So many of the InsurTech start-ups to date have focused on personal lines, addressing the end consumer and changing the way they think about purchasing their insurance.
This has bought the commercial insurance and reinsurance markets some time to think, although they know that these start-ups will, too, soon come knocking.
But will the advent of tenacious young entrepreneurs – and the millions of dollars of venture capital that chase them – actually result in a wholesale change for this complex and convoluted industry?
Many feel that reinsurance, in particular, has a stronger immunity than other areas of the industry against disruption from technology, given its relationships-driven business model and the huge numbers involved.
This argument is strengthened by recent moves from reinsurers to invest significant amounts of money in InsurTech start-ups, positioning themselves in the role of business partner rather than competitive threat.
But can any reinsurer afford to be complacent?
Perhaps the answer lies in what you believe the reinsurance industry will look like in the future.
There seems to be consensus among reinsurers and their broker partners that the industry must be leaner if it is to survive. Technology can certainly play a major part in that ambition.
But the scenarios envisaged by our InsurTech roundtable at Monte Carlo were far bigger than simply operating a lower cost base.
Could the industry see further securitisation of risk, which, when backed and powered by the latest technology, could create another trading revolution like the one seen by the derivatives market in the late 1990s?
Could risk modelling become so sophisticated through the use of big data and high-powered computer processing that the human element of underwriting is vastly diminished?
Or could ledger technology such as blockchain work to enable and empower the existing players in the market to such an extent that they are able to price risk more efficiently and accurately than ever before – potentially even better than the models?
Two schools of thought emerged from the discussion held in the south of France.
The first was that reinsurance and its use of technology will evolve gently over time, moving and working together to transform the industry as we currently know it.
The second was the industry will experience a ‘black swan’ event – a sudden explosion in the use of technology that will tear up the rulebook and force a drastic change in the way the reinsurance market goes about its business.
A heated debate was had during the roundtable where some big, bold ideas about the future of this industry – and how technology plays a part in that – were debated intensely, and at length.
Perhaps some of those ideas may not resonate with everyone, but they are certainly worth taking the time to mull over.
To view the InsurTech Roundtable supplement, please click here.
Catrin Shi, News Editor, The Insurance Insider
