The challenges and opportunities facing the insurtech sector were under the spotlight at Insurtech Insights Europe. Speaking with Insurance Business on the ground at the conference, Rob Schimek (pictured), group CEO of the international insurtech bolttech highlighted four ‘mega-trends’ that he sees driving the market.
At the root of that opportunity is the proposition that Schimek believes should sit at the core of every insurtech business – to try and bridge the multi-trillion protection gap that impacts individuals, businesses and societies alike.
“Either they do not have access to the protection it would take to address that risk, or they might have access but not enough knowledge about the risk they face or the protection that exists, or they can’t afford that protection,” he said. “It could be any of those, but it's a gap nevertheless, and everything begins there. It’s an undeniable protection gap and anytime something is measured in the trillions, it’s a big opportunity.”
For an insurtech looking to raise capital and to convince capital providers that the “size of the prize” is worthy of their investment, that protection gap is the place to start the conversation. From there, the discussion is really about the mega-trends behind that protection gap, and the ways in which insurtechs can offset or capitalise on those trends.
“The first trend is that of climate,” Schimek said. “There are so many examples of why that matters. Take, for instance, how the people in the state of California are going to get homeowners’ insurance in the next year. Or how the people in the state of Florida, who were hit by two one-in-100-year hurricanes can get hurricane protection in the next year. It’s super difficult because it’s either too costly or the carriers have pulled out of the market.
“So, you get to the creation of something like a protection gap in the most mature insurance market on the face of the planet Earth.. Then you go to the other extreme, how does someone in an emerging market who's impacted by rising sea levels or changes in the climate leading to droughts or severe weather conditions protect themselves?”
There’s no doubt that climate is creating an element of this protection gap, which is further accentuated by the second mega-trend – the increasing and ageing world population. “There is a widening gap between our chronological age and our biological age.
“And so, as we live longer, insurance needs to adapt to longer, healthier and more active lives. And again, that's creating a protection gap. It's creating a need for new healthcare and new health tech. People need hearing aids. People need eyeglasses. People need pacemakers. People need the things that will support their quality of life as they get older.”
The third big trend is that of technology, Schimek said. That’s especially clear in the example set by how quickly DeepSeek was able to catch up with the incumbent LLMs and become essentially interchangeable.
“It is also creating a new set of challenges that also create a protection gap,” he said. “For instance, the ability for people to hack you today and the sophistication of the cyber risks that are out there is unbelievable. My team has great examples of video calls where I look and sound like I am in the video call when I’m there, instructing them to do something that I'm not instructing them to do.
“And the attacks are only going to get more sophisticated. So, this is creating a new protection gap because technology is creating a whole new set of risks that nobody has figured out how to protect against yet.” The insurance solutions required to mitigate these risks are an opportunity for those providers able to think innovatively and move fast, but, as it stands, he said, there are probably relatively few, if any, businesses or individuals out there who feel 100% protected from cyber risk.
The fourth mega-trend is around population changes. The general migration patterns of people tend to be in the direction of urbanization because they need a place to live and when you see a heat map of the world, you see the disproportionate congregation of populations. “That’s because mankind needs two necessities, they need shelter, and they need a way to get to the shelter,” Schimek said. In an insurance context, the opportunity presented by this fourth mega-trend is around home insurance.
“Each of these mega-trends, in our view, feeds into the huge, untapped and unmet protection gap,” he said. “And that’s an opportunity which can be addressed with insurance solutions and capabilities.”
