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Nordic Insurtech Report


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First Nordic Insurtech Report.

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Nordic Insurtech Report

  1. 1. NORDIC INSURTECH REPORT By: Michal Gromek Henrik Allert Matt Broniarek
  2. 2. PhotobyXnylStudio NORDIC INSURTECH REPORT By: Michal Gromek Henrik Allert Matt Broniarek May 2019 TABLE OF CONTENTS 10 Key findings of the report 14 Trends in Nordic Insurtech landscape 18 Segmentation of Nordic Insurtech Companies 30 Eight leading Insurtech trends 42 Nordicstartups’challengeswhileworkingwithIncumbents 48 NordicIncumbents’challengeswhileworkingwithstartups 52 ConnectingIncumbentsandstartupsinastructuredway 55 Methodology and Limitations 58 List of Nordic Insurtech companies
  3. 3. 4 5 “ #GOOD TO SEE YOU —Margaret Heffernan Margaret Heffernan argued that “For good ideas and true innovation, you need human interaction, conflict, ar- gument and debate”. The successfully conducted Sthlm Fintech Week 2019 was a community-driven event facilitated by a handful of organisers, co-organisers and volunteers. The event enabled 520+ participants, from nine different areas of Financial Systems, to interact and debate different dis- play arguments as well as search for new solutions with 102 speakers. Due to the community efforts involving members of other Nordic Fintech Hubs, Accelerators, Incumbents as well as members of the Academic Com- munity – the team behind this report – has been able to aggregate, possibly for the first time, a total of 72 Nor- dic Insurtech Companies. Furthermore, specifying eight leading trends impacting Insurtech, nine leading chal- lenges (out of 81 classified) in the cooperation between Incumbents and startups as well as providing data about the gender and demographics of the Insurtechs CEO led to some unexpected discoveries. Following Heffernan’s argument, may the findings of this report be an introduction and fuel the upcoming Sthlm Fin- tech Week 2020 and all of the discussions that we will be having until then. For good ideas andtrueinnovation, you need human interaction, conflict, argument and debate Michal Gromek Co-organiser, Sthlm Fintech Week PhotobyEliasLjungberg
  4. 4. 6 7 PARTNERS OF THE REPORT MAIN AUTHOR This report was made possible while sharing resources with the following partners: Michal Gromek Sthlm Fintech Week is a community-driven Fintech conference based in Stockholm launched for the first time in February 2019. For the entire week, 520+ participants engaged in the discussion with 102 experts from the in- dustry, academics, politics, and representatives of ‘business environment institutions’ to foster new connection and develop the Nordic ecosystem. Michal Gromek – as a Fintech builder and Researcher in eleven countries, he has gath- ered his professional experience while sup- porting governments to adopt their policies towards changing FinTech environments (e.g. Malaysia, South Korea) and also lead- ing international expansion of European Fintech Ventures in executive positions (e.g. Rocket Internet, FundedByMe). He is a con- tributor to the Forbes Magazine and an author of the Stockholm Fin- tech Report 2018, and also a co-author in numerous reports and books. Designed by: Matt Broniarek Cover design: Michal Gromek Finmate is a Stockholm based one-stop-shop for Insurtech, Fintech, and Regtech companies which anticipated access to services in identification, authentication and payment service providers. Having a comprehensive agreement with the biggest providers, Finmate is able to limit both the costs as well as the time-to-market. Itello is a Swedish Insurtech company and the leading provider of Policy Administration Systems and digital solutions for the Nordic life and pension industry. Itello offers software and flexible and sustainable solutions with the objective to empower customers with market-leading capabilities of business agility, compliance and process efficiency and control – enabled by digitalisation and process automation. Itello is actively involved in the evolving Insurtech ecosystem with the am- bition to be a hub in the Nordic Life and Pension industry. Through broad experience and expertise, new innovations and technology advancements, Itello generates business value to organisations in the industry.
  5. 5. 8 9 SYNOPIS Since 2015, different teams of researchers from Stock- holm School of Economics have released reports that review the signals which have reflected on the devel- opment of the regional Fintech, RegTech, and Insurtech ecosystem. Those reports have uncovered different areas of the ecosystem remain open-source and grew with its complexity. This report is anticipated as a continuation of the re- port ‘The Next Wave of Fintech, Redefining Financial Services Throughout Technology’ published in 2018 together with PA Consulting. It provides an extension and a new angle on the development with a focus on Insurtech as a subsection of the Nordic Fintech Eco- system. The overall goal of this report has been, for the first time, to scout and segment the landscape of Insurtechs in all Nordic countries. It specifies current trends within the industry and reviews some aspects of the development within the Insurtech space while providing insights on the current stage as well as potential future develop- ment of the industry. Stockholm Fintech Report 2018 The Next Wave of Fintech, Redefining Financial Services Throughout Technology’ The Rise and Development of FinTech: Accounts of Disruption from Sweden and Beyond Chasing the Tale of the Unicorn This report is made available under a Creative Commons license, CC BY-NC-SA 4.0 8 Photobyrawpixel.comfromPexels Links to related open source publications about Swedish Fintech Scene:
  6. 6. 10 11 72 Insurtech companies have been established in the Nordic Countries. 50% of them (36 companies) are incorporated in Sweden. With only three female In- surtech CEOs, men account for 95% of the Chief Ex- ecutive Officers in the industry. Furthermore, with an average age of Insurtech CEOs in Norway and Sweden at 46.7 years old and only three founders being below 30 years, this industry requires more mature manage- ment teams. Eight leading trends might impact the development of Insurtech companies: Wearable Technology, Ro- botic Process Automation, Reassessment of Incum- bent-startups Relationship, Online-Only-Customers, Cloud Infrastructure Providers, Conversational In- terfaces, Decentralised Ledger Technology (DLT) and API connections. The Taxonomy of the activity of In- surtech companies has been divided into eight sub- segments which are: Claims, Management & Process- ing, Customer Engagement, Consumer Communities Peer-2-Peer (P2P), Distribution, Personalisation, On Demand Insurance, Underwriting & Reinsurance, Risk Detection & Prevention. More than 40% of all Insurtech companies have been incorporated in the year of 2015 or after and their activities are mainly allocated in the subsegment: Distribution, Risk De- tection & Prevention. Contrarily to the Nordic Fintech companies in the In- surtech industry, there has been so far an absence of Unicorns like Klarna, Revolut or Izettle. So the consen- sus to embark on the ship of digital transformation in insurance based on a smaller sense of urgency has been slower. In interviews, Nordic startups have specified 27 lead- ing challenges to work together with Incumbents. The Incumbents specified 54 challenges. Reassignment of the startup – Incumbent relationship might be at the core of trends possibly increasing the efficiency in the ecosystem. When it comes to the development of the industry, in the process of ‘digital transformation’ (following Wes- terman, Bonnet & McAfee, 2014), digital is not the an- swer, the transformation is. Focusing on transformation instead of dig- ital highlights the fundamental role of lead- ership and organisational capabilities in cre- ating real business value from technological innovations (Westerman, Bonnet & McAfee, 2014). Despite the slower path of change in Insurtech, In- cumbents across the Nordic Insurtech spaces have launched a portfolio of diversified alliances. Coopera- tions, cooptations, partnerships, buyer-supplier agree- ments, and co-branding of different activities like the Sthlm Fintech Week 2019 or this report, have been created to foster a new type of cooperation projects. Following interviews with market leaders, the pathway towards digital transformation has been quite rocky for both Insurtechs and Incumbents, but it goes forward. Every day further brings about a little piece of progress. KEY FINDINGS OF THE REPORT PhotobyrawpixelfromPixabay
  7. 7. PhotobyHelloquenceonUnsplash 12 13 INTRODUCTION The increase of shifting customer behaviours towards ‘comparison websites’ and ‘online-only customer’ trend is slowly but steadily increasing the pressure on the in- dustry. This pressure is starting to first: open up micro-level isolation within Incumbents provide more service-ori- ented platforms combining not only technology, prod- uct and service but also establishing new value-added services for the customers. It is essential when following communication studies (Blakstad & Allen) not to extrapolate on incomplete data, and before jumping to conclusions, there is a need to understand: • What are the developments in the Nordic Insurtech Ecosystem? • How do different actors interact with each other? Reflecting on these questions, the goal of this report is to provide an answer to the most fundamental question that might be the foundation of any additional assump- tions: • What are the different startup players in the Nordic Insurtech ecosystem? • How is the market being impacted by holistic global trends? “(…) Insurtech with some excep- tions tends to align at the centre of small startups with up to 10 individuals with often non-sus- tainable business models, which rarely focus on the problems of segments which are underserved by the banks. This unfortu- nately often mimic services provided by the banks or insurance companiesbutwithbetteruserexperienceorcustomercentricity. On the other end, Banks and Insurance companies don’t com- municate where they need support. This miscommunication in the market means that we waste our innovation potential.” — Stig Johansson, Former Head of Fintech at Swedish Financial Supervisory Authority Source: (Forbes, 2018) As our brains are wired for categorisation (Caramazza, 2001), we like to see clear lines between different players in the market while drawing categories, segments and sub- segments. Unfortunately, in a time period of interdisciplin- ary diversification of risks, products and growing consoli- dation of the market, the lines between different types of Insurtechs are not only blurry, but need a continuous and frequent readjustment of the positions of the players in the ecosystem. As the usage of technology develops at a nearly exponential rate, any categorisation of the players of the Insurtech market should be approached with great care as it can be outdated as it’s read. Insurtechs, refers to the use of technology inno- vations and digitalised processes to generate new business opportunities, increase quality, savings and efficiency at various value added steps in the insurance industry model (Stockholm School of Economics, 2018). The crumbling walls of stand-alone finan- cial products which focused solely on one national state reached a significant delay to Fintech – the Insurance industry. WHAT MAKES A COMPANY AN INSURTECH COMPANY? TECHNOLOGY INNOVATIONS AND DIGITALISED PROCESSES
  8. 8. 14 15 TAXONOMY The following taxonomy of Nordic Insurtech companies have been divided into the following eight different subsegments to display the core business areas: Allows the customer to mitigate risk and mutually cover their losses. Due to the increased availabil- ity of the Internet, online payment methods as well as the digitisation of trust, customers joining in P2P insurance systems use Insurtech companies to for example insure each other’s cars – which are a reinvention of ‘mutual insurance’. CONSUMER COMMUNITIES PEER-2-PEER (P2P) TRENDS IN NORDIC INSURTECH LANDSCAPE Taxonomy of Nordic Insurtech companies (Stockholm School of Economics, 2018).
  9. 9. PhotobyJoséMartínRamírezConUnsplash 16 17 CUSTOMER ENGAGEMENT PERSONALISATION Enables Insurers to engage with customers in a proactive matter, offering them: e.g. an up-to-date congestions information, suggesting steps to continue to improve their health based on the result of their biometrical data, providing information about particular weather conditions. Upgrading the customer engagement matrixes from reactive to proactive allow Insurers not only to retain the customer but additionally lowers risk of a specific vehicle-based incident. Ubiquitous access to the internet, as well as extensive availability of new data sources like biomet- rical data, or tools permitting geolocalisation not only allow the insurance providers to understand their customer base more extensively but further tailor their offering to a particular subsegment. Insurance Wallets which will enable aggregating the products in one place and Financial partners can be viewed as a type of ‘distributor’. The key difference to traditional insurance distributors is the fact that companies in this category are involved as ‘financial partners’ being primarily based on user consumption pattern and preferences. CLAIMS, MANAGEMENT AND PROCESSING Claims management services and processing consist of advice or services in respect of claims for compensation, restitution, repayment or any other remedy for loss or damage. They consist of processes supporting handling: compensation, restitution or reimbursement for any loss or dam- age. Companies in this subsegment provide Robotic Process Automation (RPA), which are systems informing about the current stage of an application, as well as products offering services in the area of Machine Learning (ML) to process a particular claim more efficiently. DISTRIBUTION Due to the shift in the distribution models towards price-aggregator, the traditional insurance ‘agents model’ could lose its relevance. This category includes both Digital Brokers, Comparison Portals as well as Digital Insurers. RISK DETECTION & PREVENTION Access to new information sources like Big Data analytics, Artificial Intelligence Software; com- panies provide real-time weather forecasts and satellite images of pre- and post-incident models that allow insurers to detect risk and potentially prevent incidents. This category includes both data-input providers using the Internet of Things (IoT), offering solutions in Risk Screening that might result in products, technologies and services like Proactive Insurance. UNDERWRITING AND REINSURANCE At the central role in the insurance value chain, due to regulatory compliance, large capital re- quirements and often long contracts time. Companies in this subsegment provide administration systems and digital solutions to increase business administration efficiency and control. Every underwriter needs a system for administration of the insurance policies. This system might include invoicing and payments, policy issuance, claims management, regulatory reporting, commission management and technical sub-ledger accounting. Companies in this category allow Incumbents using componentisation ‘Episodic Insurance’ and ‘Product Insurance’ to provide on-demand services connected to a minimal period or a particular item. For example retailers, or Hospitality providers integrate different types of coverage during their online check out process. On-demand insurance strives for the balance between the presen- tation of the policy offered to the customer at a dedicated period, while gaining the convenience and simplicity of a comprehensive policy. ON DEMAND INSURANCE
  10. 10. 18 19 SEGMENTATION OF NORDIC INSURTECH COMPANIES Seventy two companies scouted in the Nordics have been classified into eight different categories. 36 Sweden, 13 Denmark, 12 Norway, nine Finland, two in Iceland. The majority of companies are active in the subsegment of ‘Distribution’ and ‘Risk Detection & Prevention’. SWEDEN Segmentation of Insurtech companies in all Nordic countries. Segmentation of Insurtech companies in Sweden.
  11. 11. 20 21 DENMARK NORWAY Segmentation of Insurtech companies in Norway.Segmentation of Insurtech companies in Denmark.
  12. 12. 22 23 ICELANDFINLAND Segmentation of Insurtech companies in Iceland.Segmentation of Insurtech companies in Finland.
  13. 13. 4,6% 95,4% 2 32 1 11 12 6 2 24 25 Nordic Insurtech startups in average Age of CEO 95,4% oftheNordicInsurtechCEOs Year of incorporation AGE Fintech CEOs, with an average age of 40 years old (Gromek, 2018), are 6.7 years younger than their Insurtech counterparts. Methodology: The age of the CEOs has been defined as of 2019. Each name of the CEOs specified on (SE) and (NO) was provided with a birth year in the same source. Denmark, Finland and Iceland authorities don’t publicly distribute such data. Amount of male and female CEOs per country. Cumulative incorporation of Nordic Insurtech companies by year. Insurtech startups CEOs are on average 46.7 years old with only three CEOs who are below 30 years old. 46.7 Man 2010 Number of CEOs in Insurtech startups by age group. 25–30 30–35 35–40 40–45 45–50 50–55 55-60 60–65 65–70 70–75 Total 2 4 6 25–30 30–35 35–40 40–45 45–50 50–55 55–60 60–65 65–70 70–75 SwedenNorway 2 4 6 8 8 INCORPORATION YEAR 43,3% of all Insurtech companies have been incor- porated during or after 2015. Data has been based on 67 sub-segmented companies which have been reviewed using the company’s registration offices at different Nordic countries. Disclaimer: As it is a usual business practice, to buy already established companies, such process might have partly distort- ed data. Establishedin1968,theFinnishcompa- nyTietowasthefirstInsurtechcompa- ny in the Nordics. GENDER Methodology: The names of the Insurtech CEOs have been collected with the help of companies web- sites and publicly available data. The gender has been extracted using ‘genderizeR’ a solution that uses ‘ API’ to pre- dict gender from first names extracted from text corpora. The accuracy of prediction has been controlled by two parameters: counts of first names in the database and probabil- ity of gender given the first name. PhotobyrawpixelfromPexels Men clearly take up 95,4% of the Nordic Insurtech CEOs position. Sweden has the lowest ratio of male to female CEOs. The gen- der disproportion in Insurtech companies is 4% higher than in the Stockholmer Fintech indus- try (Gromek, 2018). Sweden Finland Norway Male Female Denmark AggregatedvaluesforallNordicInsurtechcompaniesin% Iceland 80 60 40 20 0 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 average
  14. 14. 26 27 Since Insurtech are a novel development, it might be tempting to compare the 72 scouted companies with around 350+ Fintech companies that operate in dif- ferent Nordic countries. Furthermore, as only a very limited amount of countries like for example Australia (Insurtech Australia, 2018) have investigated and seg- mented their Insurtech landscape, the comparison to other geographies remains difficult – as reports scout- ing for Insurtech companies remain rare. Fintech has been defined as services, products, and technology served by banks to retail and corporate customers, which have historically included Insurtech companies (Gromek, 2018, p. 21). Due to the unique position distantly from Banks, and connected exclu- sively to Insurance companies, the ‘Insurtech’ category as such is entirely new. Fintech Unicorns IZettle, Klarna and Bamborra, which have been active in the subsegment of payments or ARE 72 INSURTECH COMPANIES ‘FEW’ OR ‘MANY’? consumer lending, had at the time period of their in- corporation a significantly lower so-called ‘barrier to entry’ than Insurtech companies. ‘Barrier to entry’ are being defined as a level of launching costs and other hurdles that prevent new startups from market entry. To establish an Insurtech company, the founders need to have extensive knowledge in payment systems, data protection, financial regulation, user experience, cy- bersecurity as well as insights from the underwriting, insurance, reinsurance, claim management, and regula- tory environment connected to the Insurance industry. Following Kotter (2012) eight-step process for leading change, the lack of ‘challenger-Unicorns’ like ‘Klarnas’, ‘Revoluts’ or ‘Izettles’ in the Insurtech space is likely to be negatively impacting the speed of change in the entire industry. As the first step on the Kotter scale leading-change scale is a driver defined as: ‘Establish a sense of urgency.’ Without a sense of urgency created by both potentially large Unicorns in the area of Insurtech, regulation like PSD2, the management teams of Incumbents might as not proactively be taking the remaining seven steps to foster change.* A lower ‘dynamics of change’ might not be simplified to ‘lack of action’ as multiple Incumbents in the insurance industry have decided to take measures to transform both their internal processes and also shift the focus toward different solutions in the area of user-centricity. The Insurtech scene is slowly but steadily growing both in terms of the number of companies as well as services offered. Furthermore, there are still few but an increas- ing amount of cooperations between Incumbents and Insurtech companies. *Remaining Steps: 2. Creating a powerful coalition; 3. Developing a vision; 4. Communicating the change vision; 5. Empowering employees to act on the vision; 6. Generating short-term wins; 7. Consolidating improvements and producing more change; 8. Anchoring new approaches in the culture. WHY ARE WE SEEING MORE FINTECH COMPANIES THAN INSURTECH COMPANIES? InterioroftheOsloOperaHousebyTomasAdomaitisonStockvault
  15. 15. Sweden Finland Denmark 28 29 SPP – Swedish Occupational pension Incumbent to- gether with Swedish Property and Casualty (P&C) insurance provider, ‘Trygg-Hansa’, have partnered up with Fortnox, a cloud-based provider of account- ing software that focuses on Small and Medium En- terprises. (SMEs). Fortnox provides P&C insurances tailormade for SMEs through Trygg-Hansa. SPP underwrites the occupational pension plans in an entirely automat- ed and digitised process. Such a co-effective under- writing system has opened up the possibilities for the Incumbents to use ‘Fortnox’ as a ‘deal-genera- tion partner’ for 200k+ potential SMEs connected through the accounting platform. On the other hand, Fortnox moves into the role of ‘one-stop-shop’ for SMEs providers which allows the use of new P&L possibilities, while using the existing core system. Finland’s largest life insurance company, ‘Local- Tapiola Life’, launched a customer engagement app called: ‘Smart Life Insurance’ in November 2015 using the Finnish Insurtech company ‘Well- mo’. Since launch, Smart Life Insurance expanded to Germany and Poland, and have provided thou- sands of Europeans the possibility to channel dif- ferent health-tech apps into one platform. Wellmo allows Insurance companies to offer additional ser- vices for their retail clients and, according to own reference, at least 3/4 of customers who received access to their service from their insurance provid- er are using it regularly (Wellmo, n.d.). ThefinancialserviceproviderSkandiahaspartnered upwithDanishInsurtechstartup,thatprovideslead generation to ‘Matter Pension’. Matter enables cus- tomers to select a sustainable solution while invest- ing their pension. Matter reviews external compa- nies in which the pension of individual customers is being invested based on several criteria: • No investments into companies, which produce fossil fuels, weapons or tobacco. • Increased standards for ethics and responsi- ble business practices into companies which underline higher concern for human rights and responsible business practises. • Targeted investments into entities producing green energy, new technologies, medicine and health care solutions. (Matter, 2019) Tryg, a leading Nordic non-life insurance company is engaged with an Insurtech startup addressing the needs of a segment of customers called “mil- lennials”. The startup ‘Undo’ uses AI and data from Tryg to design personalised insurance covers pro- posals. ‘Undo’ provides a customer journey into the Tryg app based on multisided-platforms like Uber and Airbnb. EXAMPLES OF COOPERATION BETWEEN DIFFERENT PLAYERS IN THE NORDIC ECOSYSTEM PhotobyRedHatFactoryonUnsplash
  16. 16. 30 31 The impact of the increasing availability of technology is connected to a shift in demographics and usage of traditional insurance products which reside at the in- tersection between numerous fields, such as consum- er decision making, psychology, sociology, application of technology in economic activities, or economic ge- ography. The period in which the development of a single technology could be perceived as a stand-alone development has potentially passed a long time ago. Available technologies are bundled and interconnect- ed more intensively than in the past. Historically speaking, the adoption of multiple tech- nologies have been accompanying the user since the industrial revolution. Since the presentation of the first light bulb by Thomas A. Edison on the New Year’s Eve of 1879 (David, 1992), the connection between at least two technologies, a light bulb and electrical power supply, became visible to the end-users. To successfully use the light bulb technology, individuals have to be a user of both the light bulb as well as the electric power supply. Since 1950, the possibility to explain and predict end users’ technology acceptance has been the core in- terests of the academic field of information systems (IS) (Festinger, 1957; Fishbein & Ajzen, 1975; Ron- dan, Arenas & Ramires, 2015). The definition of such a process has been conceptualised as a state known as ‘technology acceptance’ which is an outcome vari- able of the psychological process that end-users pass through while deciding on using a particular technol- ogy (Dillon & Morris, 1996). Despite the fact that ‘In- surtech’ has often been defined as a new phenome- non, the underlying drivers of individuals to use a particular service, technology, or product has been reviewed comprehensively – at least academically speaking. Furthermore, every individual is unique in his or her personal and social beliefs, perceptions, preferences and choices. Using past studies in macro-develop- ments that impact individuals, it might be partly pos- sible to foresee industry developments and poten- tially respond to individual behaviour to some extent. Leveraging on the context surrounding motivation psychology, ‘motive’ and ‘motivation’ for individuals to use a particular technology are often being wrong- ly used interchangeably, but are in fact two different notions. A ‘motive’ is a psychological disposition which is individually developed and content driven. Some motives are inborn while others are developed during the socialisation process. On the other hand, ‘motivation’ is a process which highlights how individ- ual motives become activated. Interconnected-technology requires new approach- es. Only the adoption of proactive insurance with wearables (e .g. Apple watch) requires an interde- pendent approval of the internet, a particular health app, wearable, and a potential service provided by an Incumbent and a form of online payment. Furthermore, before the user decides to use an app like‘Undo’,heorshehastoacceptnotonlyONEofthe ‘trends impacting Insurtech’, but have a positive atti- tude towards ALL sections of embraced technology. As the world grows in complexity, only a slight distrust that, (for example, the ‘personal data’ might be mis- used by any of the players in the ecosystem), might result in a resignation from a particular service. Such a distrust might not be connected with an insurance provider directly, but with the telecommunication operator, public regulator, online payment provider, producer of wearables or even the platform which provides the app. This indicates that in a connected world, the responsibility for or against the adoption of a particular technology might be a result of differ- ent interactions and experiences of individual users and a specific policy provider. Based on the experts’ interviews with both Incum- bents and startups following eight leading trends, influencing Insurance have been displayed. EIGHT LEADING INSURTECH TRENDS PhotobySushilGhimireonPexels
  17. 17. 32 33 “ Insurtech trends 1 Wearable Technology 2 Robotic Process Automation & Intelligent Process Automation 3 Open APIs connections 4 Online-Only Customers 5 Improving the Incumbent – Insurtech cooperation 6 Cloud Infrastructure Providers 7 Conversational Interfaces 8 Decentralised Ledger Technology Money is the currency of transactions. Trust is the currency of interactions —Rachel Botsman PhotobyThomasRichteronUnsplash 3333 32
  18. 18. 34 35 1. Wearabletechnology been delayed or cancelled before they arrive at the airport, wearables can inform the user about potentially hazardous weather conditions or health, thus limiting the negative outcomes from an upcoming event. This is just one of the many possibilities of how wearables can be used. Two US- based Insurtech companies like ‘Cigna’ and ‘Oscar’ connect the high volume of users to the amount of walked steps, sports activities etc. Wearables enable insurers to gather a large amount of information regarding biometrics of in- dividuals from the pulse, activity levels, sleep cycles, skin temperature, and blood chemical element levels. Insurers might use them to provide personalised sugges- tion and solution that might benefit the Incumbent-custom- er relationship. The definition of wearables has shifted primarily from ‘watches’ that have been available to the general population as early as in the 16th century, to electronic devices that might directly collect biometrical data from individuals for mostly recreational use. With the introduction of Smart- watches by Apple in 2015, it emerged towards mainstream technology from professional sports and health-tech. Wearables have the potential to impact the insurance eco- system in a significant way, as they allow the shift from ‘reactive service’ in which the customer engages with the Insurance company after an occurrence to possibly allow the customer to take countermeasures before an accident might take place. Similar to app services from different airlines that inform the customers that a connection has advanced automation solutions based on APIs and work- flow management. Examples of typical activities suitable for RPA processing is the creation of invoices and handling various types of registrations of applications, agreements and master data. RPA has the capacity to provide excellent output for both customers and data collection but is only as good as the quality of the data input - as its crucial foundation remains on clear, structured data and predefined parameters and Robotic Process Automation (RPA) focuses on the rap- id automation of repeatable, primarily internal, business processes using software robots. The major objective is to assess the support ‘knowledge workers’ by removing re- petitive, replicable, and routine tasks. Basic RPA solutions mimic a human user interaction via the graphical user in- terface (GUI) of the business application. This is very use- ful for labour intensive operations in combination with an older legacy software architecture not adapted for more rules. RPA might be an excellent tool to monitor transac- tions and flag potential unexpected developments that re- quire a human-based manual review. With RPA growing more mature and advanced over the years it has morphed into the concept of Intelligent Pro- cess Automation (IPA). IPA is an emerging set of new tech- nologies that combine fundamental process redesign with robotic process automation and machine learning (Berutti et al., 2017). • Advanced RPA: Being able to connect and interact with relevant software applications like Enterprise Resource Planning Systems (ERP), service desks, databases, and other business applications. • Smart Workflow: A process-management software tool that integrates tasks performed by groups of hu- mans and machines (sitting on top of RPA to help man- age the process) (Berutti et al., 2017). • Artificial Intelligence (AI), Machine Learning (ML), Advanced Analytics: Utilizing algorithms that identify patterns in structured and unstructured data, through “supervised” and “unsupervised” learning. Allows mak- ing predictions based on new inputs on their own and to provide insights on recognized patterns. Machine learn- ing and advanced analytics could be a game changer for insurers, for example, in the race to improve compliance, reduce cost structures, and gain a competitive advan- tage from new insights (Berutti et al., 2017). • Natural-language generation (NLG): Software engines that create seamless interactions between humans and technology by following rules to translate observations from data into speech or text -based communication. (Gavs, 2018) • Cognitive agents: Technologies that combine machine learning and natural-language generation to build a completely virtual workforce (or “agent”) that is capa- ble of executing tasks, communicating, learning from data sets, and even making decisions based on “emotion detection.” (Gavs, 2018) 2. Robotic Process Automation & Intelligent Process Automation PhotobyLukeChesseronUnsplash PhotobyThomasKolnowskionUnsplash
  19. 19. 36 37 3. Open APIs The introduction of ‘Application Programming Interface (API)’ empowered the interlinking of different IT frame- works or applications, as well as enabling them to utilise each other’s resources. Creation of an intersection be- tween different Information Systems, with the help of APIs, continues to facilitate and create an efficient connection between, for example, Incumbents of Insurtech compa- nies increasing availability on well described open APIs might provide connections which allow them to facilitate cross-sectional partnerships interlinking traditional insur- ance providers to services collecting biometric data, weath- er forecasts, and government systems. The legacy systems of Incumbents in the insurance indus- try, fast-growing disparities between the customer trends in the area of personalisation of insurance services. Fur- thermore, the increased importance of price-aggregation portal indicates a shift from ‘online desired’ to ‘online only’ customer interactions. Today’s solutions allow customers to compare the premiums of different insurance providers. Customer behaviour has shifted to a pre-purchase, online comparison of available Incumbent’s services and phone contacts with chosen providers to compare multiple offer- ings. After initial phone calls, customers still tend to return to the online process to complete a particular agreement. Such ‘online>phone>online purchasing process’ displays difficulty in comparing offerings. Similar to experiences from the banks, in which retail customers rarely visit branch offices after the initial account opening. The ‘Online-Only’ shift puts a stronger pressure on the Incumbent – client re- lationships, as well as the need of Incumbents to avoid the so-called ‘race to the bottom’ fostered by platforms offer- ing price-aggregation services that often show the lowest price at the top of the comparison engine. 81% of Insurtech founders denied in a recent study that management Incumbents are doing enough to foster ef- fective collaboration with Insurtech companies (Insurtech Australia, 2018). Due to complex challenges specified in the next section, both Insurtech companies and Incumbents face difficulties in fostering effective cooperations with each other. Finding a new avenue of partnership between different players in the regional and Nordic ecosystems might be at the core of value creation for customers which have not been explored adequately. 4. Online-Only Customers 5. Improving the Incumbent – Insurtech cooperation Example The easy accessibility of API has been at the core of the business model of the US-based Insurtech company ‘Lemonade’. The Insurtech allows, for example, creation of a multisided platform for renters and homeowners to integrate Lemonade while the user signs up with the app, the company connects to other services via API in order to match the current condition of building with a particular risk premium (Sclafane, 2017). PhotobyBrookeLarkonUnsplash
  20. 20. 38 39 Initially, cloud providers focused on providing computing, storage, and networking capabilities to their customers. This continuously expanding infrastructure allowed for smaller players to access large scale infrastructure ser- vices for a fraction of the price, thanks to a pay-as-you-go model. This contributed to increased innovation, as smaller players could create new services and access large swathes of customers globally. It also allowed for a faster pace of in- novation as ideas could be quickly tested using public cloud resources without the need to order new infrastructure (i.e. servers). However, the game is changing. With the global and more mature infrastructure in place, the cloud providers compete on managed services which free even more of the customer’s resources to focus on experience and in- novation. Cybersecurity was among the first elements that cloud providers focused on, as providing a secure environment and helping individual customers to achieve sufficient levels of security was essential in building trust both with the regulators and larger Incumbent customers and Insurtech companies. With their new managed ser- vices, the cloud providers take even more responsibilities in handling the infrastructure on which customers host their applications. For example, they will update the patch servers to make sure the latest security is enabled. Alternatively, they will even get rid of the servers altogether and provide “server- less” infrastructure where the Insurtechs will deploy a code that runs seamlessly. Machine Learning (ML) and Artificial Intelligence (AI) are growing trends and cloud providers are focusing on extensive models and algorithms customers can use to work their data. Again, this allows for even fast- er innovation by reducing costs and putting ML/AI capabil- ities in the hands of a growing number of developers. These capabilities serve as enablers of both new startups and new services in the “data-heavy” and traditional in- surance industry. This trend pushes Incumbents to adopt the cloud at a faster pace with the goal of staying ahead of the competition. However, the task is not easy, with In- cumbents often sitting on legacy systems or having to mod- ernise their applications to access the benefits of the cloud and satisfy the regulators in terms of compliance. The insurance industry has historically been rather con- servative when it comes to the adoption of public cloud- based infrastructure. These reluctance has been connect- ed to many factors. One of which has been the pressure of, for example, Swedish Financial Supervisory Authority (FI) (SE. Finansinspektionen) and Swedish Data Protection Authority (DPA) (SE. Datainspektionen) for the companies to be compliant with national or European regulation (like GDPR). However, as not all cloud providers have their HQ in Europe, they are subject to, for example, the US ‘Cloud Act’. In short, the Cloud Act stipulates that US authorities may require access to data of companies or individuals users even if they are placed in countries - as long as the provider is a US based company. Furthermore, already in 2015, nine million data centres accounted for greenhouse gas emissions similar to the entire aviation industry (Vaughan, 2015). According to a Clicking Clean report published by Greenpeace in 2017, 30% of Amazon Web Services Data Centers and 31% of Microsoft data centres are still powered using coal energy (Greenpeace USA, 2017). There is a need for reflection on the public cloud providers and their environmental aspects as well as closer collaboration between the insurance in- dustry. The collaboration of Insurtech ecosystem and the regulatory authorities is crucial to fully migrate and take advantage of the promised advantages of cloud technology. Example - Cystellar Cystellar is a UK-based, cloud-based data analytics platform that has been built to improve data-driven decision making. This startup serves as Insurers in the area of agriculture to help farmers avoid damaging natural events using satellites and drones, and also integrating it with geo-referenced data. The aggregation of the data on the cloud allows real-time integration of different databases, providing an efficient underwriting of weather-related claim thanks to before-and-after analysis, automated post-event loss assessments, and claim adjustment system (, 2018). “Four years ago, as an IT Security specialist in one of the Nordic Fintech Unicorns, I was doing my best to find different reasons why our products should not be moved to any public cloud providers. After closely reviewing the cyber security services of one of these providers, I realised that due to budgetary and organisational restric- tions, it would be nearly impossible for a Fintech or Insurtech company to have the same level of security in a traditional datacenter environment.” — Georgios Kryparos, Head of Security at Tink 6. Cloud Infrastructure Providers
  21. 21. 40 41 7. Conversational Interfaces 8. DecentralisedLedgerTechnology(DLT) Conversational Interfaces (CI) – focus on the understanding of the request received by a user and to process it in the shortest and most efficient way. Typically CI is powered by advanced technologies like Artificial Intelligence (AI), Machine Learning (ML) and Natural Language Processing (NLP). This is different from the internal processes of an Robotic Process Automation (RPA) like ‘invoice creation’, which are based on ‘automation’. Furthermore Conversational Interfaces, which are sometimes simplified to the term ‘chatbots’ are mostly directed towards the external user. The overall goal of CI is to provide answers and are not executing internal processes. Conversational Inter- faces are designed to follow pre-programmed detailed rules, performing natural language processing, and trying to under- stand and evaluate questions. In the area of Insurtech, chatbots might lower costs and in- crease the user experience in the automated underwriting process. Such an increase would be achieved through the in- teraction of chatbots with a prospective customer acting as an assistant and asking questions, eventually leading towards a tailored, personalised insurance offering for a client. Reflecting on the recent development in the area of ‘home assis- tants’ like Alexa, Homepod or Google Home which allow com- puters to execute processes like buying items on an online plat- Blockchain Technology can be described as a new type of ‘digital infrastructure’ that can best be referred to as a vis- ible public database (for example, in the form of an Excel spreadsheet) into which different types of users might pro- vide data entries, but nobody can erase them. Any change or distribution from its creation until the present can be validated, registered, and traced on a Blockchain ledger. Despite the early stages of the usability of Blockchain In- formation Technology in the insurance industry, it might re- duce operational costs, provide additional customer-specif- ic information, more extensive risk evaluation and improve efficiency. Similar to the location of the different servers on the Internet, Blockchain works based on a decentralised cooperation. Effective usage of Blockchain Technology might, in the future, replace infrastructure from clearing banks and in- crease data security, as different databases could be placed and validated on decentralised computers. The insurance industry could benefit from the usage of Blockchain, for example, while executing what is called ’smart contracts’, form of one’s choice, this could blur the lines between RPA and Chatbots further. A good example of this is the Google Duplex, a voice based fully digital assistant for booking appointments. In not-a-distant future retail customer could use their home-assistants devices (like Google Home) to aggregate Insurance offering. Such a possibility might shift the interaction points away from price aggregation platforms. which would allow them to run contracts between partners allocated independently from their different geographies, increasing the transaction speed and reducing distribution costs. Blockchain Technology, because of its novelty and the ‘leg- islative and regulatory delay’, might face some discrepan- cies between the current stage of technology and current regulatory framework. An example of such a regulatory challenge has been the recent national implementation of ‘The General Data Protection Regulation (GDPR)’ precisely Art. 17 – Right to erasure (or better known in the industry as the so-called: ‘right to be forgotten’). Using the national implementation of the GDPR directive, each user has the right to request a website on which personal data has been collected (for example an Insurtech company) to erase the user’s personal data. Due to the irreversibility of data en- tries, Blockchain technology caused legal disputes about how such ‘right to forgotten’ should be executed (Finck, 2018). PhotobyAustinDistelonUnsplash PhotobyDonaldGiannattionUnsplash
  22. 22. 42 43 Whatisintra-organisationalcooperation? In the era of increasing global online competition, innovative busi- nesses are developing new collaboration systems that go beyond the earlier concept of open innovation (Turiera & Cros, 2013). One of such type of collaboration is intra-organisational cooperation. It has been defined as “a cooperative, inter-organisational rela- tionship that is negotiated in an ongoing communicative process, and which relies on neither market nor hierarchical mechanisms of control” (Hardy, Phillips, & Lawrence, 2003, p. 323). These corporations can be in the form of alliance, partnerships or joint ventures (Shi, Sun, & Prescott, 2012), buyer-supplier agreements (McCutcheon & Stuart, 2000), networks (Phelps, Heidl, & Wadhwa, 2012), R&D alliances (Eisner, Korn, & Rahman, 2009), licensing, co-branding, franchising, and trade associations (Parmigiani & Ri- vera-Santos, 2011). This collaboration between business competitors is also called coopetition (Gast, Filser, Gundolf, & Kraus, 2015). In such coop- eration, businesses combine their specialised skills to form a sym- biotic relationship (Turiera & Cros, 2013). In these relationships, businesses from different industries align their resources to achieve the goal of developing new products, services, and pro- cesses to achieve a sustainable competitive advantage. Sharing resources like technologies and expertise ultimately enhances the value of the product on offer (Faems, Looy, & Debackere, 2005; Turiera & Cros, 2013). Such business-to-business collabo- rations have sometimes been phenomenally successful (Altringer, 2013). A Nordic example of such coopetition is Combient, which brands itself as a leading cross-industry collaboration network in the Nordics and – dedicated towards the coop- eration between Incumbents and startups in the area of Financial Services. To expand the existing pieces of knowledge in this field, during the preparation for both this report as well as the Sthlm Fintech Week, a significant number of interviews were conducted with represen- tatives of startups and Incumbents in order to understand the un- derlying challenges in cooperation and coopetition between them; a process known as intra-organisational cooperation. NORDIC STARTUPS’ CHALLENGES WHILE WORKING WITH INCUMBENTS PhotobyBenKoldeonUnsplash STARTUP PERSPECTIVES
  23. 23. 44 45 In intra-organisational cooperation, companies belong- ingtosimilarorevendistantindustriesarecollaborating systematicallywithothercompaniestheyneverthought about before (Turiera & Cros, 2013). Turiera and Cros (2013) noted that some such relationships develop by chance, while others are the product of the systematic exchange between companies. Developing such a mutu- ally beneficial relationship is a complex process, but it is crucial for radical innovation, customer service, or new product or service development (Turiera & Cros, 2013). (Baum, Calabrese, & Silverman, 2000; Wevers, 2007). startups, in their nascent stages, need to use their re- sources and capabilities efficiently despite their various limitations(Paradkar,Knight,&Hansen,2015).Coopeti- tioncanbearesourcefulcapabilityforthestartup(Teece, 1992). Partnership with larger firms also presents risks, as the startups are usually immature and the more ex- perienced competitors may take advantage of their inexperience in negotiations (Guimarães et al., 2016). Most research on coopetition studies large firms while there is a dearth of literature in the case of startups (Gast et al., 2015). Bouncken et al. (2015) mentioned that future research should analyse to what extent coopetition can help startup’s growth and success and when, how, and why startups should engage in coope- tition. Bouncken et al.’s (2015) guideline was used to conduct interviews with both startups and Incumbents to investigate the challenges in collaboration between Incumbents and startups in Financial Services. Being creative and innovative is not the only priority for startups (Altringer, 2013). Turiera and Cros (2013) compiled 50 examples of such businesses. They noted that in the current global market, even the startups have to collaborate, and sometimes even with large Incumbents. For innovative startups, innovation and collaboration is the “inseparable pair” (Guimarães, Cas- tro-Gonçalves, & Vale, 2016) Incumbents establish relationships with universities and research labs to develop new technologies (Van- haverbeke, 2005). They can even acquire other tech- nology-based startups to obtain new technologies (Vanhaverbeke, 2005). Contrarily, research shows that resource-constrained startups are more innova- tive in managing their resources as compared to large, well-resourced companies. This is because constraints lead them to focus on their core-advantages and ex- periment with the options available, instead of taking the conventional path (Altringer, 2013). Due to lesser constraints and lack of bureaucratic processes which are present in the larger companies, startups can de- velop new products or services relatively quickly (Basu, Phelps, & Kotha, 2009). Collaborations and alliances among startups and large Incumbents develop a ‘lo- cus of innovation’, especially in high-technology fields “Insurance companies are willing to take the next steps. It would be useful to find a way to inform them of startup account internal processes as well as clarify the expecta- tion towards them (e.g. development stage, needed certificates, and proof of concept” —Jason Coombes, Chief Operation Officer at Zignsec PhotobyPriscillaDuPreezonUnsplash Example - Vilardell Purtí Example-Starbucks&Square An example of such collaboration purposely chosen outside of Insurtech area is: Vilardell Purtí, a business based in Barcelona, which manufactures high-quality and high precision screws with small dimensions for automotive, home appliances, and aerospace industries. In the early 2000s, the company developed its high-precision dental implant using their screws technology. Strategic collaborations with CORE3D for the production of custom- ised implants which were modelled through digital scans and made of new materials. This has also sent a positive indication to old clien- tele, such as the automotive industry, which now sees Vilardell Purtí as a company which can produce even more sophisticated and pre- cise parts (Turiera & Cros, 2013). An example of such type of partnership in the fi- nancial area is the connection between Square (a startup in the field of mobile payments) and Coffeehouse Chain Starbucks. The collaboration aims at introducing a technological innovation into the daily coffee buying routine of the users. Square aims to replace credit card payments to help businesses avoid high fees for minor amounts of bills. In 2010 Square, designed an add-on device that transforms an iPad or smartphone into a cash register in return for a fixed percentage (2.75% of total turnover). Starbucks invested US$25 million in Square and its CEO, Howard Schultz, joined the startup’s board (Turiera & Cros, 2013).
  24. 24. 46 47 Representatives from the startup communities have raised the problem of not being able to identify which department or who would be an ideal first point of contact on the side of the organisation. Startup founders specified unique points of contact from sending a Pitch-Deck to the general email address, the customer service address, and finding repre- sentatives of relevant social media pages and contacting them directly. Only a few banks and insurance companies have a dedicated webpage for Fintech or Insurtech com- panies, with a dedicated email address and cooperation requirements. Best practices - SPP SPP, an Incumbent in the occupational pension market in Sweden, created an email as a single point of contact to the organisation for startups which desired to launch a potential coop- eration. During interviews with Nordic startups – (27) leading coop- eration challenges have been discovered that hinder part- nerships with Incumbents. The following four challenges have been mentioned more frequently than others: 2. Black-Boxes 4. Uncertainty about Expectations Companies which did define their cooperation with Incumbents as a success provided ranges from 12– 36 months from the time when they have re- ceived first letters of intent and created of a partic- ular road map up to a fully concluded partnership. Startup representatives found it difficult to assess both potential timelines, as well as the potentially needed allocation of resources to launch a possible cooperationwithanIncumbent. Startups express a potential lack of transparency about the internal processes that are taking place once the Incum- bents have received their Pitch-Deck. Some founders ex- pressed their experience as ‘extremely frustrating’ as they have been contacted by various individuals within the cor- porate organisation of Incumbents, often asking very similar questions with short deadlines. Founders experienced diffi- cultiesinassessingthestageofaparticularapprovalprocess the cooperation is being at – what might be the next step or how many due-diligence procedures are there in total. Startup founders have difficulties in assessing when their particular idea, product, technology or service ‘is being considered as developed enough’ to reach out to an Incumbent. Some founders, which just passed the ‘pre-seed stage’, received feedback that their development stage is not suf- ficient enough. On the other hand, other found- ers whose startups passed ‘Series A’ have been informed to be too advanced for a specific accel- eration program – because of the scope of their offering. “The Nordic countries launch some of the most effective cooperations in the North- ern Hemisphere, but large In- cumbents have an often not only technical legacy-sys- tem but also an organisation-legacy-systems. Often, different departments are being engaged in concluding a partnership with a startup; each department tends to perform its own small due diligence process on a start- up. What is needed is a process that is similar to a book- let to sell a Real estate which is often being handed out to sellers by a Real estate broker. It starts with: “You are here”, and there are X processes in front of you that might take Y amount of time. To reach step one – please prepare and send the following documents there (…).” — Richard Rosenholz, Chairman of the Nordic RegTech Association 1. Lack of a single point of contact for startups 3. Time PhotobyyanalyaonFreepik
  25. 25. 48 49 INCUMBENTS PERSPECTIVES Often represent outdated core system or insurance companies, which have been created in a programming language like ‘Cobol’, that has been in use – long before the period of the internet – yet remain in use. Due to outdated legacy systems, often despite the best will of the Incumbents, any technical integration might be clos- er to impossible to achieve. During interviews with representatives of Incumbents active in the area of financial services, (57) leading cooperation challenges have been defined which hinder them in cooperating with start- ups; the following five challenges have been mentioned more frequently than others. “Today in banking architecture business stakehold- ers are struggling to fulfil modern era TOM (Target Operational Model) where entire landscape must become “digital”. In-house IT departments are overloaded with an effort to support legacy sys- tems and fulfil regulatory requirements. In this situation, typical digitisation projects have to switch to systems and applications developed externally due to time and budget pressure. In fact, due to high marginal costs of internal IT the most logical is to tightly cooperate with efficient Fintech, in different forms. Although that is just the first step and not productive due to “low-level start” and frequent mismatch of ideas to what corpo- rate need. What would be more practical and cost efficient – to find for corporate directly Fintech partner in a specific area that fits their TOM.” — Sergey Fedorovich, Enterprise Architect at BNP 1. Legacy systems PhotobyMikitoTateisionUnsplash NORDIC INCUMBENTS’ CHALLENGES WHILE WORKING WITH STARTUPS
  26. 26. 50 51 2. Confusing Technology with Solution 3. Proven Development Partners 4. Openness Representatives of Incumbents voiced their concerns that different management teams are focused on re- placing one ‘core system’ with ‘another core system’ in- dependently of the current market situation. Replacing systems or introduction of the Blockchain technology are examples of Digital Information Technology (DIT) which might be viewed as ‘pieces of infrastructure’ or technology but not as a ‘solution’ replying to the shifts in customer behaviour. As Incumbents work nearly exclusively with a handful of partners developing their core infrastructure, In- surtech companies have difficulties in entering this ‘ex- clusive club’. Furthermore, current software providers have created a high barrier to entry with complex and not accessible APIs which hinders efficient cooperation. Incumbents express a general openness towards In- surtech companies but only rarely scout for them ac- tively or express their needs. In case Insurtech compa- nies are approaching Incumbents, they are sometimes stuck because of the communication issues between different departments. Only a few Incumbents have teams which actively en- gage with the ecosystem outside of its own organisational boundaries, contrary to the Banks that have allocated their Business Ventures teams in co-working and co-creation spaces. The traditional Insurance companies maintain their innovation-labs mostly in-house and engage only infre- quently with the ecosystem. Furthermore, interviewees stated that in case they desire to bring in expertise into their networks, they interact with consultants and less with rep- resentatives of academia or Insurtech companies. 5. Lack of Communication with Ecosystem PhotobyrawpixelonPexels
  27. 27. UNDERSTAND THE PROBLEM USE ACADEMIC SOLUTIONS DON’T INVENT THE WHEEL AGAIN SPEAK TO INDUSTRY EXPERTS + TRUST + TRANSPARENCY + LOW POWER DISTANCE #HOW TO WORK TOGETHER 1. 2. 3. 4. 5. 52 53 InnoBridge – a Stockholm based non-for-profit that has been founded based on the results of this first Nordic Insurtech Report. The goal of InnoBridge is to enable efficient cooperation between Incum- bents and startups with the focus on the challenges faced in the Financial Services industry. Using the accumulated knowledge of InnoBridge team members collected during years of coopera- tion in corporations, startups, academia, journalism, information technology and investments, the goal is to support Incumbents to implement innovation from startups into their core systems with the help of trusted information technology providers. Inno- Bridge includes not only the results out of the new- est research in the area of intra-organisational co- operation, piles of interviews with representatives of the ecosystem, but also a review of the different accelerators as well as an investigation in the failed Stockholm Fintech Hub – to not repeat its mistakes. “While forming the building blocks for InnoBridge we have gone through a systematic pro- cess of not only analysing the startup ecosystem and the Incumbents, but we have also focused on listening to their challenges. We aim to drive innovation while at the same time building virtual bridges betweenthesetwo very different membersof the ecosystem. While investigating different players in the ecosystem, we have understood the lack of efficient cooperation between startups and Incumbents is genuinely global. As many coun- tries look up to the Nordics, it might be high time to under- stand that nobody will resolve this problem for us and that possibly we might lead the pathway and present a tangible solution with global aspirations“. —Jacob P. Strauss, Chairman of InnoBridge CONNECTING INCUMBENTS AND STARTUPS IN A STRUCTURED WAY Case Study of InnoBridge
  28. 28. SMOOTH USER EXPERIENCE FOLLOWING BEST PRACTICES IN USER EXPERIENCE SIGNIFICANT AMOUNT OF COMPLEXITY INVISIBLE FOR THE USER #PROPOSED SOLUTION OF INNOBRIDGE 54 55 Due to the dynamic nature of the Nordic Insurtech eco- system, the scouting for available companies has been executed using the ‘External Desk Research’ method outsideoftheorganisationalboundaries,whilecollecting relevant pieces of information with the following steps: First, data about Insurtech companies have been ex- tracted from previous reports as well as data sources like Crunchbase, Nordic Tech List or LinkedIn. Secondly, members of Nordic Fintech Hubs and Accel- erators connected to the organisers of the Sthlm Fin- tech Week and InnoBridge have been providing links to available lists and databases. Thirdly, the predefined list has been validated with members of the Fintech and Insurtech community before and after the conferences. More than 72 com- ments have been incorporated into the taxonomy be- fore and after the Sthlm Fintech Week 2019. Lastly, the remaining companies have been anal- ysed by authors, co-authors, and supporters, who clustered them into different subcategories for vi- sualisation purposes. Companies that have not been formed, have a sales officer or a smaller daughter company have been erased. Companies like the Ice- landic ‘Klavier’ that had very little amount of infor- mation available on them in public sources, had to be further investigated with members of the local community and VC investors. Through this process, the pieces of information available online or in com- pany’s registration sufficient information was gath- ered to place the company in a particular subdivision. As ‘only’ 72 Insurtech companies in the Nordics were found and segmented, the results might be defined to be a total ‘n’. Due to limited numbers of companies, each new entry might have a substantial impact on average and median values. Displayed data might be used and quoted for indication purposes. It is to be ensured not to extrapolate from incomplete data. Insurtech in the Nordics remains on a slow but steady development path. Based on the complexity of insur- ance, there are high barriers to entry for new Insurtech companies. Those high entry barriers connected with the complexity of the industry are potentially one of the drivers of the mature age of the Insurtech found- ers who are on average 46.7 years old. Reflecting on the lack of balance in the gender between male and female CEOs in Insurtech as well as the 84 problems spotted which hinder cooperation between Insurtechs and Incumbents, this might be at the focus of both the upcoming Sthlm Fintech Week, InnoBridge as well as a potential focus area within the industry for the forth- coming months. METHODOLOGY AND LIMITATIONS CLOSING REMARKS The InnoBridge process includes a comprehensive de- scription of the problem faced by an Incumbent. Start- ups will be able to send a solution proposal. During a structured review of the solutions proposed by the startups performed by a team of core system provid- ers, experts in the area of marketing offering & prod- uct-market fit a review in the field of legal and compli- ance. Accepted startups will receive support to process their services into the core system of Incumbents pri- marily in the area of Insurance and Banking as a first step. Currently, as the foundations of InnoBridge are being laid; missing competencies are being added to the team. The goal of the foundation is to create two initial small innovation calls in 2019 to test the displayed system. The outcome of InnoBridge for startups enables them to develop their product, service, and tech- nology to remain possibly upsold in the core-system used by Incumbents. Incumbents receive a new tool to incorporate innovation securely and efficiently. The efficiency of the ecosystem will increase; despite being world-leading in Innovation, the Incumbents have not yet facilitated efficient cooperation with startups. As it is a foundation in shaping, the most up-to- date cooperation system has been displayed on InnoBridge.Tech. Individuals that desire to contribute, and partners willing to participate in the initial calls can reach out to
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  30. 30. 58 59 NAME OF THE COMPANY SUBSEGMENT WEBSITE MALE / FEMALE CEO Advinans Distribution Male Algorithmica Risk Detection & Prevention Male BIMA Mobile Distribution Male Capin Solutions AB Risk Detection & Prevention Male Cloud Insurance Risk Detection & Prevention Male Comadso Distribution Male Compricer Customer Engagement Male Contemi Risk Detection & Prevention Male DDFinance Distribution Male Digisure Distribution Male Digitise Risk Detection & Prevention Male DXC Technology Risk Detection & Prevention Edlund Underwriting & Reinsurance Male Ekki Distribution Male Enerfy Risk Detection & Prevention Escali Risk Detection & Prevention Male Fair Crowdsurance Consumer Communities (P2P) Male Finmate Risk Detection & Prevention Male Försäkringsfabriken Risk Detection & Prevention Male Fullmaktskollen Distribution Female Gigga Distribution Female LIST OF NORDIC INSURTECH COMPANIES
  31. 31. 60 61 NAME OF THE COMPANY SUBSEGMENT WEBSITE MALE / FEMALE CEO Gobundl Consumer Communities (P2P) Male Greater Than Distribution Female Hedvig Distribution Male IBA Applications Underwriting & Reinsurance Male in4mo Distribution Male Infooverflow Distribution Male Insplanet Distribution Male Insurance Simplified Personalisation Male Insurello Claims Management & Processing Male InsureMyTrans Risk Detection & Prevention Male Insurino Customer Engagement, Distribution, Personalisation Male Itello Underwriting& Reinsurance, ClaimsManagementand processing,RiskDetection& Prevention Male Kasko Distribution Male Keylane Schantz Underwriting & Reinsurance Klavier Claims Management & Processing Male Lifeplan Distribution Male Matter Distribution Male Metaforce Customer Engagement Male Metafore Distribution Male Mono / Försäkringsarkivet Distribution Male NAME OF THE COMPANY SUBSEGMENT WEBSITE MALE / FEMALE CEO Next Risk Detection & Prevention Male Nis Risk Detection & Prevention Male Nore Tech Risk Detection & Prevention Male Paydrive Risk Detection & Prevention Male Penni Risk Detection & Prevention Male Pensiono Distribution Male Pensure Distribution Male Profit Software Underwriting & Reinsurance Male Resys Risk Detection & Prevention Roaring Risk Detection & Prevention Male Safe Stuff Personalisation Male Safety Wing Distribution Male Samlino Distribution Male Sharemyrisk Consumer Communities (P2P) Sky Forsikring Distribution Male SplitEx Consumer Communities (P2P) Male Teambrella Consumer Communities (P2P) Male Tia Technologies Underwriting & Reinsurance Male Tieto Risk Detection & Prevention, Claims Management and Processing, Underwriting and Reinsurance, Personalisation Male Tillit Forsikring AS Distribution Male
  32. 32. 62 In case of possible errors please contact: research@InnoBridge.Tech NAME OF THE COMPANY SUBSEGMENT WEBSITE MALE / FEMALE CEO Tribe Consumer Communities (P2P) Male Upptec Claims Management & Processing Male Vakuutuslaskuri Distribution Male Vitec/Capitex Risk Detection & Prevention Male WaterCircles Norge AS Consumer Communities (P2P) Male Webcap Risk Detection & Prevention Male Wellmo Personalisation Male Wisetalk Risk Detection & Prevention Male Yetz Distribution Male Zlantar Personalisation Male Zmarta Group Distribution
  33. 33. Michal Gromek Henrik Allert Matt Broniarek NORDIC INSURTECH REPORT May 2019