Bridging the insurance divide

Insurance is a complicated business. Between the underlying capacity and the end customer there are usually a number of different types of company, each providing a specific service. Here’s a typical stack of businesses that make up the value chain:

  • an insurer which fronts the capital,
  • a separate underwriting business to write insurance products and create rates,
  • an MGA to manage the products and take care of underwriting and operations,
  • a broker responsible for creating a customer brand and selling and servicing the insurance, and
  • an introducer to provide distribution.

What makes this more complicated is that some businesses can fulfil several of the roles listed above, e.g. an insurer that already has a customer-facing brand and can distribute and manage policies themselves.

When building the Aventus platform we realised it would be difficult to create a one-size-fits-all solution since every business model can look different, even if the value chain itself remains broadly the same across any insurance line. Our solution was a modular approach that allows businesses to take just the pieces they need, either to fill gaps in the chain or enhance the parts of it they know are weakest.

Aventus offers a range of products that link the two ends of the value chain

Case study: Neo banks

Banks like Monzo and Starling have only existed for a short time but they are already challenging our assumptions of what a bank can do for their customers. As well as some traditional banking services, many have given access to a wider marketplace of novel fintech startups that can provide value-add products to their customers, whether that be savings accounts, mortgage arrangements, or insurance. This allows the banks to remain focussed and nimble, letting other companies provide the specialist products and expertise that they can’t. It also lets customers get the best value product for their needs and making it easy to manage in one place, seamlessly transferring their data from one platform to another.

Neo banks exist right at the far end of our value chain as a powerful distribution channel to a motivated (and ever more demanding) customer base. They would like access to insurance capacity but brokering these deals for themselves means becoming experts in the industry, building up deep relationships with incumbents, and working with legacy systems.

Aventus’s turn-key solution exposes a powerful API that lets banks concentrate on the user experience while we take care of the insurance. Innovations like quote estimates, responsive documents, and third-party data augmentation means the banks can create seamless customer journeys, perhaps triggered by a specific purchase.

Case study: Incumbent insurer

Incumbent insurers, both large and small, are increasingly looking for support from startups to help them innovate. According to Gartner, over 80% of existing insurers will have invested in InsurTech by the end of 2018, with a total investment of over $400m in the last five years.

A plausible trend is for incumbents to consolidate their expertise in areas that they excel in and can’t be easily replicated, such as pricing, and leave the distribution and customer relationship to others.

“Currently, most incumbent insurers own the entire value chain, from distribution, all the way through to technology. Insurers of the future are more likely to focus on their core capabilities like pricing … with less of a focus on distribution or administration.” —Anton Kleingeld, Head of Strategic Partnership & Alliances at Old Mutual, South Africa

Aventus puts insurers in touch with a host of new distribution opportunities, and is flexible enough to accommodate a range of underwriting requirements and insurance product features. This allows insurers of any size to tap into new marketplaces without having to create any infrastructure of their own, allowing them to concentrate on the things they do best.

Playing to your strengths

With so many new opportunities on the horizon, insurance companies and startups alike need to find ways to work together and to maximise each other’s potential; to connect the old world with the new. Companies like ours exist to make this connection work. We’ve created technology that joins up the two ends of the value chain in a way that allows new insurance products and user experiences to be created with low risk and at start-up speed.

Customers expect to move their data freely across company boundaries and access products and services that offer them the best value. Our partnership with Yolt is a perfect example of this. We’ve shown how traditional capacity providers can have access to customers that were previously inaccessible, and Yolt can now offer a valuable insurance product to its customers without having made a large investment.

If you’re at one of the value chain and wondering how you might get to the other side, we can help. Get in touch if you’d like to find out how.

sbs-insurtech-trends-report-2018.pdf

Michael Murphy

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