Getsafe CEO: insurtechs need to ‘find their niche’

Insurtech is expected to face a wave of consolidation in the coming years despite the innovations and successes such companies have brought to the wider sector, says Christian Wiens, founder and CEO of Germany-based start-up Getsafe.

Wiens believes that the proliferation of venture capital investments in the industry is causing a bottleneck in an already competitive market.

"The prospects for insurtechs are very promising, even though the market is now consolidating," he tells Intelligent Insurer. "The access to venture capital is good, as can be seen from the fact that annual investments in insurtechs doubled in 2018, with more than $3 billion being invested worldwide."

However, he says that in the next few years "insurtechs will need to find their niche and sharpen their business models" to remain relevant and thrive.

"We observe a trend that more and more insurtechs are predominantly active in the business to business sector (B2B) or are switching from business to consumer (B2C) to B2B, selling software to incumbents. In addition, insurtechs focus more on building fullstack insurance companies rather than focusing on distribution only. Specialisation can already be seen," he said.

The future of insurance will be "digital, personalised and predictive", he says, adding that access to and usage of data will be “a game changer” as insurance policies are based on statistics and calculations of probability.

But even though the business landscape is changing, in terms of digital transformation and adoption of emerging technologies, traditional insurers may still continue to struggle to keep pace, he adds.

"It’s not that traditional insurers lack the will or resolution, but it’s a huge challenge for an industry that is long overdue for modernisation," Wiens explains. "Their data is buried in decades of technological strata, stretching back to the early days of computing and networking. It’s not easy to build a lightweight API around mainframes and tape drives."

"This reality puts some staggering obstacles on the road towards modernisation. What is more is that employees working for these traditional insurers need to adapt to an entirely new approach that upends some of the industry’s longest-held assumptions."

"In the insurance sector, many companies still have to master this challenge to digitise their processes," according to Wiens.

The German insurtech, which describes itself as 'Europe's first digital multi-line insurance platform for flexible and customisable coverage', raised $17 million Series A funding in June 2019 for its artificial intelligence (AI) powered insurance business. It currently offers a fully-digital product covering property/casualty, life and health risks in a single solution, and has partnerships with global re/insurers such as Munich Re. Getsafe is planning to enter two other European countries by the end of 2019, with six other markets scheduled to follow in 2020. The company will also start to offer its life insurance policies in the coming year.

The Heidelberg-headquartered start-up, which is yet to secure its own licence, is competing with US rival Lemonade in Germany and Europe, but Wiens asserts that he is not so concerned as he sees it as a validation of the market.

"Yes, Lemonade is a direct competitor for us, but we see it differently. For us, our biggest competitors are not other startups, but large global multi-line insurers such as Allianz or AXA," he says. "So far, we have not felt any impact on our growth since Lemonade’s market entry, but see it as a validation of the market."

"At first glance, all insurtechs promise something similar, that is simple, fast and digital solutions. If you take a closer look, however, there are considerable differences between the products and business models," Wiens continued. "Getsafe is by far the leading insurance company for young people in Germany and is the only provider to offer everything in a very successful smartphone app. In addition, we are not focusing on a specific product niche or line of business, but want to become a global full-stack insurer for the mainstream - like Allianz is for older generations. To this end, we have developed our own insurance core platform that functions independently of line of business and currency. We can therefore expand in all markets and in all lines of business at incrementally low cost."

"With our mobile approach we’ve created an entirely new experience that translates the effortless, instantaneous, and personalised experiences of services like Amazon and Netflix to the insurance world," he concluded.