Navigating the Insurtech Landscape: Building, Buying, or Partnering?

The digital transformation of the insurance sector has brought forward the significant dilemma: Should carriers build their own Insurtech solutions or buy them? With an array of Insurtech partners frequently launching innovative solutions, the market offers an abundance of options. Yet, many carriers find value in owning and developing their solutions.

Recently, at Insurtech Insights Europe in London, industry experts deliberated on this crucial question. Historically, carriers crafted their tech solutions in-house. Legacy technologies have served the sector reliably for years. However, with the digital revolution, carriers are prompted to reconsider their technological infrastructure.

Illustration of a handshake symbolizing a partnership between an insurance carrier and an Insurtech startup, with digital icons representing claims, payments, and underwriting surrounding them.

Imran Akram of AXA Venture Partners highlighted the adaptability of earlier industry leaders and emphasized the continuous need for innovation. Building solutions in-house allows carriers to tailor the technology to their exact needs. But this approach brings along challenges like high costs, potential delays, and post-deployment maintenance.

Massimo Cavadini from Munich Re spotlighted the significant investment required in terms of human resources. Meanwhile, carriers have the alternative to opt for ready-made solutions from various Insurtech providers, catering to diverse needs, from claim platforms to billing dashboards.

However, Hanbing Ma from ERGO Group AG warned against Insurtech providers that promise comprehensive solutions, as they might not always hit the mark. An emerging trend in the industry is the formation of strategic partnerships. By collaborating, Insurtechs and insurers can co-create solutions that benefit all parties involved.

Stefano Bison from Generali emphasized the merits of partnerships over outright acquisitions. A shared sentiment was that while technology is paramount, understanding the industry’s nuances is equally crucial.

The era of collaboration is upon us. As the panel concluded, they offered insights for both insurers and Insurtechs. For insurers, patience is essential. Adaptation to new cultures and methodologies will require time. Insurtechs, on the other hand, should prioritize specialization, ensuring robust intellectual property rights, and emphasizing security and user experience.

Our Perspective:

“We believe that the future of Insurtech lies in creating synergistic solutions. While the debate between building and buying persists, it’s the innovative and consumer-friendly solutions that will drive the industry forward. In our experience, a balanced approach that combines the strengths of both in-house development and external acquisitions can yield optimal results. The emphasis should always be on delivering value to the end consumer, ensuring that solutions are not just technologically advanced but also user-centric.”

Pinnacle Digital Advisors

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