Insight with Jamie Macgregor, SVP - Insurance, Celent
What is the most impressive fintech start-up you’ve come across in the past 12 months and why?
In Insurtech, my personal view is that the ‘court is still out’ on this one. The ones that are causing the most noise / appear to be the most complete (as far as their proposition is concerned) are the ones that everyone knows such as Lemonade, Trov, Bought By Many, Zhong An (ok – this is not really a start-up anymore, but attracts interest as one – certainly often considered insurtech), Gobear and Friendsurance. The rest are still in a proving situation. That said, I do think CBIEN is interesting (and shows promise). Atidot also might be interesting – but is entering a crowded space. NEOS is in a “proving state” currently – and is at least trying to make a proposition within the connected home space. AdaptReady (although early) also has an interesting proposition. Then, some of B2B players that have shown some traction (such as Insly, RightIndem, MassUp, Policy Genius,…).
What would you rank as the top 3 challenges faced by start ups and scale ups as they plan for growth?
Still: (1) access to industry expertise / licenses (when D2C); (2) access to insurers with a real appetite to do something (when B2B oriented); and (3) access to initial funding.
Are we any nearer to seeing the full impact of Brexit on the fintech sector? If so, please share your view on what the best outcome for the fintech sector would resemble?
No. For fintech, I suspect to see EU start-ups moving elsewhere. For insurtech. I’m not so sure that the effect will be immediate – London is still a magnate for insurance and a new centre is yet to emerge for insurance - however, I suspect that Brussels (as a result of Lloyds of London’s decision to locate there), Berlin, Paris and Amsterdam will be the main centres.
Have you seen any major market shifts in the last year?
For insurtech, the switch to commercial lines (data / analytics / AI and, to a lesser extent, industrial IoT) and a greater focus on B2B. Insurers engaging with B2B players are also taking a more focused position on value – so, we see a few moving from less opportunistic behavior (i.e. responding to insurtech’s knocking on the door) to active search in some specific fields and/or decisions whether to search/acquire or internal build.
Where do you think London ranks now, among the various global fintech hubs?
Still important. For insurtech, SBC’s location and Insurtech London have both attracted activity. The real money, however, is still in the US (albeit more spread out).
Tech entrepreneurs now seem to be held in the same esteem as movie and music starts, who is the most impressive you’ve met or seen and why?
Although high profile already, the CEO’s of Trov, Slice, Sure, Friendsurance and Lemonade are good speakers. Coming up behind them could be the CEOs of Traity, RightIndem, and NEOS. Dustin Yoder of Surifyis interesting too – although quite sales-y (without a lot to show for it yet).
Do you believe there is more or less collaboration between fintechs and financial institutions than there was three years ago? Please comment or give examples if you are able to.
Within insurtech, the market is largely B2B – so, still a lot of collaboration. The more interesting play for me is to watch the activity of reinsurers, the established insurers and the newer primary insurers (i.e. <10 years old – most of whom act and behave like entrepreneurial tech firms who happen to do insurance, e.g. the Gibraltar based motor underwriters). There is an interesting strategic power game going on between these firms as they vie for position. Some insurers have a strategy to catalyse the market for MGAs (start-ups) and acquire assets in the IoT infrastructure (in order to reduce the power of primary insurers – i.e. lots of small distribution outlets for them + maintain a dominant position in data / control of information).
Munich Re are the best example (although Swiss Re, RGA, Hannover Re and HSB (albeit part of Allianz) are all doing similar things. For the Gibraltar based firms, check out Markerstudy, First Central etc – although small, these firms are already investing in many of the core technologies that insurtech’s are also focused on and experimenting / innovating with them using their internal staff with some positive results. With these firms, insurtech firms really need to offer something new / deep & exciting tech to get their interest (otherwise they will just do it themselves). For big brand primary insurer, insurtech’s are better placed to help owing to the cultural inertia that exists for when it comes to doing something out of the ordinary.
Outside of fintech, which company launched within the last 10 years do you admire the most and why?
Zhong An. The Gibraltar based underwriters – i.e. Markerstudy, First Central etc.
Do you believe incumbent financial institutions are adapting their products and services in response to the influence of fintech? If so, what would be the best example of this?
Yes, some are. Digital customer engagement is largely being addressed in-house. Distribution deals are also becoming more ambitions (i.e. non-traditional channels). Most are looking to engage with insurtech’s when doing more ambitious things.
Again, I’d look to the innovative underwriting players in the UK (many of whom are in offshore locations) as examples of firms who look, act and behave like tech firms.
On a scale of 1-4 score the following technologies based upon their potential to transform the financial services industry:
Based on your experience, what advice would you give to young entrepreneurs starting their careers in fintech?
Focus on proof points. There is so much noise / hype to navigate. Avoid meetings without clear qualification – there is a lot of “insurtech/fintech tourism”.