Key to Understanding InsurTech

The way to analyze the InsurTech phenomenon is via a cross-section view of the customer journey and the insurance value chain.


Digital transformation has become a major challenge for insurance companies all over the world. In Italy, this transformation is exemplified by the adoption of vehicle telematics. According to the latest data from IVASS (Istituto per la Vigilanza sulle Assicurazioni, or the Italian Insurance Supervisory Authority), black boxes became an integral part of 16% of new policies and auto renewals during the third quarter of 2015. The insurance sector is seeing the same dynamics that have already been experienced in many other sectors, including financial services—with start-ups and other tech firms innovating one or more steps of the value chain that traditionally belonged to financial institutions. InsurTech has seen investments of almost $2.65 billion during 2015, compared with $740 million in 2014. Similar to FinTech in 2015, it’s now InsurTech’s turn to define what elements will be included in the observance perimeter, a main point of debate among analysts. See Also: Where Are the InsurTech Start-Ups? In my opinion, all players within the insurance sector will have to become InsurTech-centered in the coming years. It’s unthinkable for an insurance company not to question how to evolve its own model by thinking about which modules within the value chain should be transformed or reinvented via technology and data usage. Realizing this digital transformation can be achieved by building the solutions in-house, by creating partnerships with other players (both start-ups and incumbents) or through acquisitions. Based on this view that all the players in the insurance arena will be InsurTech—meaning organizations where technology will prevail are the key enabler for the achievement of strategic goals—the way to analyze this phenomenon is via a cross-section view of the customer journey and the insurance value chain. This mental framework, which I regularly use to classify every InsurTech initiative, whether it’s a start-up, a solution provided by established providers or a direct initiative by an insurance company, is based on the following macro-activities:

  1. Awareness: Activities that generate awareness in the client (whether person or firm) regarding the need to be insured and other marketing aspects of the specific brand/offer;
  2. Choice: Decisions about an insurance value proposition, which, in turn, are divided into two main groups:
    1. Aggregators, who are characterized by the comparison of a large number of different solutions
    2. Underwriters, who are innovating how to construct the offer for the specific client, regardless of the act to compare different offers;
  3. Sales/Purchase: Focuses on innovative ways in which the act of selling can be improved, including the collection of premiums;
  4. Use of the Insurance Product: Clarifies three distinct steps of the insurance value chain: policy handling, service delivery—acquiring an ever-growing significance within the insurance value proposition—and claims management;
  5. Recommendation: This part of the customer journey has become a key element in the customer’s experience with a product in many sectors;
  6. The Internet of Things (IoT): Includes all the hardware and software solutions representing the enablers of the connected insurance (the motor insurance telematics is the most consolidated use case);
  7. Peer-to-Peer (P2P): Initiatives that, in the last few years, have started to bring peer-to-peer logic to the insurance environment, in a manner similar to the old mutual insurance.

Based on my interpretations of the evolution of the InsurTech phenomenon, I say: On one hand, there is a tendency toward ecosystems where each value proposition becomes the integration of multiple modules belonging to different players. On the other hand, the lines between the classical roles of distributor, supplier (even coming from other sectors), insurer and reinsurer are getting blurred. The balance of power (and, consequently, the profit pool) among various actors is bound to be challenged, and each one of them may choose to either collaborate or compete, depending on context and timing.

Matteo Carbone

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Matteo Carbone

Matteo Carbone is founder and director of the Connected Insurance Observatory and a global insurtech thought leader. He is an author and public speaker who is internationally recognized as an insurance industry strategist with a specialization in innovation.


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