Insurtech companies challenge the brokers

Insights

06/02/2019

Insurtech companies challenge the brokers

Never before has customer satisfaction been more miserable for the entire brokerage industry. It opens up a range of new players who have identified a potential “sweet spot” in the Swedish insurance market – distribution and distribution of insurance completely digital with simplicity and customer benefit in focus.

Customer confidence at an all time low

Confidence in intermediaries is at a record low and has steadily declined over the past five years.The four significant brokers Söderberg & Partners, Max Matthiessen, Hjerta and SÄKRA are best in the class when it comes to customer satisfaction. However, the intermediaries not separately reported in the statistics from the agency Swedish Quality Index – SKI are particularly distinctive.

A number of new players have identified a potential “sweet spot” in the Swedish insurance market – brokering and distributing insurance completely digitally with simplicity and customer benefit in focus.Here are some of the Swedish actors that we monitor:

  • Hedvig
  • First Insurance AB (Clear)
  • North Europe
  • Enerfy
  • Pensionskraft
  • Mono
  • Insurance Simplified
  • Advians
  • Pensure
  • Fortnox
  • Smart Insurance
  • More are knocking at the door

Insurtech Seminars

International collaborations challenge both Swedish intermediaries and insurance companies

A clear trend, which is something that should worry the traditional Swedish industry players, is that the new digital intermediaries do not necessarily choose to cooperate with the established Swedish life companies, but instead act as resellers (tied agents) for large international reinsurance companies. It not only challenges the intermediaries but also the Swedish companies who lose revenue in an already tight market where there is price competition from several directions and a constant struggle to earn their customers by offering the best digital customer experience. Some of the new players are also intermediaries or tied agents for any of the European insurance companies.Here are some examples of such collaborations:Hedvig – International Insurance Company of HannoverFirst Insurance AB (Clear) – Maiden Life and Maiden GeneralNorthern Europe – Knif Trygghet (Norway)Advians – Euroaccident / Danica PensionOur analysis is that it will become increasingly crucial for the established insurance companies to develop collaborations with players who have the right conditions to own the customer relationship; in their entirety or in any case the “on-boarding process”. The situation also opens up for the established companies. Through partnerships, they can reach new customer segments that they have historically had difficulty reaching or for other reasons have become “underserved” by the industry. Here, the insurance companies have the opportunity to experiment with different actors to gain experience as an alternative to developing their own portal solutions for intermediaries and corporate customers as well as their employees.

The figure below shows some established forms of cooperation between insurance companies and insurtech companies.

Read more about what Celent told us about Digital Trends in Life and Pension

The Next Wave of Fintech – a major focus on distribution within insurtech

​In the report, The Next wave of Fintech from the Stockholm School of Economics and PA Consulting, the future looks bright to the Swedish players in insurtech. Customers are demanding customised and cheaper solutions.Itello is one of the actors highlighted as an Insurtech company, and that can reduce the costs for the life companies through more efficient administration and smart integration with the many players who utilise the digitisation to personalise the distribution.

Download the report – The Next Wave in Fintech from Stockholm School of Economics and PA Consulting

SPP is already utilizing the power of digitisation

Swedish insurance company SPP is one of the companies that we see using the strength of its new administrative platform from Itello which, with a combination of standardised industry integrations and open APIs, creates opportunities for increasing the distribution power. Pensure and Fortnox are two examples of new digital distributors for SPP.

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