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Quarterly InsurTech Briefing Q3 2018

A new insurance paradigm: event-based insurance

Insurance Consulting and Technology

December 20, 2018

The Q3 InsurTech Briefing looks at event-based, or “parametric,” insurance and explores whether it’s a niche product or a Trojan horse that can simplify and fundamentally change the industry.

In this edition of the Quarterly InsurTech Briefing, we look at event-based, or “parametric,” insurance offerings and ask ourselves whether event-driven cover is just a niche product or a Trojan horse that can simplify and fundamentally change the industry.

Start-Up Company Profiles explores how a handful of new entrants are taking unique approaches to incorporate technology in order to address inefficiencies or coverage gaps within the existing insurance ecosystem, and how they are also using data (third-party and proprietary), advanced sensors and Internet of Things (IoT) capabilities to develop a new paradigm of insurance offerings for the connected world.

The Transaction Spotlight section features Munich Re’s acquisition of relayr. relayr offers sensors and analytics infrastructure to optimize processes in the industrial context. This technology can help improve Munich Re’s underwriting models and Munich’s Hartford Steam Boiler can develop new insurance offerings around relayr’s technology.

The Thought Leadership article explores how parametrization of insurance will likely lead to self-mutualization of risk. Using 30MHz (Start-Up Company Profiles) as an example, like-minded gers use the company’s technology to optimize their production and mitigate risk, pooling their risk together to avoid premium subsidization of farmers using inferior processes and technology. In the world of event-driven insurance and accurate predictive modeling, homogeneous groups will be incentivized to look for customized insurance that is appropriately priced given the risk mitigation activity of the insured. As a result, parametric covers will not only facilitate modularity of the insurance value chain, but also mass customization and fragmentation of the insurance industry offering.

The report concludes with the InsurTech Data Center. $1.3 billion of InsurTech funding during Q3 was completed in 57 reported transactions. This amount is more than double the funding volume over the prior quarter, despite a 20% decline in the number of transactions reported.

Evolution of the insurance value chain

Diagram of evolution of the insurance value chain

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Quarterly InsurTech Briefing Q3 2018
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Quarterly InsurTech Briefing Q3 2018 PDF 4.1 MB
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