Brokers: If you can’t buy insurtechs, join them

If you can’t beat the insurtechs, and you can’t buy them, then you may as well join them.

Partnering with insurtechs may be the best way to go for most carriers and brokers lacking the resources necessary to acquire them, says Trisura Guarantee Insurance Company president and CEO Michael George.

“If you have gobs of money, lots of capital, and you want to buy some insurtechs and get serious on that side of it, that makes sense,” George said in an interview with Canadian Underwriter Thursday. “But for most brokers in Canada, they’re smaller shops — they are regional players, mom-and-pop stores, and even a lot of insurance companies have limited capital, too.

“So, they are not going to go out rushing to buy insurtechs. I wouldn’t recommend that to brokers, in part because there are hundreds of [insurtechs]. Which one’s going to be right? You don’t know.”

George said the better alternative for most small to mid-sized players, either brokers or insurance companies, is to form partnerships with insurtechs. For brokers, this trend towards partnerships may require a re-think about their traditional notions of competition.

“Brokers have start to start thinking that maybe the are not just competing with other insurance brokers,” said George. “They may have to start thinking about the fact that they are actually competing with direct writers, for example. Or other potential entrants into the insurance space that may not see the benefit of an intermediary.

“Brokers maybe also have to start getting together a little bit more, and collaborating. Maybe you could have 10 brokers band together on insurtech, and that opens up a whole host of other opportunities for them that they wouldn’t have otherwise just by themselves.”

Definitely, the business of investing in insurtechs has been brisk in Canada.

As noted in a December 2017 Insurance Institute trends paper, investment firm Mill Street & Co. in early 2017 bought a stake in the Toronto-based P&C insurtech Tuque, which, when launched, will offer digital solutions for buying home, auto and business insurance online. In October 2017, Montreal-based Covera Technologies Inc. raised $1 million in seed money for its artificial intelligence work in helping consumers to re-shop their insurance automatically.

Most recently, Canadian financial technology company Ratehub Inc. raised a $12-million investment led by Elephant, a venture capital firm. Ratehub is using the investment to build a digital platform that will allow Canadians to go through the entire mortgate process online. It is also planning to launch a new suite of tools in 2018, which will allow Canadians to compare home, auto, and life insurance policies.