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A.M. BEST'S MONTHLY INSURANCE MAGAZINE


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Will Internet Giants Take a Bite Out of Insurance?

Incumbent insurers should monitor insurtech startups using insurance metrics.
  • July 2018
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There is no such legal, regulated entity called "insurtech". There are incumbent insurance firms and startup insurance firms; there are incumbent technology firms and startup technology firms. Regardless of whether a startup or incumbent insurance firm uses technology—current or new technology—for strategic, tactical, or operational initiatives, the insurance firm remains an insurance firm and nothing more. 

Might Big Tech take a bite out of the insurance industry? (Best’s Review, May 2018) Possibly. That must be discussed by each major insurance line of business. But if any of the Big Tech firms want to enter the insurance marketplace, they must be licensed and regulated as insurance firms (intermediaries, (re)insurers) or partner with licensed and regulated insurance firms. 

Incumbent insurance firms must realize, putting all the entrepreneurial enthusiasm aside and the level of investments in the startup insurance firms, that the startup insurance firms haven’t reached into an alternative universe and extracted new technologies or new applications of technologies. I continue to recommend that incumbent insurance firms monitor what startup insurance firms are doing and copy the startup insurance firms only at the point where the incumbent insurance firm believes they can do so in a profitable manner—measured by insurance industry metrics for the insurance segment in question and never by technology firm/industry metrics. Moreover, when incumbent insurance firms decide to partner with startup insurance firms, the incumbents should never share their client list with the startup insurance firms. 

I believe that the League Tables—rankings by each major insurance segment—will remain the same for the foreseeable future. 

Barry Rabkin, president and principal analyst
Market Insight Group
Santa Fe, New Mexico

Reader responses may be edited for length and clarity.


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