The influence of insurtech and M&A

In association with Swiss Re, Monte Carlo Today conducted a survey of senior industry executives ahead of and during the conference.

After all the tech hype, is a sense of realism setting in?

It would be very sad if the industry feels that technology is only hype. A shiny app isn’t going to disrupt insurance on its own, but the sector remains behind most other industries when it comes to technology adoption.

Technology can dramatically enhance customer experience so, if the realism is setting in, it should be around the necessity for a higher adoption rate of innovative technology. At so-sure, we prefer optimism to realism, especially when it comes to assessing the possibilities that technology allows. - Dylan Bourguignon, CEO, so-sure

US insurtech carriers have reported gross loss ratios over 100 percent, and reinsurers have lost money backing them.

However, valuations are as robust as ever. Founders face a difficult question: do you pursue growth or profitability first? Blog posts suggest they are increasingly focusing on underwriting profitably.

The startups within established carriers have pursued profit margin more than growth, but they may get more aggressive. Perhaps we see not realism but a healthy mutual respect. - Adrian Jones, deputy CEO, ventures & strategic partnerships, SCOR P&C Partners

Our new reality will be driven in large part by tech and it is vital that the sector stays abreast of it. It involves a better understanding of exposure data through the use of wearable devices, it uses saliency analysis and predictive analytics—I’m just getting started.

If anything is certain, it is that technology will shape most changes to how risk emerges and how risk is quantified in future.

There has been some hype but it’s a small price to pay for those who seek a first-mover advantage. - David Flandro, global head of analytics, London, UK, JLT Re

What are the reasons for the increased M&A consolidation?

The same factors have always driven M&A activity: access to talent, access to platforms, access to markets or access to products.

Ultimately, the overarching goal is diversification. The market has ebbed and flowed over the years but the driving forces are always the same—I am not sure we are seeing anything out of the ordinary at the moment. - Pina Albo, chief executive, Hamilton Insurance Group

The reasons behind the recent consolidations are the same as they were 10 or 20 years ago: market share, opportunity, economies of scale, and synergy, to name a few. These are some of the reasons and they will remain valid in 20 years’ time when most of the delegates attending this Rendez-Vous have long gone! - Charlie Doyle, director, THB Treaty, THB

Insurers have allowed startups to do their innovation for them and bought them when it looks viable. It is a sensible strategy when you are a large, not terribly nimble, business with a big balance sheet. There is now an increase in investment in insurance disruptors, so inevitably many of them will be snapped up. Online, where size is no real advantage, is where the little guys like Bought By Many can cause the big guys real problems. If online growth is slowing then buying revenue and distribution makes sense. - Guy Farley, CTO & co-founder, Bought By Many