Launch of the Nordic Insurtech Report



Being actively involved in the Insurtech ecosystem, Itello is proud to be part of the first Nordic Insurtech Report ever produced. Together with Stockholm Fintech Week, Itello initiated and co-wrote (Henrik Allert, Head of digital solutions at Itello) the Nordic Insurtech Report. A total of 72 Nordic technology companies within the insurance industry have been analysed.

Key findings:

95 % of all Nordic Insurtech CEOs in the report are male and the average age of the Insurtech CEO is 46.7 years old. More than 40% of all Insurtech companies were founded in 2015 or after and their activities are mainly in the subsegments Distribution and Risk Detection & Prevention.

Wearable technology, accident countermeasures, and automation are 3 of the 8 leading trends –That will impact the development of the sector going forward has been identified. These trends will be key to the development of new products and services and should be monitored closely.

Startups voice frustration at “no easy way in” to incumbent partnerships.From the startup perspective processes often are lengthy with little or no information along the way. Startups also have difficulty to assess the expectations of the level of development that should have been reached once making contact with an incumbent.

Incumbents often rely on legacy systems that are very difficult to change.They voiced concern that startups often didn’t take this into account, developing entirely new systems as opposed to solutions for their problems. These new systems were therefore not practical to implement. They also warn about high barriers of entry for startups due to their present software providers.

The Insurtech industry is growing rapidly and technology develops at an exponential rate. It has been extremely interesting to map the industry at this stage and I think the findings show the dynamics of this business area. The insurance industry will no doubt change tremendously during the next 2-3 years and the Insurtech companies will be in the lead of this development as customer behavior is changing.

Michal Gromek Researcher at Stockholm School of Economics and co-author

Sector demographics

Insurtech industry is dominated by male CEOs who are on average 46.7 years old 6 years older than the CEOs in Fintech. Discussions have started on how to close the gender imbalance. The industry is still at its inception with most companies founded in- or later than 2015. The Insurtech companies are mainly in the sub-segment ‘Distribution’ which includes both digitalbrokers, comparison portals and digital insurers, and in the sub-segment ‘Risk Detection and Prevention’ which includes companies with access to new information sources like big data and AI, which includes data-input providers using the Internet of Things and risk screeningsolutions amongst others.

Industry trends

‘Wearable technology’ is one of the key trends that first took off with the Apple watch in 2015. Accident insurance has traditionally been reactive. Now there is a shift towards proactive countermeasures to prevent accidents. Another key trend is ‘Automation’ where repeatable business processes and routine tasks will be conducted using software, with the capacity to provide excellent output for both customers and data collection, given a good quality of data input. ‘Open APIs’ is another thriving trend which is empowering the interlinking of different IT frameworks and applications, enabling them to utilise each other’s resources. The fourth trend identified in the study is the ‘Online-Only Customers’ that have a need for personalisation and interaction online. These customers have gone from being ‘online desire’ to ‘online only’ and this could prove difficult with growing disparities between the trend and legacy systems. To see all 8 trends identified please see the report attached.

Partnership challenges

During the interviews, both startups and the incumbents mentioned a number of challenges to potential cooperation. The startups expressed a need for an ‘easy way in’ and one single contact for them to work with. The startups also find processes lengthy and compare it to a black box that can be ‘extremely frustrating’ with little or no information from their counterparty. Startup founders also have difficulties in assessing when their particular idea, product, technology or service is being considered as developed enough to reach out to an incumbent. Some founders, which just passed the pre-seed stage, received feedback that their development stage is not sufficient. On the other hand, other founders whose startupspassed Series A have been informed to be too advanced for a specific acceleration program.Incumbents on the other side describe legacy systems on their end that sometimes makes technical integration close to impossible to achieve a problem together with the fact that startups often focus on one specific technology or core system rather than solutions. The incumbents in the insurance industry rarely have teams which actively engage with the tech ecosystem outside of their organizational boundaries as their innovation-labs are mostly in-house which can also cause problems. They also warn about high barriers of entryfor startups due to their current software providers and internal communication issues.

About the Nordic Insurtech Report

The Nordic Insurtech Report is a result at the back of the popular Stockholm Fintech Week that took place on 11 – 15 February 2019. The report has analysed 72 Nordic technology companies within the insurance industry for the first time in order to find statistics and findings within the sector. The report is written by Michal Gromek, Henrik Allert and Matt Broniarek.

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