Matt Ferguson: 00:00:12
Hi, everyone. My name is Matt from Sønr, and welcome to another in our series of discussions exploring some of the key trends and themes in the insurance space.
Now today’s session is less standalone and probably more Part Two, to a discussion that I was lucky enough to take part in with Nigel and the Kanopi team late last year. And understandably, this focused on embedded insurance.
So, this time around, what are we going to have a chat about? So, together, we’re going to be exploring a question. So that question being:
“Do incumbents truly need insurtechs to implement embedded insurance and participate in the ecosystem economy?”
So, it’s a big one. I’m joined today by an absolutely fantastic group. You comprise of a variety of parts of that ecosystem, actually. So we’ve got leading commentators, we’ve got advisors, we’ve got founders and execs, who are going to help us to explore various aspects of this question over the next 30 minutes or so.
So firstly, thank you everyone for your time. And without further ado, let’s perhaps get started with some introductions and Sabine, perhaps you could lead us out.
Sabine VanderLinden: 00:01:42
Hi, everyone. I’m Sabine VanderLinden. I run Alchemy Crew, which delivers R&D and commercialisation labs between startups and corporates.
Matt Ferguson: 00:01:54
Fantastic. Thank you, Nigel. How about you?
Nigel Fellowes-Freeman: 00:02:00
Thanks. My name is Nigel Fellowes-Freeman, and I’m the Founder and CEO of Kanopi. We are an embedded insurances service platform, serving corporates and allowing them to deliver embedded products into third party platforms.
Matt Ferguson: 00:02:18
Fantastic, Yuri. Perhaps over to you.
Yuri Poletto: 00:02:23
Hello, everyone. I’m Yuri Poletto. I’m the Founder and Director of the Open and Embedded Insurance Observatory. And we run ongoing research and intelligence on embedded insurance and open insurance and provide advisory to the companies that want you to do it in the best possible way.
Matt Ferguson: 00:02:45
Brilliant, thank you Yuri. And last, but by no means least, Mr. Kaenan Hertz, over to you my friend.
Kaenan Hertz: 00:02:54
Thanks, Matt. Thanks, everybody else.
Kaenan Hertz, I don’t think that I have the cool accent that the other panelists and moderator have, although I guess from an international perspective, my accent would be cool in and of itself, that notwithstanding I founded a few companies. One of them is InsurTech advisors, where I work with regional carriers here in the United States, helping them innovate and helping them partner with the appropriate insurtechs to drive their agenda forward, and I co-founded a boat and yacht insurance company called Ahoy! Insurance. So, look forward to the conversation. And I’ll turn it back to you Matt.
Matt Ferguson: 00:03:33
Fantastic, thank you. What a great lineup: it is really good. Thank you everyone for giving up your time. So enough of my preamble slash ramble. Let’s get into some questions.
First of all, we’ve got a bit of context, obviously in the insurtech market, particularly but also insurance right. It’s been a busy few years, a lot of challenges.
So first question. (00:04:03) Where can insurers look to create more value for shareholders? And how is it going to play a role in delivering point solutions or revamping the value chain?
Plenty of breadth in that one so plenty of latitude for response. Maybe Sabine from an outside perspective, you could kick us off, and then, let’s get everyone else’s perspective, too.
Sabine VanderLinden: 00:04:30
Sure. So I mean, for me, when you look at insurance, we often look at insurance from the growth the industry is creating. And I think between 2011 and 2021, that growth has been quite static. And so insurers had to start looking at the way they do innovation in different ways. And we have very interesting themes, as we know that entering the market on a continuous basis because they are technological innovation driven mostly through artificial intelligence that those companies need for sure to deliver value to shareholders, either by looking at point solutions, but also reinventing that value chain and every step of that value chain is to make the engagement with the customer seamless, you know, we often talked about touchless, seamless, or friction free. That was a term I was looking for and to be able to do that with insurance companies. And, I think, the market of insurance in general, brokers and insurers need to really focus on the customer. And that customer experience as a result, leveraging digital technologies, they have to look at data analytics, but I also would say, effects in the usage of those we have seen so much happening with generative AI in recent weeks, that I think it’s very important to make sure that it’s not, you know, put it down resulting pull data out.
So therefore, it’s about balancing that human intelligence with that machine intelligence. But then, at the end of the day, it’s actually using digital enabled technology to ease that friction-free engagement and reducing risk at the same time. You know, my theme, right? Dynamic underwriting. How do we actually combine all those bits together to deliver better customer experience?
Nigel Fellowes-Freeman: 00:06:29
Sabine, so interesting,
Oh, Kaenan, go for it. I’ve jumped in you go, you go for gold.
Kaenan Hertz: 00:06:36
I jumped in too Nigel, go ahead.
Nigel Fellowes-Freeman: 00:06:39
Well, I just want to kind of pick up on the LLM thing I thought was really interesting. That period you brought up, which is kind of 2010 to 2021, if you look at the macro level, there’s been a very low interest rate environment. And, so I think you could look at the kind of yield from the kind of investment on the insurance side, they’ve probably struggled, even though they’ve had some revenue growth on the premium. And so I think in terms of shareholders, I think there’s some that could come together a little bit in terms of interest environment, helping from a profitability standpoint. And that intersecting with a very large macro shift of kind of MLMs, etc.
(00:07:17) I think if you look, historically, when really big companies have been created, they’ve generally been created in the higher interest environments, where there’s been really big technology shifts, and those two things come together. So I actually think these two things are a real macro trend and is a real opportunity for really big companies to be created. The Googles, the Apples, those kinds of really big companies have been created in those environments. And so I think that’d be something to watch in terms of how they can really deliver shareholder value, if there’s some really big bets made in those two places.
Kaenan Hertz: 00:07:50
So now, my comments are really in two different ways. I was going to jump on the ChatGPT, which I’ll do in a second Sabine, because actually, it speaks to technology, and it speaks to the rapid evolution. But before I get to that, Nigel, I want to just touch a little bit, you had talked about, you know, profitability and shareholders. So, I think the issue of shareholders is dependent, right? So, for a carrier, who are their shareholders, is it a public entity, in which case the decisions they have to make are decisions around, you know, around quarterly returns, around returning value and equity value to to its stockholders, but in a mutual or in risk retention groups or organisations that for the sake of the like, it’s really the value is making sure surpluses is maintained, and that ultimately you are providing the services at the best possible price to enable the policyholders.
And I think that nuance is going to become exacerbated in our current environment with technology. And that’s where we’re talking about ecosystems, we’re talking about embedded. But if you just look at ChatGPT, in a microcosm, what it is proven, and what it is showing to be able to do, whether or not you know, irrespective of does it give you a little bit erroneous data, it still needs a human to filter it after, but it doesn’t give that much erroneous data. And if you actually start to apply it to your own data, I’ve just been playing around with it myself, I put in a data set from essentially a software vendor that works in the old age home space. And I asked, what are the important variables that I should look at to run my business, and out of 500 different elements that are collected by their system, it spit out, probably the eight that any administrator would be watching, right? So that ability, that shortening of time, is what is going to accelerate both the profitability challenges, the need to embed, the need to become more efficient. And unfortunately, there will be this tension between human bodies and artificial bodies. And, sorry for rambling a little bit longer, I think that the technology is evolving at a rate so much faster than we can consume it at, as a company as it incorporates in a society.
Matt Ferguson: 00:11:05
Yeah, super interesting. Yuri I think this for me, feels like a really good point to ask for your input, given your role, sitting in between various aspects of this ecosystem, right?
Yuri Poletto: 00:11:20
Matt. Thank you, I agree with what all the other friends have said, I would just like also to focus a bit on profitability, because insurers, as in every business, need to provide profits to the shareholders.
So, I have worked for 14 years in insurance companies, knowing that when insurers wants to grow in the traditional economy, they go to the agents, brokers and tell them, get new business. Get new business, do not mind about the loss ratio too much, mind about growth. And then after three, four years, it was the time of taking all the new business and removing the non profitable ones, returning to profitability. So it was like a wave: grow-profits, grow-profits. And I think that in this moment, we are in a moment where we are changing a bit between pure growth and profitable growth.
(00:12:25) So, I think that insurance needs to grow and the best growth is the way to deliver value to shareholders. And if we just think about the protection gap, we see that the protection gap, not only in developing economies, but also in developed economies, is still huge. So there is huge potential to grow a lot of spaces. But just to see into two segments that are unserved like the creator’s economy – digital nomads. So we are talking about millions of people and micro-enterprises that are completely unserved or think about micro and small enterprises. Their needs are completely unmet by insurance today. So there are plenty of opportunities for growth, but do not forget profits.
(00:13:20) To gain profitable growth we see insurers today are leveraging their internal assets and adding a layer of technology that can be built internally or sourced out externally. Technology and partnerships with brands that have customer bases so for example, think of the red click strategy of Generali, think of the Chubb Studio and Gallagher re and Mercer.
So those are strategies and platforms through which those big insurers and brokers are building the technology that lets them be a gateway between the insurance market and the end customers, by partnering with the brands that have direct relationships with those insurance customers. So this is my take on this topic.
Matt Ferguson: 00:14:15
Yeah, brilliant. Thank you. Yuri.
Kaenan Hertz: 00:14:21
This might be a transition into something else. But we’re talking about profitability. We know that many of the insurtechs, whether they were enablers, enabling technologies or trying to be digital MGAs, or actual carriers have really struggled with profitability. And I think this gets to Sabine’s comment around 2010 to 2021, there was just this view that Yuri said, which is just grow, grow, grow, grow, grow.
The VCs in the investment community treated insurance and insurtechs like everything was software service, when that failed, you know, it’s a time of reckoning. But I think the issue then, which gets a little bit to your first question around, you know, can an insurtech and incumbents or can insurers/can incumbents rely on insurtechs? It’s the general question that any established Corporation has with its partners, which is are those partners going to be around for a long time? And if those partners don’t have a path to profitability, then it will be used to raise concern. But now it’s raising concern even more, because fuel that was pushing for that growth, which didn’t care about the path to profitability is no longer there. So I think, you know, we are in this even bigger shift, where yes, carriers and incumbents need external relationships, but they need external relationships that aren’t just one offs and aren’t going to disappear within six months to a year.
Matt Ferguson: 00:16:16
Yeah. We could probably easily spend an afternoon just discussing this state of the insurtech market role of VCs and appetite, certainly could go with everything you’ve said there.
Well, I wonder whether that’s actually a good segue into talking about the sort of models that we’re seeing and Yuri has alluded to a number of examples there. But what are your thoughts on the insurance ecosystems? Do we see more insurers orchestrating their own ecosystems? Or are they providing products as part of other already established ecosystems? What are the approaches that we’re seeing and Nigel, I guess, from a kind of the front line, what are you seeing?
Nigel Fellowes-Freeman: 00:17:06
Yeah, I think that there’s some examples of a couple of insurers that are taking the orchestrator approach. And I think there’s massive gains to be had from that. I think there’s a bunch of research to come out from LA McKinsey. And those kinds of folks have, like the percentage of the kind of revenue to be gained by the orchestrators versus the kind of parts of the system and is kind of maybe certainly 75/25.
So a really big portion of the value sits there. But it’s really hard to do. And it takes, I guess, a really long time, a big investment. Obviously, you got folks like Ping An who have really kind of led the way in terms of showing how they can build these enormous ecosystems that they’re the orchestrators of. But that takes a very, very committed group, and a very committed shareholder group and very committed, etc, etc, to make that happen. And so what we see a little bit more is wanting to nibble around at the sides, try and get involved, try and understand it, get executive buy-in. How can we prove some things are worth investment, time, money? This is really something that’s going to do. We’re going to have to change our path of these 10 year digital transformations that we’re already working on. But now we want to do this as well. So what we see day to day is that there may be some folks that really go big and I think will win big off that. But a more general theme is how can they learn, understand and iterate into it versus kind of really go big and try and be the orchestrator because that’s a big leap to make. I don’t know what everyone else thinks, but that’s what we see day to day.
Sabine VanderLinden: 00:18:41
Yeah, I will follow on to Nigel’s point. So one thing I want to add is also to really understand the difference between the big players and the smaller players.
I think the big players have the resources to become orchestrators. However smaller players who want to be part of an ecosystem will actually hop on and join an ecosystem to actually see how it works and actually leverage the assets and resources from the ecosystem.
(00:19:11) I think it’s very important to think that and to understand that ecosystem operate in a very different manner, from, if you don’t mind me saying, profit and capitalist driven organisations, because in an ecosystem, you have to think less about yourself. But the members of the ecosystem across the value chain, where one plus one equals 10, is actually when you become a little more selfless. And the discomfort usually in an ecosystem is when you have not built really strong trust amongst the members of that ecosystem. So I just want to also highlight orchestrator versus joining. It’s also pretty much linked to size. And then for it to work, you have to embed a lot of trust in the system. But the benefit of delivering an ecosystem, if you actually truly understand your strengths and capabilities, you end up being able to build for the customer that frictionless engagement, you hope into people, or maybe strong capability around data and analytics and artificial intelligence. You actually can generate new sources of revenue, because you’re working together. Actually, maybe there’s an opportunity here to tap into the protection gap, and identify new product emerging risks, right?
When we think about insurance, where together we can actually start building better for the world, as a group rather than a single entity. And I think you drive probably better agility, flexibility and adaptability. As working together means we are able to adapt much quicker, again, as long as we’ve built a trusted group of ecosystem players among one another.
Yuri Poletto: 00:21:06
Matt if, if I can, I would also think it’s also worth spending a few words to talk about the main model trends that are changing economic competition and paving the way towards ecosystems. So I would like to quote Alex Choniski. Here, Alex is the head of embedded insurance at Gallagher re, they are one of the members of the Observatory, and talking about medical insurance, but I think this also can apply perfectly to ecosystems. Alex says that they’ve answered that in modern history however, having given birth to embedded insurance, are akin to our parents classic advice about finding a new job, they are all about networking, networking and networking. So I think it’s interesting, the foundation of embedded insurance, but also of the ecosystem model as well.
So if we look, in the last decades, we have built technologies that are shifting our economies, and business models in almost all the markets from, you know, closed loop or self referential to open and working. So particularly, there are three technologies that are driving this change. In my view, they are Internet, mobile and API’s. So the Internet has created the infrastructure to exchange data and to connect people and businesses. Mobile has made the connectivity available every time and from everywhere. And the API’s are enabling every brand with the customer base to offer financial and insurance services to the customers. So this is the playing field for ecosystems. And we know that the ecosystem model has grown particularly in Asia. And now it’s gaining traction also in North America, and Europe.
Why in Asia? I believe that the main reason is why in Asia and you know the regions that are not in North America, Europe; there is less legacy, then we have less cultural and technology legacy. So if you want to introduce an innovation, it’s more straightforward and quicker to introduce an innovation if you do not have legacy technology and cultural legacy.
And in Europe, in North America, we have a lot of tech and cultural legacy. So people are using it to go to a broker to buy insurance, which will continue to be in the next centuries, I’m sure. But if you do not have this discussion technology legacy, it’s easier to introduce more modern infrastructure in order solutions. So if you have a population and businesses that have been knowing about insurance in the last 10 years, they haven’t only showed us digital, the unknown digital insurance, not traditional one. So obviously it’s easier to introduce innovation in this kind of environment.
So that’s why, for me, the ecosystem model has grown and become huge in Asia particularly. But now we have realised that the value and potential of this model, and it’s getting traction also in Europe and in North America, particularly, and we see, not only in areas and the lines of business where we have simple products, but also, for example, in business insurance that traditionally have been considered too complex to be embedded or to be offered in an ecosystem today, this is not the case anymore, probably. Nigel will know better than me, this has his company competing, this side is marketing.
Kaenan Hertz: 00:24:50
So I’m keen on offering the contrary opinion, or a little bit contrarian. And I think, you know, it boils down to a little bit of what Yuri was saying, which is there’s a regional variation and a regional difference, right.
So what we’ve seen in Ping An or what we see in India, are environments that are vastly different from Western culture, which gets to I think, a little bit of what Yuri said. The cultural piece, I think, is much bigger than the legacy technology. But that cultural part also bleeds into other areas of Asia, for instance, in Korea, you know, everybody has an uncle who sells insurance. And if you don’t buy your insurance from your uncle, it’s like a slap in the family’s face. It’s a disgrace. So there are barriers that are non technical, technological, that will have to be overcome.
But moreover, at least here in the US, and probably including Canada, the integration is less likely to be led by an insurance carrier. They’re more likely to want to participate then they are not and you’ve seen it in a couple of interesting areas. CVS, right, buying Caremark CVS, putting in health clinics every you know, in not every but in the majority of their pharmacies. You have Amazon, and Amazon Health and Amazon Care. And Amazon now has partnerships where they’re selling memberships in coordinated doctor’s office parts, so that you can supercharge your traditional care here for not that much more money, and then they’ll integrate the prescriptions and everybody knows how it gets delivered. And it’s an easy delivery. So the health care providers will bolt into Amazon, if it doesn’t decide to do it itself.
Although when they and IBM, and I forget, there was McKinsey, maybe, tried to design a health insurance product for their employees, it just didn’t grab hold. So there will always be false starts, right. But ultimately, we will progress. But at least here, I think the ecosystems will be driven by non insurance companies. And it will, therefore the ability for the carriers to inject themselves with both, it will be a great opportunity.
But those other ecosystems will also look at the fact that insurance is a cash cow and is profitable. And you know, we see it on the auto side, right? Tesla is the simplest example. Ford is another example, Volvo cars here. And I think also in Europe, you can lease them bundled in with insurance and right and so who’s providing that there’ll be this tension between let’s partner with a traditional carrier, but maybe they can’t be as nimble or let’s partner with a startup, but then they’re not as stable. Or let’s just do it ourselves. Because we actually know more. And this gets to what Sabine and others were talking about earlier, which is just data, you know. And if you are closer to the data, therefore you should be able to extract even greater insights than somebody one step further away from that original data source.
Nigel Fellowes-Freeman: 00:28:35
It’s really interesting on that data set piece. So I think you’re right. And I think that I would extend it out to say that I think where the winners will emerge in that space is the ability to aggregate multiple data sources, not your single data set. And so I think historically, those folks have done a really good job of having a single data set and understanding that really well and often historically. I think that we’ll see more and more bigger winners emerge with the capability to bring multiple datasets together, and have the capability to do that the amount of carriers that I speak to that have 17 different systems and the data sets in all parts of the company, and you couldn’t have an auto product, and they don’t know the same customer. So I think those problems are still to be solved. And I think the folks that do solve those multiple datasets, I think, will extend your point, I think will continue to really grow.
Kaenan Hertz: 00:29:35
You know what’s interesting about that last thing with multiple data sets? It’s a little bit surprising to me that they do it a little bit but not at scale. The reinsurers and the reinsurance brokers essentially get access across hundreds if not thousands of carriers and their depth of knowledge of auto transcends any individual portfolio and it would strike me that they are in an amazing position to rewrap that information and give it back in a blinded way in the same way IQVA does or with health data here. Or like AXA or Experian do with credit or finance data. To me, there are actors in the insurance ecosystem who actually have so much more clarity or ability for clarity but for whatever reason there’s sort of blinders, this is my line and I stay in that lane.
Well, I would say Kaenan that if you talk to some of the reinsurers, I think it’s the continuous problem around data; it will be the data quality, even though they have access to a lot of data it is also possible that actually the quality of the data is not there and so they still need to enrich that data with other data sources just to make sure that whatever they use, and in this scenario what you highlighted is correct, and I think that you will find is that even though access to data is there, doesn’t mean that the quality of data is there.
Kaenan Hertz: 00:31:37
Very good. I am conscious of time. I think we have time to explore one more question between us and we started to touch on the capabilities but also some of the limited facts to enable these ecosystems to effectively interact together. What about some of the approaches you are seeing? Should insurers spend time balancing core operations and budding partnerships or spend intensive time around R & D and on their own individual transformational journeys? Do we have a sense of what is more effective, more appropriate in the short term versus long term, thoughts and perspectives on that?
Let me start with that. I think in the end you have to think about, make sure your backyard is clean and weed free. Or as weed free as possible right. So you have to start with your own house and get it closer to order. That can be both looking outside for support to where you are missing capabilities or where the capabilities can be delivered which started this whole conversation about profitability. Where they can be delivered in a more efficient, effective, thorough manner, right and so to get a better sense of where you are, what your strengths, what your weaknesses are, where you are wanting to go, where the world might be changing.
At that point, you can now start to figure out, you know, how much do I have to spend on innovation? Where do I outsource? Where do I insource? What is my key differentiator? Your unique value, that’s what you keep close to the chest, anything else you can outsource so to speak and outsourcing doesn’t mean a different company, it means figure out a different solution that might leverage other approaches. That’s how I would answer that question.
I was going to respond to Kaenan because that was a very profound statement as well but to remain competitive at the end of the day, I would say insurance companies need to be super proactive, right, and I call it probably ambidextrous.
You need to run the business, and as Gartner would say that more companies focus on running the business than transforming the business and so still today, 70% of activities are still in running the business, you know, doing the efficiency transformation which when you look at it in terms of value from efficiency it’s still important.
I remember Dame Inga Biele ? talking on stage recently, when she looked at insurtechs when she was at Lloyds she saw a lot of new systems. She saw solutions coming into the market which were delivering new capability but not always taking cost out of the process. So I think for the basics it’s about efficiencies and making sure we can leverage those back into the valuation and the ecosystem.
But, I think second would be to be aware of the value of transformative initiative, looking at open innovation and looking at outside-in otherwise you just keep running against your own tail and being quite insular in the way you are doing innovation. Transformational innovation therefore is high risk, high return. Therefore you have to balance the two. The short term lends into running the business, apply making profit, considering the fact that new technologies that are coming in, you need to be fluent in those technologies, and know where we need to supervise so that we can actually make sure that we are aware of privacy laws and breeches and all this stuff and can affect any legacy systems.
But then you know the three strategies at the end would be to study your strategy and be clear where you want to go. It would be around, you know we talk about balanced portfolios, you might be 60% in efficiency stuff, 20% in much more products and services stuff but within the sustainability theme coming into this embedded conversation that we are having, and lastly transformative. Being able to do a balanced portfolio means that you are clear about where you are going and then maybe together we can start looking at the right culture, the right talent, how you mix existing with new and find ways to address the big problem we are all facing, and what we are all facing right now with the talent gap.
Matt Ferguson: 00:37:21
Brilliant, Nigel, sorry I had a false start with you a moment ago, but what are your responses and thoughts?
Nigel Fellowes-Freeman: 00:37:30
Yeah, I think it’s interesting. There are a couple ways which are, I suppose, what we are seeing in terms of these digital transformation paths, which are big, hollowing out paths which are what big general insurers are trying to take. How do they kind of consolidate their systems? How do they take stuff out of their core and increase their ability to be able to partner? There has been a batch of appetite to be able to partner but often there has been a challenge to do that because of cultural as well as technological capabilities as opposed to do that so we are seeing that run and I suppose it is going to be continuous and that’s going to increase the capability for partnership I suppose.
Once you’ve got the board right you have got that build, partner, buy what should you do at the moment? I mean build is really hard, long and slow, so how can we hollow out for partnership to enable us to be able to move quickly, to take some of these big transformational trends that we can do and how can we bring some of that stuff in house or how can we accelerate through partnership? But I think maybe something, maybe a little controversial, I think throughout the year, will be that buy piece which we touched on right at the top of the call – the last couple of years, a bunch of venture and a bunch of young companies raised a bunch of money. Some of them, like the reality of growing companies, is that some won’t make it, and so I think that capital over the coming months will run out and I think the opportunity to buy some tech for some folks to leapfrog up that curve I think is going to be there. I think it’s a thing we may see over a the next 18 months or so some really interesting purchases by a bunch of different folks, perhaps a consolidation of young companies; consolidation of companies being acquired by some more incumbents.So that kind of build, partner, buy there is kind of two thought processes how we see embracing innovation and then executing on the coal face.
Matt Ferguson: 00:39:47
Fantastic, and Yuri any parting thoughts from you before we wrap.
Yuri Poletto: 00:39:54
Yes, so looking at my particular domain,that is embedded insurance and open insurance. For insurers, insurers that want to find capabilities externally, there are plenty of opportunities, really plenty of opportunities.
We publish every quarter a map of the embedded insurance enablers, embedded and open insurance enablers. Those companies, typically tech companies, but not only, also data companies, for example, that sit in between the insurance providers and distributors and enable embedded insurance or open insurance.
In the next map that we’re going to publish in a few weeks, we have mapped over 130 companies. I am sure that we are missing a lot, particularly in China and India. Probably there are at least two or three times this number, but there are a lot of companies, really a lot of companies. Many of them do more or less the same thing, more or less in the same markets, in the same verticals. So I also put in the shoes of insurers how difficult it is to find the right partner, the right company to partner with or to acquire. Then we also need to consider that insurers are very choosy when they want to partner with somebody else. They are not happy to open their data to third parties. They are not happy to expose their customers to third-party services. They have a trust issue to consider. There is a cybersecurity topic to consider.
They are very choosy. I perfectly understand the reasons. This is not necessarily the best approach, but I understand the reasons. I think that at this moment, we are at the stage of maturity of Insurtech,where we are going from providing capabilities and technologies from a 360 perspective. So technologies that can do a lot of things and that are addressing a lot of verticals, we are moving towards a specialization. I think that in the near future, we will see a number of insurtechs and enablers specializing in specific verticals, in specific markets. Probably at that point, we will also see an increase in the number of mergers and acquisitions from insurers.
They are probably looking for opportunities that solve specific issues that they have that help them to get to markets where they are not able to get through the traditional channels. So yeah, I think the landscape is evolving and I think that we are going to see interesting things in the near future in this space.
Kaenan Hertz: 00:42:42
Can I just jump in with one sort of last though, and it gets to the remaining competitive component, right.
To me, one of the areas that I think carriers or incumbents don’t spend enough time thinking about and it was heightened, let’s say this past week with the collapse here in the US and in Europe of Silicon Valley Bank and Signature Bank, right, that there are these black swan events that aren’t typically modelled, right? It’s not that you can model a black swan event, but you can model what would happen in an event. And related to that, and I think this is where sort of you see insurtechs, let’s say cyber, which there’s been more activity with insurtechs than incumbents, is what is the future of insurable risk?
You know, where will the risk be in five to 10 years? Because if you’re a carrier, yes, you have to do what Sabine said, and focus on the 80% of running your business today. But if that business materially changes, so everybody talks about climate, right? So if the climate suddenly raises the sea level one foot in 10 years, right, is your business different? Would you want to do something different? So what will risk look like in 10 years? I think that question, I know for a fact among the boards and execs that I deal with, isn’t discussed.
Yeah, but it should be because it’s all about emerging risk. And what I believe is too much is actually being put around the 70% or 60%. And because the world we are living in changes so fast from technology viewpoint, from emerging risk, climate, social risk, we need to put a little bit more around that protection gap that you mentioned at the beginning of the conversation.
Beautiful. Well, it feels like a point at which we’ve come full circle, neatly joined the dots. I think that’s all we’ve got time for today. Just a massive thank you again to all of you for your time and expertise.
Cracking Viewpoints, that’s been fantastic.
I think it’s probably set up for part three as well, but let’s leave that for now.
Thank you again everybody, and have a great rest of the week. Speak soon everybody.
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