The industry’s worst fear – that insurtechs are coming to run traditional insurance players out of town – might be only a dream after all. In fact, the impact of insurtechs looking to disrupt insurance has been overstated, according to the CEO of a firm that helps grow MGAs.
While there is likely to be significant changes in the landscape over the next couple of years, there will be “perhaps less than we’ve been writing about in the last 12 months,” Chris Butcher, chief executive at
Ambant Underwriting Services told
Insurance Business.
“This disruptor influence is not going to gather quite the pace that people have been assuming, because the insurance broking community has built very strong client relationships and can generally adapt reasonably successfully,” Butcher explained in an interview. In many cases, brokers will be able to adjust their own sales processes and the way they interact with their client base, while staying with the fundamental relationship-driven strategy, he said.
Ambant, which acts an as incubator for start-up MGA services, has clients ranging from multinationals to relatively small firms with a niche focus. But much of the new upstarts are not actually looking to disrupt the status-quo, but to add something new, according to Butcher.
Many are filling an insurance need that has arisen out of the innovation we see elsewhere in our lives, as trends such as home and ride-sharing change our behaviours.
“That’s a new revenue stream to the industry – it’s not often replacing something directly that we’ve had before. Using Uber as an example, we are all behaving differently because we’re using Uber cars more, and therefore more insurance is being purchased for it,” he explained.
As for the challenges that a start-up insurance company faces, the initial hurdle is the same as for any business – finding capital – followed by the challenge of navigating the industry’s regulations.
“It’s the nature of our very heavily compliant world that we’re in… We’re seeing quite a lot of businesses that aren’t from the sector, and predictably they have no anticipation or understanding of what it’s going to be or how hard it’s going to be, or really the complexity around it,” Butcher commented.
Often, start-ups on the fintech side of things tend to be more optimistic about their ability to trade, he added, while the more successful up-starts are the ones that manage to harness some insurance knowledge.
“The ones that are succeeding are the ones that have a leadership team involving someone from the insurance sector, a bit of experience and some understanding of the facets of the insurance business,” he said.
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