.63% -9.75% +34.33% VXS KPO CVE UVF SGB XAB 291.32 890.32 43.32 69.22 213.59 50.56 -0.97% -32.87% +1.45% +76.09% +43.33% +1.66% Okay, lets go long energy companies and buy up tanker ca

45、pacity to the UK. Lets short some UK transport companies. Looks like oil is running a bit low in UK storage facilities TRADING FINANCIAL ASSETS This is not to say that data and insight is not important. Far from it: any UK motor insurer will count pricing analytics as a key driver of profit. 2019 Me

46、mber Concirrus is demonstrating the transformational impact of dynamic data in the marine underwriting process. We also see huge value in more complex, data-driven products or capabilities. For example we have frequently argued the case for parametric products and have included some parametric solut

47、ions in this years Membership. We also believe that data solutions can have a transformational impact on risk management, for example dynamic reinsurance. Our point here is about context and timing. Successful InsurTechs need to understand where their proposition can plausibly, practically and impac

48、tfully be implemented by incumbents in any reasonable timeframe, and where a technological advance is either merely interesting or too far ahead of its time. 12 | OXBOW PARTNERS InsurTech is no longer a special category leading to risks and challenges Finally, InsurTech and established technology ha

49、ve levelled in terms of status. Corporate objectives have moved away from InsurTech experimentation to achieving business outcomes. Gone are the days where the insurance press was full of articles about blockchain pilots. Instead, we are now seeing InsurTechs and established insurance technology vendors being evaluated on their own merits in selection processes. For example, an insurer wishing to enhance its claims capability could consider vendors ranging from Guidewire (market cap: $9bn) to ICE Insuretech (owned by one of the original InsurTechs, Acturis) to Impa