Insurtech expert says insurers ignored warnings about next generation of customer


Israeli law firm Herzog, Fox, and Neeman hosted at their central Tel Aviv offices today the Insurtech Conference 2016. co-sponsored by Jerusalem Venture Partners (JVP) and insurance giant AXA.

Like most events held at HFN, the talks were given in Hebrew. However English conversations representing the international interest in the subject could be heard during the mingling.

On speaker who did give a presentation in English was Michael Niddam, Executive Partner at Kamet who was in attendance representing the offices in France. He introduced his organization and told the audience not to fear the regulators.

“Insurance companies are wondering how they can adapt to the new technologies,” he said, plugging Kamet as AXA’s incubator arm. “We thought [of] partnering with JVP and HFN when we saw how many insurtech companies were coming in Israel.”

JVP, AXA, and Kamet announced the InsurTech Israel Competition merely three weeks ago, promising an unusually lucrative prize of a $1 million investment from JVP and potentially from AXA.

“If I consider insurance a very orderly, traditional business, then there are barbarians everywhere,” says Niddam, decidedly not sugarcoating what he thought were companies playing with fire by not upgrading their capabilities. “It will be very difficult for an insurance company like us to adapt and maintain our leadership.”

Kamet was launched in September 2015 with €100 million behind it, with the backing of the AXA Strategic Ventures branch of the company and AXA Lab in San Francisco and Shanghai. Their objective was to come up with new digital services and products for the benefit of the insurance industry.

In Niddam’s view, regulatory evolution and demand for better transparency definitely benefits the customer but exerts a lot of pressure on the industry. The technology revolution and especially access to data also invites regulatory attention to ensure private consumer data isn’t abused.

And yet, a solid and consistent regulatory framework brings clarity to the market and assuming there’s enough room to run a business, traditional insurance companies and startups challenging them should want them in place.

“The competitive advantage that insurance companies have built up over the years is not mechanically ready there to stay.”

He estimates that there are between 600 and 700 companies innovating in the insurance sector with more than $7 billion invested since the beginning of the decade into the insurtech vertical. Its surge isn’t merely in the potential to outpace the service capabilities of the industry’s “barbarians,” proverbially speaking, but also because of new customer segments.

“Because the way we interacted with customers in the past was so regulated and difficult to write policies, it’s organized around branches that are completely arbitrary,” Niddam told the crowd. “What we see with digital is that those big bricks are being distributed. We are seeing itemization.”

That makes insurance easier to understand for consumers, rather than complicated by having an assortment of policies. That being said, classical companies need to “evolve,” integrating more data and getting used to this more distributed market.

“For years people said ‘Customers will change.’ Today, it’s not that they will change. They have changed. They are highly dissatisfied with the way insurance is distributed.”

“It’s the children today who are dissatisfied and running toward these new competitors.”


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