A few weeks ago I attended the Event Meetup 6: InsurTech – The Next Big Thing?!?! at Westend Campus of Goethe University Frankfurt, Germany. The event was hosted by Felix Scheffka and Yassin Hankir from the Meetup Group FinTech-in-and-around-Frankfurt.
The goal of this Meetup Group is to create a platform for those who are interested in the changes to come in the financial services industry and may like to contribute to Frankfurt’s future position as a financial services hub for the next generation.
The agenda was divided in two parts. The first three presentations were from leading players in the InsurTech industry:
- Steffen Glomb, CTO of CLARK gave us some insights in the ‘Tech’ of InsurTech. He focused on the rise of Robo-advisers.
- Bernd Scharrer, CEO of the Allianz Digital Accelerator gave us insights into Allianz’s accelerator program, what entrepreneurs can expect and how it fuels innovation for the Allianz Group.
- Paul Morgenthaler, Senior Investment Manager at Commerz Ventures (the FinTech venture capital fund of Commerzbank) shared his views as a leading investor.
There were also three pitches from FinTech startups:
- Creditshelf presented their vision to change corporate lending.
- Exmedio presented ways to take care of your digital profile, after you’re gone.
- Finotek demonstrated possibilities in digital identification.
(1) InsurTech Brokers need to starting invest heavily in Robo-advisor technology
- WHAT IS IT? In the insurance context a Robo-adviser is a policy based advisory and management system that provides automated, algorithm-based advice to insurance customers with as little interaction as possible or without interaction from a (human) broker. More information here, here and here.
- HOW DOES IT WORK? Robo-advisers develop and propose sound insurance plans, by assimilating multiple customer goals (eg. home purchases, retirement, health and long term care coverage) and adapt their behavior based on earlier customer responses. They incorporate several risk carriers and handle existing coverage appropriately.
- WHY IS IT IMPORTANT? In the talk it became clear to me that Robo-advisers will provide the future economic basis for financially viable growth (scaling) of customer focused startups in insurance. The cost-intensive personal advisers (who are core of the customer experience) can be reduced to a minimum. Over time, Robo-advisers may have a significant impact on the business model of digital brokers. I can even imagine that InsurTech brokers like CLARK will sell their Robo-adviser technology (as-a-service) to incumbent insurance agents, brokers and customer care centers.
(2) The CEO will ask: „Does it move the needle? – for Allianz!“
- WHAT IS IT? The Allianz Digital Accelerator is a specialized company builder in the InsurTech space. The goal is to add value to the current portfolio of Allianz’s current business model or create new disruptive opportunities within the insurance sector. More information here.
- HOW DOES IT WORK? Participating entrepreneurs are employed as an Entrepreneur in Residence by receiving an employment contract for a limited time while trying to develop and validate new concepts. During this time they have access to an experienced team for validation, concept design, prototype development and product testing. The cost are covered during this period by the company builder. If they are successful entrepreneurs will have to answer the CEO’s question to go ahead: „Does it move the needle – for Allianz?“
- WHY IS IT IMPORTANT? The challenging question brings it to the point. To move the needle at a global EUR 125 billion insurance giant like Allianz, the revenue and profits from the startups must have the following potential: globally scalable, essential to core insurance tasks or complimentary services inside the existing business model or they have to be disruptive to incumbent risk carriers. Not an easy challenge.
(3) InsurTech is 12 times under-invested compared to the size of industry
- WHAT IS IT? Commerz Ventures and Paul Morgenthaler focus mainly on the InsurTech industry these days. They believe that the market size of InsurTech startups is currently 12 times underinvested, relative to the actual BankingTech market size. See page 14 in the presented slide deck and this article.
InsuranceTech has received 12 times less funding than BankingTech; Paul Morgenthaler from Commerz Ventures.
- HOW DOES IT WORK? Commerz Ventures operates as the corporate venture capital fund of Commerzbank Group. They back early and growth-stage companies in financial services and insurance with initial investment size ranges from EUR 2 million to EUR 10 million.
- WHY IS IT IMPORTANT? It’s good news for entrepreneurs! Investors are looking for InsurTech startups to invest in. My impression is, that they don’t find enough promising InsurTech projects to join. Currently it seems to be an (investment) seller market!
I look forward to the next InsurTech Event
Special thanks to the very well prepared hosts Yassin & Felix. I can’t wait for the next InsurTech event. And thanks for the beer and pizza, sponsored by Frankfurt Main Finance.