The Future of Insurance Podcast - Robin Merttens & Matthew Grant of InsTech London

The Future of Insurance Podcast – Robin Merttens & Matthew Grant

Co-Founders & Partners, InsTech London

Season 1, Episode 19, August 31st 2021

Guest Bio

Robin Merttens co-founded Ri3K, a start-up focused on digitising the London Market back in 2000 and has been involved in insurance innovation and modernisation ever since. Having co-founded InsTech London in 2015 he now shares responsibility for running it with Matthew concentrating on member relations and our events.

He also has a variety of non-executive directorships and advisory roles both with startups side and progressive companies in the insurance space. He remains a tireless advocate for the need for greater digitalisation of the industry.

Matthew Grant has been building and advising companies on the innovative use of technology, data and analytics for over 30 years. He was responsible for launching catastrophe modelling into Europe in 1992 and was on the Executive team of Risk Management Solutions for 8 years. Over his career at RMS from 1996 to 2016 his roles included running global sales and marketing, leading the product team and developing emerging market solutions.

Matthew’s is co-owner and partner of InsTech London. InsTech London has a global network of 20,000 people and is supported by many of the leading insurers, technology companies, insurtechs and professional services companies. Matthew and his colleagues talk to over 200 companies a month in insurance and technology. InsTech London releases monthly research reports, newsletters, digital events and has returned to holding to face to face monthly evening events. Matthew hosts the weekly InsTech London podcasts, writes regularly on the topics and themes of relevance to insurance and risk management, produces the weekly InsTech London newsletter and speaks frequently at InsTech London events and other industry conferences.

Highlights from the Show

InsTech London started as a community in London, but today has a global audience, including 25% of their audience being in the US, and their total audience being around 20k people
Their purpose is to sit in the nexus of insurance and technology to understanding and promote it, and use their network to bring intelligence to the community
London is a natural hub for both insurance and innovation on a global level because so much of the risk that is written in London is outside of London, so the mindset must be global to begin with
Themes that have risen to the top for InsTech London include
- Parametric insurance, including how it’s moved from being used in large applications in capital markets to being more focused on smaller implementations – Get their report on Parametric Insurance here: https://www.instech.london/civicrm/contribute/transact?reset=1&id=10
- Embedded insurance, where an easier way to deliver coverage through another transaction – Get their report on Embedded Insurance here: https://www.instech.london/civicrm/contribute/transact?reset=1&id=11
Parametric is being used where traditional coverage doesn’t come into play or is too expensive for most people, so a simpler solution with an automatic trigger makes sense
- This could really take off in business interruption in the wake of pandemic-related BI losses
Embedded insurance can help close coverage gaps, for example building coverage into something that didn’t have it before (like climate or growth protection built into buying plant seeds)
- Embedded is also about providing a truly digital experience because you have to digitize the insurance acquisition process to be able to embed it into another transaction
There have been phases of InsurTech
- First – it’s disruptive where startups are written off and disliked
- Second – the partnership model where incumbents need to talk to startups, which we seem to be in today
You need to be careful about the whole value chain and what you do and don’t give up
You need to pick your distribution partners carefully when you look at tech players like Amazon, Google, Apple or whoever else may get into insurance thanks to what you teach them as a partner
Some partnerships with InsurTechs can be safe for legacy players, like Hiscox and Thimble partnering, while the scale and resource of an Amazon or Google pose far different (and greater) threat and risk to a carrier and more thought and strategy needs to be applied to partnership decisions with such players
Who is doing the innovation in insurance today? The level of openness to fund or partner with anyone has changed in the UK and Europe where now people want to see more proof of the concept than curiosity
- This does mean there’s been an increase in the funding when it happens, but it’s based on a need for more diligence on the concept being funded having commercial legs
- You see this with Lloyd’s Lab where it’s looking for less incubation ideas and more ones that can be commercialized as underwriters don’t have time to incubate
We talked about the difference in ease of finding funding in the US than the UK and Europe historically, and still today, though the gap has lessened
- European and UK-based startups used to go to the US for funding, not because it was easier, but because you could get bigger raises generally
- US investors were usually interested in growth while EU investors were looking for a nearer-term profitability story
The really big money has gone to those with a full-stack proposition, like Lemonade and WeFox, though most startups have been taking the MGA route, which gets less funding
As an MGA, the trick is you have to create the belief in your fronting company that you won’t just go and build your own capacity very quickly, and this has created some issues between startups and carriers, like Mulsanne and Marshmallow
They asked me if COVID has been an accelerant on digitization in the US, or is it just “digital lipstick on a legacy pig”
- It has been an accelerant in some respects, and also slowed things in others where there is a desire for some to pause after the rapid change they went through in 2020
- In the London Market, rates have gone up dramatically, so that has taken pressure off digitization as a means of improving margins since rate increases are more than making up for that