In a panel at Insurtech Insights Europe, Qover CEO and Co-founder Quentin Colmant sat onstage with experts from Inshur.to, Tokio Marine Group and Habit to dive into how strategic alliances between traditional insurers and insurtechs can level up embedded insurance distribution to meet consumer demands, decrease costs and more.

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A mindset shift for non-insurance companies is creating an opportunity for insurtechs

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There’s a shift in mindset happening for many businesses, which is forcing the insurance industry to rethink existing distribution models, in turn creating new opportunities for insurtechs.

The first, Quentin outlines, is that as businesses become more digital, this trickles down to their insurance programs. Whether it’s a tech-native company like a neobank that needs an API-driven insurance solution or a traditional bank that’s trying to advance its digital offerings, both are keen to partner with insurtechs, he explains.

Another change is that players have traditionally considered insurance a side product to upsell. Now, many companies are thinking about how they can leverage insurance as something core to their value proposition – as a way to increase retention and show customers that they care.

And finally, local businesses are now going global. To deal with this, traditional insurance companies have built 32 insurance factories to serve the 32 countries across Europe, which results in a more fragmented approach. Insurtechs, on the other hand, can handle cross-border distribution.

‘A lot of businesses entering the European market think of Europe as one country, one distribution,’ Quentin argues. ‘So they need to find a partner that can accommodate a multi-country pan-European solution.’

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As embedded insurance distribution grows, so does the need for insurtech partnerships

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Insurers have been working with affinity insurance for a long time now. But as tech becomes more prominent and the embedded insurance distribution channel grows, insurtechs are paving the way for a more intuitive and frictionless process for end consumers.

‘We’re all aligned in our mission to embed insurance and make it part of our daily life,’ says Domingos Bruges, CEO and Co-founder of Habit. ‘But we shouldn’t forget that customers still need to upgrade, change or buy additional products.’ So not only do you need to find the right partnership, but also make sure to introduce the right product at the right time when customers need to make an upgrade or cross-buy.

Typically insurance has been sold as a standalone product, but that’s now changing, says Masashi Namatame, Executive Officer at Tokio Marine Group.

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‍‘Embedded insurance is a way to deliver better propositions that could be far more appealing and convincing for final consumers,’ he says.

‘From a [risk] carrier perspective, we can work together with insurtech companies by providing our large capacities so they can create and scale their business without large capital and balance sheet needs,’ Masashi says.

‘We need to appropriately address diverse customer lifestyles,’ he says, particularly the changing behaviours of younger customers, or non-traditional insurance products within financial services, the gig economy, etc.

‘Working together with insurtechs is one of the ways to solve that … We need to create a breakthrough by working together and accelerating the pace of innovation.’

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How to identify the right partnerships as an insurtech or insurer

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The relationship between risk carriers and insurtechs is changing, making the time ripe for collaboration. 

‘Carriers and insurance companies innovate a lot,’ says Domingos, ‘it’s a myth that they don’t …They’re very receptive to new opportunities.’

‍‘It’s all about creating products together with your carrier partners that don’t seem like an upsell, but something that’s needed by the customer,’ says Dan Bratships, CEO and Co-founder of Inshur.to. ‘You can gauge that by measuring your conversion rate. And it creates a win for the customer, the carrier and the insurtech if you get it right.’

Although insurtechs and traditional carriers might have differences in terms of expertise and pacing, Quentin thinks they can play off of each other’s strengths.

‘In the beginning people wondered whether we were “frenemies”,’ Quentin reminds the audience. ‘The reality is that it’s a chance for insurtechs to rely on strong and robust capital from top-tier insurance companies – those that are very serious about governance, regulation and are very well-funded.’

This actually helps insurtechs, he says, because when they go to a non-insurance partner with everything they need to add insurance to their value proposition, the company still might be hesitant to rely on that new technology in case the company fails.

‘If we fail, the support behind us – whether that’s AIG, Chubb, Tokio Marine Group, etc. – will be there,’ Quentin says. ‘It’s a win-win. We can rely on their brand, reputation and financial strength and they can rely on us for the execution, and being more agile and tech-driven. It’s a very nice ecosystem.’

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Embrace orchestration: the perfect time for insurers and brokers is now →

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That being said, Dan also points out that finding the right partnerships is still hard work.

‘As an insurtech, you have to knock on a lot of doors and hear a lot of no’s. We prioritise existing partners who want new products, and then it’s a lot of trial and error.’

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Pricing: balancing customer needs and profitability

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Pricing is an inevitable topic within the framework of partnerships. Consumers want a product that feels organic and low-cost, but insurtechs and insurers still need to survive – so what’s the right balance?

‘Fortunately, here in Europe the space is highly regulated,’ Domingos says. And it’s about working with insurance companies who are committed to making sure that customers get a fair price.’

‘I think we have a moral duty and code of conduct in terms of sharing the right value when we earn a premium,’ Quentin argues. ‘We should be on a mission to maximise the loss ratio while being profitable because the loss ratio is the value we create for society.’

Due to increased investment in AI, he says, insurtechs can streamline and reduce distribution costs, as well as significantly decrease the expense ratio thanks to automation.

‘From a customer point of view, you want to weave in the embedded product itself; you’re not just trying to sell a commodity,’ Dan says. ‘Ultimately, embedded distribution should result in lower expenses because there are fewer middlemen. To me, insurance has too much regulation. It’s about coming to a point where supply and demand meet and you’re providing value to customers.’

On the risk carrier side, ‘we would like to be as flexible as possible,’ says Masashi. ‘At the end of the day, it’s a commercial negotiation between the insurtech players, carriers and final consumers … It's about how comfortable we are dealing with particular types of risks. I believe that the more fair, broad and embedded the products are, the more fair we can be in pricing.’

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Ultimately, strategic partnerships between insurers and insurtechs are levelling up distribution

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‘Partnerships are really becoming something compared to when we started in 2016,’ Quentin says. ‘Risk carriers used to be reluctant to partner, but now we’re creating an ecosystem together.’

Masashi agrees. From a risk carrier point of view, he says the goal is to create ‘more partnerships with insurtechs in order to create even more comfortable and convenient lives for our society and community’.

Dan and Domingos emphasised that the way forward needs to be through customer-focused products, with Dan saying, ‘It’s [about] designing products that actually solve a problem for customers and being customer-obsessed. Partnerships do matter."

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Curious to know how Qover works with its insurance partners? Get in touch with our team to join the conversation.

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