“It is in the DNA of startups to take advantage of not having the overload of legacy and to try innovative solutions and ventures in markets that have not previously been explored.”
With the new historical investment rise, do you consider that the Insurtech market is still in a growth stage, or is it going more towards consolidation?
Depending on each country, undoubtedly Europe and the United States have quite different realities. In Peru, for example, the Insurtech world is still quite young. In fact, in Peru, according to the latest data from Finnovista, there are only around one hundred FinTechs, and only 4% of them are Insurtechs.
It is in the DNA of startups to take advantage of not having the overload of legacy and to try innovative solutions and ventures in markets that have not previously been explored. I believe that both globally and, fundamentally, locally, it is still in a stage of growth. Technology is an extremely relevant partner for this industry. However, we are still far from enjoying the full potential and the great benefits that these Insurtechs are going to bring us, at least on this side of the world.
Regarding post-IPOs results and the exponential growth of these startups. Do you consider there is more hype in Insurtechs than real impact in the market?
Startups and Insurtechs are still a big bet. I have seen positive trends of companies investing and participating to accelerate these great initiatives. For now, we are still in the “fever stage”. I believe that in a few years they will consolidate. However, like any other type of venture or solution that is a little more innovative, there will be a small minority that will reach that extremely important level of consolidation.
That does not mean that I do not think it is positive that the big companies and enterprises are entering the Insurance market. There are large companies such as Google, Apple, and Amazon that want to both provide their solutions and invest in others. We don't know if this will bring revenue in the short term, but we can see a trend that many are jumping on board.
So, to be concrete, I think we are still in a hype stage, and we would like to see a good impact on the market. This is especially for the benefit of users because the philosophy of startups is having user-centered solutions, which often take much longer to implement for larger companies.
Looking at your contribution to Insurtech investments do you think your role is crucial for Insurtech success or even to avoid the possibility of a new bubble?
Yes, insurers have a key role to play, but I do not think it is exclusive. No doubt there may be an Insurtech that can chart its course with their investment, or from Tech Giants, and do quite well. However, the participation of an insurer helps a lot. The knowledge of years of work that we have, such us in MAPFRE, is extremely valuable. That kind of knowledge could take an exceedingly long time for a startup to learn, so cooperation with insurers can prove value quickly.
That is precisely where there is an important balance that can be struck. Not only from the point of view of capital but also from the point of view of partnership, which can provide them with expertise and even, to a certain extent, the use of installed capacities. So, I guess the challenge will depend on the working philosophies of both Insurtechs and Insurers, as well as how they are faced with the day-to-day realities of this.
“We work under a partnership philosophy, we give the startup access to our customers, which helps them to grow, and we get to offer great solutions to our clients.”
“As insurers, we have the responsibility to serve the market, to take initiatives forward and not wait for these partnership agreements to come along.”
Tech Giants and Big Corporations are very into Distribution and Commercial this year too. Why do you think insurance companies and new entrants such as these companies move in the same direction? Are they competing for leading this market or do you feel this is more of a collaboration scenario?
It is too early to tell. They can be a threat or an ally. Moreover, that can change over time. Imagine buying health insurance from Amazon, which has a much more robust platform than any of the global insurance companies. That would be a threat. But, on the other hand, they can be an ally. MAPFRE already has formally established a partnership with Amazon and Google. It is about getting the timing right, to be able to make those alliances and work together.
What MAPFRE is doing is trying to make alliances that are aligned with its vision, but it is also developing its own digital solutions. For example, we launched the digital clinic, which has been running for almost two years. I think insurers should create their own solutions. As insurers, we have the responsibility to serve the market, to take initiatives forward and not wait for these partnership agreements to come along. We must be autonomous for the sake of our customers.
What is your perception of the interest of Tech Giants in the Insurtech market?
The interest of Tech Giants in the Insurtech market is growing. I think the pandemic has raised much awareness about the health world, especially from an Insurtech point of view. It is going to continue to grow, but it is also a challenge because insurance is complex, it is the only product you buy hoping you never have to use it. Selling insurance is a big challenge in general terms, so I would not be surprised if the Tech Giants focus first on the world of tangibles. However, you can see that they are slowly dipping their toes in the water. In the end, without health there is nothing, so I am not surprised that they want to enter the insurance world through health.
“What I find interesting is that Insurtech allows you to work under this philosophy of a customer-centric vision that allows companies to be a little more sensitive to the market.”
What kind of value do you see a Tech Giant can bring to a young Insurtech?
First, capital for develpment, which is necessary to access customers. Second, I think having access to their customers can put them to another level, where they can have millions of subscriptions fast, and enrich their models.
What I find interesting is that Insurtech allows you to work under this philosophy of a customer-centric vision that permits companies to be a little more sensitive to the market. This means they can respond to smaller customer segments more effectively that would otherwise be ignored by a larger organisation. It is a win-win situation. These companies are going to grow much faster than they could do without their resources.
“Data is the currency of the future and in the end, all companies are going to be software-driven companies, which is not that far away.”
One of the main pillars of ecosystems is Data. Sometimes data comes from within insurance. However, data is now required to be real-time and actionable, this source is from outside the insurer. If Data is then, the main driver, will Insurers transform into data-driven companies, or will they just serve the ecosystems at the end of a value chain?
Insurers are going to be data-driven companies. Data is the currency of the future and in the end, all companies are going to be software-driven companies, which is not that far away. The moment of the claim, the renewal of your policy, even when that customer decides to leave the insurer, all of that actions generates data. Which in turn generates traceability that enriches management information. It’s going to be a lot of work because organizing data is difficult, expensive, and slow, but necessary.
We have already taken the first steps; we are consolidating our first data management area. This will allow us to standardize the data that we have. We also have Advance Analytics resources. What we intend to do is to generate algorithmic models that allow us to “predict the future” so we can provide our clients with tailor-made solutions.
The world of data is not an option and I believe that the company that takes the best advantage of this sooner rather than later will undoubtedly have a significant competitive advantage.
“Data must be strengthened and exploited, to generate better customer service at all points of contact.”
How do you see the journey to ecosystems in your organization?
We have just recently implemented a tool that will allow us to develop our capabilities using Salesforce. For these big projects, you need big partners, and Salesforce will allow us to better manage information about our clients.
Data must be strengthened and exploited, to generate better customer service at all points of contact. We must equip all our points of contact with the customer with the tools and capabilities necessary, so they are able to give our clients the service they deserve. It is an exceptionally long road, but we have already started. We are excited about it.
“Tech and regulation are moving at different speeds and Regulation is trying to catch up, so we have to manage it with responsibility.”
What do you think are the main challenges that affect an insurer when we combine the terms regulation and technology?
The issue is that technology is moving much faster than the regulation. We have seen this with the cases of Facebook with the management of the personal information of their users. In Peru, it is managed by the Superintendency of Banking and Insurance, which is trying to keep pace with digitalization, already a complicated issue. Tech and regulation are moving at different speeds and regulation is always trying to catch up, so we have to manage it with responsibility.
How would you define the degree of maturity of your company regarding participation in Open Insurance initiatives?
I think Insur_Space division explains this quite well. We are working on that. We already have powerful partners, such as Google. We are still mapping out and equipping ourselves with digital capabilities that allow us to also plug in other digital schemes, from the point of view of open innovation: APIs and other types of technology that quickly allow you to connect to third parties.
Looking into the crystal ball, what are your predictions for the Insurtech industry for the next years?
Lots of trial and error. There are going to be a lot of initiatives supported by artificial intelligence which is extremely relevant, and certainly new marketing channels.
Which trends do you see becoming increasingly important?
Artificial intelligence and data. Subjects that are developing quite fast.
Who will be the next Unicorn? Why?
The Insurtech that can most accurately predict risk.
Which was the top technology in 2021?
Which will be the next top trend in the industry?
What is the highest hype in the Insurtechs?
Democratizing insurance, which is the essence of a startup, massifying it, making it easy to use, simple, digital.
What are the models that you feel are not going to grow/have relevance in the future?
I think that lots of manual processes are going to disappear, and it will happen sooner rather than later, as well as telephone assistance, which is going to reduce significantly and probably be automated by bots.
Lastly, and most worrying for Insurers, is that vehicle insurance might disappear, or at least evolve from what we know today. Mass adoption of self-driving cars and the advancement of their algorithms will lead to in theory, a world without car accidents. More than 50% of the revenue of most big insurer comes from car policies, so I ask myself, what are we going to do when cars do not crash anymore? Luckily, we are already thinking about that.