Читать книгу Embedded Finance - Scarlett Sieber - Страница 17

According to an article by Jennifer Rudden in Statista,⁷ insurance is defined as a contract, represented by a policy, in which an individual or a business entity receives financial protection or reimbursement against possible future losses. Insurance is a concept that most, if not all of us, are familiar with in some aspect of our lives. Whether it be for our homes, our cars, our life, or for specific products, it is a class that we all are used to dealing with and it is one that is in great need of disruption. Today, most insurance policies are sold through existing distribution networks, i.e. the brokers. This means that most insurance policies are still sold offline through a brick-and-mortar office. Florian Graillot, founding partner of the Insurtech investment fund Astorya.vc, believes these numbers to be close to 80% for mortgages and 60% for auto insurance in Europe.

The same way that fintech entered the traditional banking space, insurtech, or insurance technology, entered the insurance space. Insurtech has been around since the early 2010s and the initial cohort of companies in the space focused on B2C, or business-to-consumer opportunities. From the early days in the space, discussions were started around the ability for on-demand or just-in-time insurance. These technologies focused on digitizing the incumbents, the traditional insurance companies, by enabling them to distribute insurance products more quickly. The goal was right but, as we have seen across all industries, the movement to digital can take time and there are a lot of bumps on the road. Close to a decade later, there hasn't been much traction to date as companies discovered that the cycles are incredibly long and the technology stacks of the incumbents were outdated, making it very difficult to plug into the systems. These challenges are very similar to those on the banking side as well. Even if a connection is successfully made to an existing system, the work has just begun. As a result, there are only a handful of players that have managed to truly crack the code.

Of course, as with most rules, there is an exception. One such exception is a company known as Wakam. Formally known as La Parisienne Assurances, Wakam is an example of an incumbent that has seen success in digitizing its services. According to its LinkedIn page,⁸ Wakam “is a digital-first insurance company that creates white-label, tailor-made and embedded insurance solutions for its distributor partners and clients via its high-tech Plug & Play platform.” Wakam has been in the market for a handful of years and now is one of the most advanced in terms of digitization and its ability to plug into external players. In some cases, Wakam is faster at doing this than the insurtechs that are known to compete with them. What makes Wakam different from the other incumbents who have pursued this path with somewhat limited success? Wakam was able to switch all of its technology infrastructure to API-first, which is game-changing and allows them to do a lot more with third parties faster, in a shorter period of time. As Florian Graillot states, “An insurance company, which is running close to 100% of its activity on the state-of-the-art IT system is quite unique, and I believe that this is the reason why there is an ability to gain market share.” As of 2020, according to LinkedIn,⁹ Wakam was among one of the top 20 P&C insurers in France.

From those early entrants into insurtech, a few companies are successful, but most are struggling. Because of the struggle, there is a real play for embedded insurance, where we can expect to see adjacent players to the early vision start to push insurance products in the customer journey in a natural way, making it easier for the end customer to understand the value proposition. As Graillot puts it:

The core value of embedded insurance is education. When it comes to insurance, for most customers, it's a requirement to have insurance policies for your home, your car, and in many countries, your health. Otherwise, it's not really clear why people should pay for an insurance product. By embedding this kind of product in the same journey they are already engaging with makes it obvious, and the value proposition is really clear, which will result in a higher conversion rate.

As we will share many times throughout this book, the focus on an incredible customer experience is absolutely crucial. This may sound like fluff or something easy to do, but it's quite hard to do well. The same issues that arose in banking with the emergence of neobanks and others applies to the insurance space as well. Graillot discussed the importance of the user experience, saying:

We were running a due diligence on a health insurance startup, and we were having a look at the mobile apps for insurance, and it was quite surprising because almost all of them, both on iOS and Android, were below three stars out of five. It may appear very easy to achieve a great customer experience but the reality is that it's really tough. We increasingly believe that there is something around the product itself, the user experience that insurtech can deliver at scale and better than the insurance company themselves.