As with many industries and global peers, Swiss-headquartered (re)insurers are not all that different in trying to stay ahead of the latest technology trends, understanding how these trends will ultimately shape the insurance industry, and identifying use-cases for how these can be harnessed / leveraged within their own organizations to create a differentiating proposition. Incumbents in Switzerland, it emerges, have just as healthy a relationship with Insurtech as their counterparts elsewhere in the world. They’re diligently exploring the opportunities of new tech and finding diverse approaches to harness them.
How are Swiss-based (re)insurers harnessing Insurtech opportunities?
Our deep dive reveals that incumbent carriers are taking a variety of different approaches to harness Insurtech opportunities. Those approaches fall into three main categories: financial investments (either minority stakes or majority acquisitions), non-equity partnerships, and through participation in accelerator and incubator (A&I) programmes.
Minority equity investments, such as Swiss Re’s in digital insurer GetSafe, are designed to strengthen the relationship between the (re)insurer and the Insurtech and/or ensure exclusive access to the unique product of a non-controlled business. Majority acquisitions, by contrast, give the purchaser full control over the target business and its product or products. A good example is Munich Re Venture’s acquisition of home insurer Neos. An important decision when considering equity interests is whether it’s better to integrate the target business or maintain an arm’s length relationship. Other things to consider are the higher administrative burden involved in managing and overseeing Insurtech investments, plus the risk that the underlying tech or capabilities being acquired might become obsolete or less relevant over time.
A non-equity partnership is a way to collaborate and deliver value that’s more flexible and less risky than an equity interest. One example is the partnership between digital car insurer FRI:DAY and online broker Friendsurance. This type of (re)insurer/Insurtech arrangement is less capital intensive than an equity stake and is also an opportunity to check whether the partners are compatible in capability and cultural terms, with a view to potentially putting the relationship on a more strategic basis. It’s also good for carriers wanting the freedom to work with different Insurtechs. From the Insurtech’s point of view it can be a good way of building credibility while capitalising on their partner’s expertise and client base to generate additional fee revenue.
Last but not least, participating in accelerators and incubators is a good way of entering into a mutually beneficial partnership, allowing a more mature business to grow and help early-stage businesses (typically potential disruptors) to develop their ideas. They’re a possible avenue for incumbent carriers seeking to identify promising start-ups, new technologies and business models. The benefits for Insurtechs include access to facilities and office space, training, funding, connections to companies and mentors, and market access. Plug and Play, 500 Startups, F10 and Swiss Startup Factory are all examples of accelerators and incubators.
What are the major Swiss players up to?
Our Insurtech Deals Market Insights deep dive looked at seven of the largest Swiss-headquartered (re)insurers and their approach to engaging with Insurtech.
- Baloise’s engagement with Insurtech centres on four areas: home, mobility, financial wellness and business services. It involves partnerships with funds and incubators/accelerators, incubating its own start-ups and direct investment, and includes the acquisition of capabilities in data and analytics, artificial intelligence, parametrics, blockchain and smart contracts.
- Helvetia works with an Insurtech accelerator and has set up its own in-house incubator and VC fund, Helvetia Venture Fund. It’s open to partnerships as well as minority and majority equity stakes.
- Mobiliar’s expansion strategy involves developing and modernising its core business (incl. processes) and focusing on two ecosystems: “renting, buying, living” and “service for SMEs”. Mobiliar’s approach to Insurtech includes its own venture arm, majority investments, new greenfield companies and joint ventures.
- Swiss Life has founded an incubator/CVC and set up a customer portal based on a “phygital” approach. It is fostering a digital culture, rethinking traditional approaches, and creating an omnichannel marketing approach. Swiss Life often uses minority equity interests to access Insurtech capabilities and is complementing internal digitalisation efforts with selected investments to enlarge its sales channels.
- Swiss Re started by acquiring minority and majority interests in Insurtechs but has since adapted its approach in favour of more strategic partnerships. It actively engages Insurtechs via a wide variety of channels (incl. partnerships with universities, venture firms and incubators/accelerators), with a focus on big data and analytics and, in particular, using data to understand the interconnectivity of risks.
- Vaudoise’s digital strategy aims to diversify revenues via partnerships and integrate Vaudoise’s digital solutions into ecosystems from third parties. Its endeavours have included investing in a fund giving access to Fintech, Insurtech and Regtech start-ups. It has also embarked on its own internal digitalisation efforts as well as engaging in joint ventures, direct equity investments and non-equity partnerships.
- Zurich Insurance Group uses various channels to advance its digital agenda, including partnerships with and (in exceptional cases) investments in Insurtechs, partnerships with key incubators/accelerators globally and the Zurich Innovation Championship. It is endeavouring to develop capabilities in health tech/wellness, wearables, mobility solutions, risk mitigation, AI, digital distribution and fraud detection.
“Incumbent insurance carriers in Switzerland haven’t been sitting on their laurels. Some have played a pioneering role in digitalisation and harnessing Insurtech capabilities to enhance the customer experience, drive revenues and ultimately assure the future of the business.”
If you’d like to dive even deeper into Insurtech, call me, visit our website or check out the full Insurtech Deals Market Insights 2022 report.
#social#
