FOMO key to insurtech takeup

Technology will be the key to making the insurance industry more accessible—but the pace of innovation must also match the opportunity and demand, Gerry Tighe, head of treaty, Matrix Insurance & Reinsurance Brokers, told Monte Carlo Today.

“There is a multitude of insurtech startups out there right now all looking to disrupt the current industry model. My feeling is that many will not take off, but those that do will create lasting true change,” Tighe said.

In terms of whether the sector is innovating fast enough, he stressed that some would say that it is too fast.

“Market forces will however mostly ensure that the pace of change matches the opportunity and demand. Having said that, the protection gap at a national and retail level is a massive opportunity that is not moving as fast as I would have expected.

“Creation of true new business rather than disruption of existing markets should be a key driver,” he said.

Asked whether the influence of technology is overhyped, or if insurtech represents a bubble, he said the issue is that it is difficult for any company to risk being left behind.

“There is a certain amount of insecurity about the possibility of being left behind—the fear of missing out, or FOMO. This may well be the case, but much like the case of the .com bubble, the hype could be overblown. It is very difficult to know, only time will tell.”

Underpinning all this, he stressed, fundamental forces that are driving consolidation in the industry show no sign of dissipating. The winners will also have an advantage when it comes to technology.

“The usual economies of scale are the primary driving force, as margins are squeezed at all levels, and expenses are under the microscope. Those with lower expense ratios will have a distinct advantage and generally the bigger you are the more likely that you will be able compete on expenses,” Tighe said.