All Aboard the Digital Train

Insurtech providers are facilitating a more efficient insurance market for both buyers and sellers. Brokers must stay ahead of the learning curve to remain competitive.
By: | September 12, 2017 • 4 min read

Insurtech firms — many with the financial backing of big name insurance groups — are fast making cheap, digital P&C procurement the norm.


By and large though, they don’t see themselves as disruptors. They prefer to be perceived as revolutionaries — transformers of the market.

Commercial brokers targeting the SME sector would do well to pay attention, and to commit to staying up to date with the rapid pace of changes to come.

“Existing brokerages aren’t built to serve the needs of smaller or medium-sized businesses. The big guys can’t service them efficiently, and the smaller brokerages don’t have the resources, market access or vertical expertise,” said Matt Miller, CEO of start-up Embroker, launched two-and-a-half years ago.

“Carriers are thinking hard about how to develop digital strategies without alienating and disrupting their existing distribution networks,” said Sofya Pogreb, COO of Next Insurance, which serves 6,000 small businesses through its platform with the backing of powerful investor-partner Munich Re.

“Companies like ours do pose a threat for the traditional distribution channels,” she said. “Insurtech will either replace the agent or provide them with better tools so they can focus on offering expertise to customers rather than moving paper applications around — I suspect a mix of both.”

Sofya Pogreb, COO, Next Insurance

Small local brokers for whom SMEs are their bread and butter may be particularly concerned, though Keith Moore, CEO of Coverhound, is keen to work in partnership.

“Rather than disrupting, we think we’re enabling market segments that have been underserved. We’re also giving small local brokers a better way to transact. We want to help facilitate the transaction, and are indifferent as to how the business is placed,” he explained.

“Anyone who said the traditional broker is dead is a fool,” said Insureon CEO Ted Devine. “However, agents and brokers are going to have to embrace some of the technologies we are leveraging to make their solutions more efficient and deliver more value for the customer.”

Many of those new technologoes will soon be essential for brokers to grow and sustain their business.

“We bid on 400,000 keywords every day and have massive models to make sure the return on every bid is right, and we’re doing some cool things with machine learning to deliver the best product to the customer.

“This is very hard for a broker to do, so they’re going to have to raise their game to be at our level,” said Devine, adding: “The best ones will.”

Forging Ahead

While Insureon, Embroker and Coverhound all pride themselves on providing human expertise to help buyers find the right solutions, their real competitive advantage will always be driven by their tech capabilities. Some, like Next, are happy to limit human interaction to a minimum.

“On certain larger or more complex risks, perhaps an engine can’t make all the decisions and human expertise is needed — at least in the near term,” said Pogreb, though others feel insurtech may have a role to play higher up the food chain fairly soon.

Miller believes Embroker’s model is “just as relevant” to large, complex commercial risks, though he admits that it will be a challenge overcoming “entrenched” buyer behavior, while Devine thinks big commercial risks could benefit from automated panels.

“Agents and brokers are going to have to embrace some of the technologies we are leveraging to make their solutions more efficient and deliver more value for the customer.” — Ted Devine, CEO, Insureon

“I’ve been surprised how much appetite there is for an alternative way of transacting among larger commercial accounts,” said Miller. “It shouldn’t cost so much to access insurance in a digital world, and companies are increasingly looking at their efficiency ratios.”

Matt Miller, CEO, Embroker

He believes the implications of the swathes of data captured through insurtech will be “profound” for the insurance industry, helping improve underwriting efficiency and risk modelling.

Next is planning to move beyond pure distribution into the development of proprietary products tied to the distribution engine and react to data in real time — essentially creating intelligent, ongoing optimization of coverage. “That’s not happening in the traditional market at all.”

This is one area where brokers could wrestle back some advantage by taking the lead in the development of wearables, telematics and other data sources to bolster risk modelling and real-time insurance cover.

Doug Turk, chief marketing officer at JLT Group, acknowledged that insurtech is a risk for brokers, who he said should already be investing in research and development and tech partnerships.


“The broker of the future will have to be incredibly information literate. They’ll have to understand all the different sources of information available about their clients’ operations and risks.

“They’ll have to be willing to separate themselves from the way things have been done in the past and accept that there may be better ways to do things, particularly when it comes to how risk is underwritten and rated,” he said.

Alternatively, some agents and brokers might choose to explore the other side. “We’re certainly hiring,” said Embroker’s Miller. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance


Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”


“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.


“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?


“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.