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Life Insurance
Widening the Scope

Life-related insurtechs are expanding beyond distribution and underwriting.
  • Kate Smith
  • September 2019
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Brian Muench, Allianz Investment Management

We look for expected returns from our investments that we’re making in the startups but also the strategic alignment.

Brian Muench
Allianz Investment Management

Insurtech investments reached record levels in the first quarter of 2019, when 85 deals worth a total value of $1.42 billion were announced.

Not only was it the third straight quarter with more than $1 billion in funding, according to the Willis Towers Watson's Quarterly InsurTech Briefing, but Q1 also saw the highest number of transactions and the highest volume of Series B and Series C funding rounds.

On the life side, most of the insurtech activity so far has revolved around distribution and underwriting, but the scope of transformation is widening, according to Brian Muench, president of Allianz Investment Management and managing director of Allianz Life Ventures.

Muench spoke with AMBest TV at the IASA Conference in Phoenix. Below is an edited transcript from the interview.

What trends are you seeing on the life side in insurtech investing?

We're definitely seeing more deals come into the marketplace. First quarter of 2019 was a record quarter for insurtech in general. It's on the heels of 2018, which was a record year in insurtech as well.

I think the trend that we're seeing is around product distribution. How can you put insurance products through a platform such as digital that helps with aggregation and also with advice that can come through that, and even alongside of on-demand type of policies?

Think about the need for term insurance and the enablement and the easiness of doing that, or even episodic type of insurance that's more situational in nature depending on if you need it just for a short period of time.

Are those the types of things that the carriers are looking for or is that what the insurtechs themselves are focusing on?

The most opportunity to begin with is really on that distribution side. I think going forward that it will get more into other areas.

Some of the hot trends that we're seeing now are around underwriting and accelerated underwriting. While that's not a new trend per se, what's new about it is the different ways that these startups are going about it.

They're able to leverage machine learning. They're able to leverage facial screening and combine that with big data and medical records. There's a whole new way of how the insurance company can now use something that's less invasive to the policyholder to underwrite that policy.

That's another hot topic that we're seeing come through that's more insurance-driven than it is from the insurtech side.

Does that change the customer engagement?

Yes, absolutely. If you can be less invasive through that approach, it makes total sense.

I think where we also see insurtech can help is around the ability to get insurance or to buy an annuity.

I make the analogy sometimes that insurance historically has been a lot like filing your taxes. In the old days, I remember going to the library, picking up my forms, getting the big publication to figure out how to do everything.

I look back at a company that we invested in called Tomorrow, and as in most cases with startups, it's the founder that recognizes a problem or an opportunity to do something better because their own experience just wasn't up to what they wanted.

In this case, [the founder of]Tomorrow looked at the employees—in this former company—that he had that just were not making really important decisions and found that it was behavioral, which is the idea that I can do it tomorrow or the next day or the next day. What he created was an online app, very user-friendly and very intuitive, that you can then create your own will and then purchase life insurance alongside of that to protect your family.

Will having greater ease and availability spur more activity and interest in those types of products?

Yes, I think so. I also think about education. Allianz Life is very much in the retirement business. You can help educate on why an annuity or a life insurance policy might make sense as you're accumulating assets or getting close to retirement or even in retirement.

Is Allianz Life Ventures looking at startups that are operating in that space?

We look to enable with the firms that we invest in. That's aligned with what we're trying to do from a company standpoint. Retirement obviously is the cornerstone of what we do, and that's a pretty big area that we can play in and have a lot of good ideas come our way.

I would also say accelerated underwriting, the customer experience and enterprise technology. Are there ways that we can do things more efficiently that takes a lot of data and makes it into information that is useful? 

You brought up accelerated underwriting. Are there concerns about data and how it's used?

We've definitely seen that in the technology landscape with private information and how well that's used. I think a lot of it's around disclaiming what you are using it for and why it's being used and why it's necessary. I think the industry can get their arms around that at the end of the day.

We're just at the forefront in a lot of these different areas of how to take information in and make sure it's not only usable, but it's [used] in the right way.

For Allianz Life Ventures, what's the end goal? Are you looking for straight returns? Are you looking for technologies and companies that can be folded into your existing company?

I get that question a lot. It is a dual mandate. We are looking for both is the short answer. We look for expected returns from our investments that we're making in the startups but also the strategic alignment. For us, that's a lot about value alignment as well, because with these startups, they have the ability to raise cash from a lot of people in the ecosystem. A lot of firms are chasing deals.

What Allianz can bring to the table as being one of the largest insurance companies in the world is helping these startups get up and running in areas that they might need, because core competencies of an insurance company are much different than a core competency of a startup.

There's a lot that can be gained by working together.

When you invest in a company, do you take a role in the company?

No, typically not. We'll typically be a board observer so we can stay attuned to what's going on, but for the most part, we're working with them to see how we can work together strategically. And, again, it goes both ways. Through our program, we're not looking to be on that board and having a say on what they should be doing in the daily operations of their business.

Are there any changes you're seeing that you find particularly exciting on the life side?

There's quite a bit. I think the evolution of where things are going is pretty amazing. AI, I mean, who knows where that's going to end up at the end of the day. Probably what it looks like five years from now is going to look much different than what it is today.

I think there's a lot more runway out there of new innovative ways in which we can all work together.



Kate Smith is managing editor of Best’s Review. She can be reached at kate.smith@ambest.com.


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