Partnership, not disruption
There’s a word I hear more and more rarely in the insurance industry at the moment: disruption. For a while, established companies have been opting for close cooperation with young technology firms – and vice versa. It’s big businesses investing in small companies, and, in return, the smaller ones are pushing ahead with innovations which would usually take much longer in a large corporate structure.
"Young technology firms and established insurers are increasingly working together – for good reasons"
Christian Macht, Chief Representative of ELEMENT Insurance AG
At ELEMENT we see our role as partners, not as a disruptive force. We are White Label product providers, and so we stay in the background, enabling our partners to implement new solutions, either completely or in part. In other words, we deliver digital insurance products which are then sold by others under their own brands.
This form of collaboration between young and established companies will eventually become the rule – for two reasons: Firstly, the product range is clearly becoming more diverse for everyone in the industry, with individual offers that are geared especially to certain narrowly defined target groups – a development which increases the pressure to innovate. Secondly, to keep up, small and medium-sized insurers will often handle parts of their value chain together with partners, particularly in product development and IT. If you like, with component suppliers.
It’s already possible to have a modern IT system that can put together any combination of products from a variety of modules. This will make it easier to produce specially tailored products for different target groups in ways that are totally different from today.
Take, for instance, buyers of high-end properties who can have their own tailor-made packages. A combination of contents and liability insurance, where individual valuables can be insured as additional items, would be just right for this target group. Another option would be policies covering certain short-term circumstances, such as the risks of subletting a property. This can be done in partnership with insurers or indeed with the real estate industry itself, where firms can sell policies in their own name and thus generate further sales. The rental industry, too, is increasingly looking after the needs of tenants. This means they can offer specially tailored insurance solutions via tenants’ apps – which increases customer loyalty and also their share of wallet.
Collaboration projects of this kind are possible in a variety of areas. For instance, we are working with Cyber Security specialist Perseus, offering an insurance against cyber threats or damages. Also, we have developed a policy dealing with flight delays together with FairPlane, a portal for passenger rights. And together with SIGNAL IDUNA we are offering a combination of contents and liability insurance that is particularly aimed at fans of the Borussia Dortmund football club.
Especially for small and medium-sized insurers, new partnerships are available, enabling them to stand out with innovative products and to open up the rich potential of highly attractive segments. In turn, young technology companies can benefit from established companies, including, for instance, their customer knowledge.
So far many InsurTech companies have been concentrating on sales, i.e. to some extent they have been on the offensive. Now, rather than competing for access to the end customer, we can concentrate on product development and IT. Furthermore, as we have a licence from the German Financial Supervisory Authority (BaFin), we are an insurance company ourselves with the relevant expertise. This, too, makes it easier for us to work with our partners, particularly insurers.