Incumbent insurance companies must buy their way into insurtech, or risk getting blown away by a “technological typhoon”, an expert warns.
Munich Re Digital Partners CEO Andy Rear told the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) Insurtech Conference in Sydney today that insurtech “hype” is set to become reality.
He predicts insurance will have its own “Uber moment”, and some incumbents will disappear – but adds the process will take much longer than many assume.
Mr Rear used the example of Toys R Us to indicate potential timescales. The toy market giant was first challenged by online retailers in the late 1990s, but did not go bankrupt until last year.
“Will major insurance brands go bankrupt over the next 20 years? Of course they will,” he said.
“Insurtech will hit meaningful scale, it is growing incredibly quickly. Over the next 30-40 years there will be wholesale change.”
Mr Rear recommends incumbents move quickly to buy into start-up competitors, even if it means paying over the odds.
“We will see a slew of $1 billion exits to insurance companies which are buying their way into technology,” he said.
“The fundamentals [of those deals] will look insane. But [the insurance companies] will be thinking ‘our whole market cap is at risk if we are attacked by these guys. Why not just buy them out’?
“The alternative is to stay away and wait and see who wins.
“But it is very difficult to fix your business in the face of rapid change. The danger is that you are hit by a technological typhoon. If you look back in 20 years and ask where it went wrong, you will think it was now, when you decided to sit back.
“The industry has to stay ahead of the technological curve.”
The ANZIIF event is Australia’s premier insurtech conference and the only one backed by Insurtech Australia and Insurtech NZ.
Other speakers included Flamingo Ai founder and CEO Catriona Wallace, and IAG Entrepreneur in Residence Alex Taylor.