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CommerzVentures
Emerging Technologies Transforming the $4tn Insurance
Industry
A White Paper by CommerzVentures
Frankfurt, March 07, 2016
1CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
This document has been created and published by CommerzVentures GmbH
Disclaimer
This document is for information purposes only and does not take into account specific circumstances of any recipient. The information contained herein does not
constitute the provision of investment advice. It is not intended to be and should not be construed as a recommendation, offer or solicitation to acquire, or dispose
of, any of the financial instruments, companies and/or securities mentioned in this document and will not form the basis or a part of any contract or commitment
whatsoever. Investors should seek independent professional advice and draw their own conclusions regarding suitability of any transaction including the economic
benefits, risks, legal, regulatory, credit, accounting and tax implications.
The information in this document is based on public data obtained from sources believed by CommerzVentures to be reliable and in good faith, but no
representations, guarantees or warranties are made by CommerzVentures with regard to accuracy, completeness or suitability of the data. CommerzVentures has
not performed any independent review or due diligence of publicly available information regarding an unaffiliated reference asset or index. The opinions and
estimates contained herein reflect the current judgement of the author(s) on the date of this document and are subject to change without notice. The opinions do
not necessarily correspond to the opinions of CommerzVentures. CommerzVentures does not have an obligation to update, modify or amend this document or to
otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or
subsequently becomes inaccurate.
This communication may contain trading ideas where CommerzVentures may trade in such financial instruments with customers or other counterparties. Any prices
provided herein (other than those that are identified as being historical) are indicative only, and do not represent firm quotes as to either size or price. The past
performance of financial instruments is not indicative of future results. No assurance can be given that any financial instrument or issuer described herein would
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multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or
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CommerzVentures GmbH is registered in the Commercial Register at Amtsgericht Frankfurt under the number HRB 99403.CommerzVenures GmbH is a subsidiary
of Commerzbank AG. Commerzbank AG is supervised by both the German regulator, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer
Strasse 108, 53117 Bonn, Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main and the European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am
Main, Germany.
© CommerzVentures GmbH 2016. All rights reserved.
2CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
About this White Paper
This white paper was compiled by CommerzVentures, the FinTech
Venture Capital fund of Commerzbank.
Our goal is to give an overview of key technologies which we
believe will transform the insurance industry. We hope to provide
insights into their potential uses in the context of the insurance value
chain.
We hope that this will allow readers to better assess the
developments within the space.
We identified the top 50 startups in the industry. Contact us via
info@commezventures.com if you believe you should be one of
them.
3CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Executive Summary (1/2)
•  90 percent of all the data available worldwide was generated during the
last two years. New technologies enabling the generation and acquisition
of vast amounts of new data and powerful algorithms are about to
transform the $4tn global insurance industry beyond recognition.
•  The entire insurance value chain will be transformed by technological
innovations such as artificial intelligence, connected devices, drones, new
payments, and the blockchain. Entirely new value propositions and
distribution methods will be enabled.
•  There is a huge market for startups and incumbent insurers that embrace
the new technologies.
•  Relative to the market’s size we feel confident that InsuranceTech
startups should have absorbed twelve times more funding than they have
thus far.
4CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Executive Summary (2/2)
•  To capture this vast opportunity startups and incumbent insurers need to
establish effective cooperation models, leveraging each party’s key
strengths.
•  Effectively cooperating with startups may be the only way for incumbent
insurers to fend off potential competitors such as Google, Amazon,
Facebook and other non-traditional players.
•  By analyzing 500 InsuranceTech startups across the world,
CommerzVentures identified 50 companies that are especially well
positioned to drive innovation in insurance.
•  While one-third of these startups can be seen as disruptive to incumbent
insurers, most enable existing insurers to harness technology. Thus,
insurers have much to gain from fruitful collaboration with startups.
5CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
Startup Landscape
6CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
  Worldwide investments in FinTech companies with a clear focus on financial return.
  Directly reports to the management board of the Commerzbank AG. Commerzbank’s CEO
chairs the investment committee.
  Fast decision-making: Direct access to decision makers in all business units. Five deals
completed in Year 1.
  Team with more than 25 years of experience in venture capital. Co-invested with Index,
Kleiner Perkins, USV, Redpoint, Sequoia, A16z.
Announced investments
CommerzVentures at a glance
7CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Company background
 HQ in Heidelberg
 Founded: 2013
 Series A funding from CommerzVentures, b-to-v,
Acton Capital, Capnamic, Iris Capital and Partech.
 Operates in Germany. Works with 100+ insurance
companies.
Product/service
  Mobile application offering digital management and
optimization of consumers’ insurance policies across
multiple providers.
  Free for consumers, receives brokerage fees from
insurers.
Key innovations
  Easy and seamless integration of users’ insurance
policies in the app.
  Automatically discovers potential savings and
optimization of insurance coverage.
Our take-away
  User-friendly solution aiming to increase consumer
interaction with the insurance product.
  Targets relatively underserved markets such as young
professionals and first-time insurance seekers.
Insurance is one of our focus areas and GetSafe is our
first investment in the space
8CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
3.  Which Players Will Win?
Startup Landscape
9CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
InsuranceTech is one of the two major sectors within
FinTech
Source: Swiss Re, McKinsey
•  Lending
•  Retail Investments
•  Capital Markets
•  Payments/ FX
•  Banking Infrastructure
•  Distribution
•  Underwriting & Risk
•  Claims Management
•  Risk Capital & Investment
Management
FinTech
BankingTech InsuranceTech
10CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Source: World Economic Forum: The Future of Financial Services
“The most imminent effects of disruption will be
felt in the banking sector; however, the greatest
impact of disruption is likely to be felt in the
insurance sector”
11CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Insurance represents the largest long-term opportunity in
FinTech
Source: Swiss Re, McKinsey
Global revenue pools ($, bn)
Payments
Investment
Lending
Insurance
481
851
1,628
4,778
12CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Insurance CEOs feel more vulnerable to technological
disruption than other industries’ CEOs
Source: adapted from the PwC 2015 CEO Survey
Share of CEOs who see their industry vulnerable to disruption
Average of other major industries*
Banking & capital markets
Insurance
*automotive, retail, asset management, power & utilities, entertainment, pharma & lifescience, healthcare, and hospitality & leisure
60%
66%
73%
13CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
BankingTech InsuranceTech
Startup funding 2008-2015
($ bn)
Relative to industry size, InsuranceTech has received
12 times less funding than BankingTech
Banking Insurance
Global revenue pool 2014 ($ tn)
3.7
4.7
Source: Swiss Re, McKinsey, Accenture, CB Insights, VentureScanner
41
4.6
14CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
We see four generic opportunities for InsuranceTech
Source: Core Innovation Capital, Swiss Re
$3.1tn
1
2
3
4
Nature of opportunity Relevant revenue pool
$0.9tn
$0.7tn
New, tech-enabled products and business
models
Technologies to reduce risk/ number
of claims
Innovative distribution channels
Lower cost of claims processing
HUGE
15CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
3.  Which Players Will Win?
Startup Landscape
16CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Five rapidly emerging technologies are transforming
insurance
BlockchainNew Payments
• Usually based on smartphones or
card readers
• Allow quick mobile payments or
money transfers without traditional
banking
• A decentralized chain of timestamped
data blocks
• Data is automatically validated and
kept safe from alteration or tampering
Drones
•  Remote controlled or autonomous,
unmanned vehicles
•  Allow efficient oversight of individual
objects or large areas from a
distance
Artificial Intelligence
• Systems that autonomously adapt to
information and their environment
• Allows analyzing vast amounts of
data from disparate systems through
self learning algorithms
Connected
Devices
•  Includes all Internet connected
devices, i.e. wearables, smartphones,
cars, household appliances, collecting
personalized data
•  The collected data allows analytics
and informed decision making
17CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
New technologies will impact every aspect of the insurance
value chain
Source: Adapted from SMA Research, Innovation and Emerging Technologies Survey 2015, n=147 insurance executives surveyed analysis, and own analysis
Strong Impact
Moderate
Impact
New
Payments
Blockchain
Distribution
Underwriting
& Risk
Claims
Management
Risk Capital
& Investment
Management
Artificial
Intelligence
Drones
Outside of this white paper’s scope: Rather
related to asset management FinTechs
Connected
Devices
18CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
DronesConnected DevicesData from web and
internal sources
Connected devices and drones will provide new data
sources for the technologies transforming insurance
Claims
Management
Underwriting
& Risk
Distribution
•  Real-time
•  At point of demand
•  Triggered by rules or
consumer intent
•  Highly personalised products
•  Dynamic behaviour-based
pricing
•  Built-in-risk reduction
•  Faster, lower cost processes
•  Less fraud,
•  Improved customer
experience
Low cost, high
performance
computing
Data
Low cost
hardware
New
Payments
Artificial
Intelligence
Blockchain
19CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
I.  Artificial Intelligence
II.  Connected Devices
III.  Drones
IV.  New Payments
V.  Blockchain
3. Which Players Will Win?
Startup Landscape
20CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Predictive analytics goes a step further, extrapolating
trends to predict the future
Artificial intelligence offers customer-centric use cases in
insurance distribution
Insurance use casesTechnological capabilities
• Determining over which channel customers are most
responsive and can best be reached
• Deepening of customer relationships, through KYC
initiatives and personalized contact
• Evaluating expansion targets and better preparing new
market entries
Artificial Intelligence allows effective analysis of vast
amounts of data to gain new insights
• Matching different types of insurance to create holistic
insurance portfolios and automatically suggesting new
insurance policies to clients
• Effective determination of cross-selling opportunities for
proprietary or third party goods and services
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Artificial
Intelligence
21CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Predictive analytics goes a step further, extrapolating
trends to predict the future
Artificial intelligence offers various risk-reducing use cases
in underwriting and risk
Insurance use casesTechnological capabilities
• Assessing individualized data to improve risk models
o  Reducing capital set aside for future claims
o  Individualizing all customer insurance aspects
• Forming customer portfolios with negative risk correlation
• Analysis of internal procedures to speed up processes
and reduce costs
Artificial Intelligence allows effective analysis of vast
amounts of data to gain new insights
• Providing customers with individualized plans and
strategies to reduce risk
• Helping third parties, such as doctors, combat risks
before they even emerge
Artificial
Intelligence Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
22CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Artificial intelligence reduces costs and fraud cases in
claims management
Insurance use casesTechnological capabilities
• Analyzing fraud patterns and similarities to assess which
claims are likely to be fraudulent
• Efficient comparison of contractor quality and price
• Better interaction between customers and automated
communication systems (bots)
Artificial Intelligence allows effective analysis of vast
amounts of data to gain new insights
Predictive analytics goes a step further, extrapolating
trends to predict the future
• Predicting when and where claims are likely to emerge,
allowing more efficient capital allocation and payouts
• Automatic intelligent suggestions to clients during the
claim filing process
Artificial
Intelligence Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
23CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
I.  Artificial Intelligence
II.  Connected Devices
III.  Drones
IV.  New Payments
V.  Blockchain
3.  Which Players Will Win?
Startup Landscape
24CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Connected devices enable new business models and
communication channels in insurance distribution
Insurance use casesTechnological capabilities
• New business models, such as usage-based vehicle
insurance, become possible new offerings
• Winning low-risk customer segments with rewards for
“good behavior”
• Better insights into customer behavior and their attitudes
towards their insurer
Continuous measurement of individual data from
customers and their belongings (such as consumer
electronics or cars)
Seamless, detailed, continuous communication and
interaction with the insurer
• Push contextual insurance offerings to customers,
especially relevant for short-term instant insurance
• Offer new product bundles that combine insurance and
subsidized connected devices, to win over tech-
fascinated customer segments, such as millennials
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Connected
Devices
25CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Continuous measurement of individual data from
customers and their belongings (such as consumer
electronics or cars)
Seamless, detailed, continuous communication and
interaction with the insurer
Connected devices can help to improve models, decrease
risks, and create new products
Insurance use casesTechnological capabilities
• More precise and personalized risk models
• Personalized data allows insights as to how customers
can reduce risks
• Reduction of risks as devices prevent negative
occurrences, e.g. an internet-connected door detecting
robberies
• Giving customers tools to measure and improve their
health or uphold the performance of their belongings, on
a continuous real-time basis
• Creating products that are an integral part of customers’
lives
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Connected
Devices
26CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Continuous measurement of individual data from
customers and their belongings (such as consumer
electronics or cars)
Seamless, detailed, continuous communication and
interaction with the insurer
Connected devices can reduce fraud, while improving
customer experience in claims management
Insurance use casesTechnological capabilities
• Automated activation or validation of claims
• Existing fraud detection capabilities are improved and the
basis for new fraud detection capabilities is established
• Mobile-enabled claim activation and data input
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Connected
Devices
27CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
I.  Artificial Intelligence
II.  Connected Devices
III.  Drones
IV.  New Payments
V.  Blockchain
3.  Which Players Will Win?
Startup Landscape
28CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Efficient assessment of large areas or individual
objects without human proximity being necessary
Drones reduce costs and add efficiency in underwriting
and risk
Insurance use casesTechnological capability
• Substitute human with drone visits, for quicker, more
precise, and less costly underwriting inspections
• Using drones to provide data on a continuous basis to
allow for more precise analyses and predictions
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Drones
29CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Efficient assessment of large areas or individual
objects without human proximity being necessary
Drones improve capabilities while reducing costs in claims
management
Insurance use casesTechnological capability
• Substitute human with drone visits, for quicker, more
precise, and less costly claim inspections
• Increase inspections of lower-value items that would not
have been inspected previously, to reduce fraud
• Improved capabilities and reduced costs in post-
catastrophe claims settlement
• Decreased dependence on contractors’ assessments of
lower-value claims
Drones
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
30CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
I.  Artificial Intelligence
II.  Connected Devices
III.  Drones
IV.  New Payments
V.  Blockchain
3.  Which Players Will Win?
Startup Landscape
31CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Instant mobile payments with a cost structure that
makes transfers of minimal sums possible
New payments enable new business models and expansion
into new markets
Insurance use casesTechnological capability
• Expansion into and increased offerings in, emerging and
frontier markets as well as among the underinsured in
developed markets, as lower payment costs and
payments of smaller sums make these markets viable
• New business models such as short-term instant
insurance
• Insurance sales with connected devices as sales
channels
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
New Payments
32CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Instant mobile payments with a cost structure that
makes transfers of minimal sums possible
New payments offer more speed and security in claims
management
Insurance use casesTechnological capability
• Instant payments to customers as soon as claims are
validated
• New payout options, such as coupons
• Instant payments to contractors and claim adjusters
• Efficient cancellation of payments in case fraud is
detected
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
New Payments
33CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
I.  Artificial Intelligence
II.  Connected Devices
III.  Drones
IV.  New Payments
V.  Blockchain
3.  Which Players Will Win?
Startup Landscape
34CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Delivery of automatic trigger points for self-executing
contracts
Keeping data safe, validated, and time stamped
Blockchain technology allows contract automation and
increased security
Insurance use casesTechnological capability
• Full automation of claims processing and record-keeping,
drastically reducing fraud and speeding up processes
• Full automation of contractor and adjuster contracts
• Payment validation and documentation
• Heightened security of internal and external data as well
as processes
• Drastic reduction of paper based information and
processes
Risk Capital
& Investment
Management
Underwriting
& Risk
Claims
ManagementDistribution
Blockchain
35CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
1.  Market Opportunity
2.  Key Technologies Along the Value Chain
3.  Which Players Will Win?
Startup Landscape
36CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Incumbents, big tech companies, non-obvious entrants and
startups will shape insurance to varying degrees
Capital
Novel data
Historical data
Regulation
Innovative
capacity
Customer
acceptance
Business model
fit
• To assess what role each of the players is likely to hold, we compared the insurance-specific
strengths and weaknesses of each type of player
• The strengths and weaknesses are summarized along criteria essential to shaping the future of
insurance, in a radar diagram
37CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Incumbent insurers have recognized the potential of
technology, but are limited in their innovative scope
While incumbent insurers are willing to implement changes, they are likely to require
partners for innovation
Source: Bain & Company Global Digital Insurance Benchmarking Report 2015
• New technologies are often relegated to being topics of
future instead of current importance
• 60% of insurers feel they lack the internal capabilities
necessary to allow digital transformations
• Many insurers are limited in implementing technologies
due to legacy IT and paper-based infrastructures
• Insurers generally lack the ability to use data from new
sources such as social media or wearables
• Organizational inertia prohibits full-scale innovation
• Incumbent insurers possess capital, historical data sets,
regulatory knowledge, and a customer base, which
ensures them a major role
• Most insurers realize the potential and importance of
technology
• Some insurers have begun to actively search for and
integrate technology by directly investing in startups,
using accelerators, or by forming internal innovation
teams
Capital
Novel data
Historical
data
Regulation
Innovative
capacity
Customer
acceptance
Business
model fit
+ -Positive drivers Negative drivers
38CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
• Vast amount of consumer and GIS data, along with
cloud computing would allow insurance to be based on
more precise risk models, and to be sold using
contextual triggers
• These companies possess large, loyal customer bases
and understand customer needs
• Google has driverless cars and smart home devices,
while Apple has its Healthkit initiative, both of which
may serve as entry points
• Directly offering insurance would cannibalize
advertisement revenues and may not be a good fit for
brand images
• Strict unharmonized regulations make global expansion
difficult
• Building up historical data sets would take much time
• Insurance is not perceived as attractive to internal
engineering teams
• Limited commitment has been shown thus far
Big tech companies (Google, FB, Apple, Amazon) have vast
data resources, but are unlikely to fully enter the market
It is unlikely that big tech companies will enter insurance on a large scale, instead they
will form partnerships to create more accurate risk models
+
Capital
Novel data
Historical
data
Regulation
Innovative
capacity
Customer
acceptance
Business
model fit
-
39CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Telcos, vertical entrants and other financial service
providers will gain importance
Direct full scale entry is unlikely; however, limited-scope involvement is probable for all
of them
• They possess vast stores of data that can be used
to create more precise risk models
• Burdensome regulation, lacking historical data and
expertise, as well as unaligned business models
+
TelecomVertical
entrants
FS
providers
Capital
Novel data
Historical
data
Regulation
Innovative
capacity
Customer
acceptance
Business
model fit Telecom
Vertical entrants
Financial service
providers
-
• Burdensome regulation, lacking historical data and
expertise, as well as unaligned business models
• Involvement is legally prevented in many countries,
furthermore negative public images make competing
with established and trusted insurers difficult
• Some industries, such as the automobile,
healthcare, or real estate industries may directly
offer insurance related to their products
• Financial institutions posses the capital and data
related capabilities to become active in insurance
40CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
• Many startups have the capabilities and expertise
necessary to develop and market new technologies
• Systems and processes can be created from scratch
without preexisting legacy structures
• Many of the new insurance-shaping technologies
require limited capital and manpower to develop
• Startups understand and deliver customer centricity
• Funding for the InsuranceTech industry has been
increasing
• Regulatory requirements are very high, creating
significant barriers to full-scale entry
• Attaining the historical data to develop risk models is
challenging
• Regulation severely impairs expansion across
international and even intra-national state borders
• As insurance is largely based on trust there may be
some biases against young companies’ untested
concepts
Source: Bain & Company Global Digital Insurance Benchmarking Report 2015
Startups are best positioned to innovate, either enabling incumbent insurers or
disrupting individual parts of the value chain
Startups will drive innovation and form partnerships
+
Capital
Novel data
Historical
data
Regulation
Innovative
capacity
Customer
acceptance
Business
model fit
-
41CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Contents
About CommerzVentures
Our View on InsuranceTech
Startup Landscape
42CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Characteristics of promising InsuranceTech
startups
• Impact: potential either to enable or disrupt the
insurance value chain by using technology
• Focus: Innovative and clearly defined business model
• Setup: Young and independent companies led by
entrepreneurs
• Outlook: Successful exit conceivable for (prospective)
investors
CommerzVentures identified the 50 most transformative startups along the
insurance value chain; contact us if you think that you should be one of them
43CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016
CommerzVentures
Most of the 50 leading InsuranceTech startups are active in
distribution and enable insurers, rather than disrupting them
50%
32%
13%
5%
Share of startups along the value chain
Distribution
Underwriting & risk
Claims management
Risk capital & investment management
68%
32%
Share of enablers vs disruptors
Enablers Disruptors

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CommerzVentures' white paper on InsuranceTech

  • 1. CommerzVentures GmbH – confidential CommerzVentures Emerging Technologies Transforming the $4tn Insurance Industry A White Paper by CommerzVentures Frankfurt, March 07, 2016
  • 2. 1CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures This document has been created and published by CommerzVentures GmbH Disclaimer This document is for information purposes only and does not take into account specific circumstances of any recipient. The information contained herein does not constitute the provision of investment advice. It is not intended to be and should not be construed as a recommendation, offer or solicitation to acquire, or dispose of, any of the financial instruments, companies and/or securities mentioned in this document and will not form the basis or a part of any contract or commitment whatsoever. Investors should seek independent professional advice and draw their own conclusions regarding suitability of any transaction including the economic benefits, risks, legal, regulatory, credit, accounting and tax implications. The information in this document is based on public data obtained from sources believed by CommerzVentures to be reliable and in good faith, but no representations, guarantees or warranties are made by CommerzVentures with regard to accuracy, completeness or suitability of the data. CommerzVentures has not performed any independent review or due diligence of publicly available information regarding an unaffiliated reference asset or index. The opinions and estimates contained herein reflect the current judgement of the author(s) on the date of this document and are subject to change without notice. The opinions do not necessarily correspond to the opinions of CommerzVentures. CommerzVentures does not have an obligation to update, modify or amend this document or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. This communication may contain trading ideas where CommerzVentures may trade in such financial instruments with customers or other counterparties. Any prices provided herein (other than those that are identified as being historical) are indicative only, and do not represent firm quotes as to either size or price. The past performance of financial instruments is not indicative of future results. No assurance can be given that any financial instrument or issuer described herein would yield favourable investment results. Any forecasts or price targets shown for companies and/or securities discussed in this document may not be achieved due to multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by CommerzVentures or by other sources relied upon in the document were inapposite. Neither CommerzVentures nor any of its respective directors, officers or employees accepts any responsibility or liability whatsoever for any expense, loss or damages arising out of or in any way connected with the use of all or any part of this document. CommerzVentures may provide hyperlinks to websites of entities mentioned in this document, however the inclusion of a link does not imply that CommerzVentures endorses, recommends or approves any material on the linked page or accessible from it. CommerzVentures does not accept responsibility whatsoever for any such material, nor for any consequences of its use. The manner of distributing this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves about and to observe such restrictions. By accepting this document, a recipient hereof agrees to be bound by the foregoing limitations. CommerzVentures GmbH is registered in the Commercial Register at Amtsgericht Frankfurt under the number HRB 99403.CommerzVenures GmbH is a subsidiary of Commerzbank AG. Commerzbank AG is supervised by both the German regulator, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Strasse 108, 53117 Bonn, Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main and the European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany. © CommerzVentures GmbH 2016. All rights reserved.
  • 3. 2CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures About this White Paper This white paper was compiled by CommerzVentures, the FinTech Venture Capital fund of Commerzbank. Our goal is to give an overview of key technologies which we believe will transform the insurance industry. We hope to provide insights into their potential uses in the context of the insurance value chain. We hope that this will allow readers to better assess the developments within the space. We identified the top 50 startups in the industry. Contact us via info@commezventures.com if you believe you should be one of them.
  • 4. 3CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Executive Summary (1/2) •  90 percent of all the data available worldwide was generated during the last two years. New technologies enabling the generation and acquisition of vast amounts of new data and powerful algorithms are about to transform the $4tn global insurance industry beyond recognition. •  The entire insurance value chain will be transformed by technological innovations such as artificial intelligence, connected devices, drones, new payments, and the blockchain. Entirely new value propositions and distribution methods will be enabled. •  There is a huge market for startups and incumbent insurers that embrace the new technologies. •  Relative to the market’s size we feel confident that InsuranceTech startups should have absorbed twelve times more funding than they have thus far.
  • 5. 4CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Executive Summary (2/2) •  To capture this vast opportunity startups and incumbent insurers need to establish effective cooperation models, leveraging each party’s key strengths. •  Effectively cooperating with startups may be the only way for incumbent insurers to fend off potential competitors such as Google, Amazon, Facebook and other non-traditional players. •  By analyzing 500 InsuranceTech startups across the world, CommerzVentures identified 50 companies that are especially well positioned to drive innovation in insurance. •  While one-third of these startups can be seen as disruptive to incumbent insurers, most enable existing insurers to harness technology. Thus, insurers have much to gain from fruitful collaboration with startups.
  • 6. 5CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech Startup Landscape
  • 7. 6CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures   Worldwide investments in FinTech companies with a clear focus on financial return.   Directly reports to the management board of the Commerzbank AG. Commerzbank’s CEO chairs the investment committee.   Fast decision-making: Direct access to decision makers in all business units. Five deals completed in Year 1.   Team with more than 25 years of experience in venture capital. Co-invested with Index, Kleiner Perkins, USV, Redpoint, Sequoia, A16z. Announced investments CommerzVentures at a glance
  • 8. 7CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Company background  HQ in Heidelberg  Founded: 2013  Series A funding from CommerzVentures, b-to-v, Acton Capital, Capnamic, Iris Capital and Partech.  Operates in Germany. Works with 100+ insurance companies. Product/service   Mobile application offering digital management and optimization of consumers’ insurance policies across multiple providers.   Free for consumers, receives brokerage fees from insurers. Key innovations   Easy and seamless integration of users’ insurance policies in the app.   Automatically discovers potential savings and optimization of insurance coverage. Our take-away   User-friendly solution aiming to increase consumer interaction with the insurance product.   Targets relatively underserved markets such as young professionals and first-time insurance seekers. Insurance is one of our focus areas and GetSafe is our first investment in the space
  • 9. 8CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain 3.  Which Players Will Win? Startup Landscape
  • 10. 9CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures InsuranceTech is one of the two major sectors within FinTech Source: Swiss Re, McKinsey •  Lending •  Retail Investments •  Capital Markets •  Payments/ FX •  Banking Infrastructure •  Distribution •  Underwriting & Risk •  Claims Management •  Risk Capital & Investment Management FinTech BankingTech InsuranceTech
  • 11. 10CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Source: World Economic Forum: The Future of Financial Services “The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector”
  • 12. 11CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Insurance represents the largest long-term opportunity in FinTech Source: Swiss Re, McKinsey Global revenue pools ($, bn) Payments Investment Lending Insurance 481 851 1,628 4,778
  • 13. 12CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Insurance CEOs feel more vulnerable to technological disruption than other industries’ CEOs Source: adapted from the PwC 2015 CEO Survey Share of CEOs who see their industry vulnerable to disruption Average of other major industries* Banking & capital markets Insurance *automotive, retail, asset management, power & utilities, entertainment, pharma & lifescience, healthcare, and hospitality & leisure 60% 66% 73%
  • 14. 13CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures BankingTech InsuranceTech Startup funding 2008-2015 ($ bn) Relative to industry size, InsuranceTech has received 12 times less funding than BankingTech Banking Insurance Global revenue pool 2014 ($ tn) 3.7 4.7 Source: Swiss Re, McKinsey, Accenture, CB Insights, VentureScanner 41 4.6
  • 15. 14CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures We see four generic opportunities for InsuranceTech Source: Core Innovation Capital, Swiss Re $3.1tn 1 2 3 4 Nature of opportunity Relevant revenue pool $0.9tn $0.7tn New, tech-enabled products and business models Technologies to reduce risk/ number of claims Innovative distribution channels Lower cost of claims processing HUGE
  • 16. 15CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain 3.  Which Players Will Win? Startup Landscape
  • 17. 16CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Five rapidly emerging technologies are transforming insurance BlockchainNew Payments • Usually based on smartphones or card readers • Allow quick mobile payments or money transfers without traditional banking • A decentralized chain of timestamped data blocks • Data is automatically validated and kept safe from alteration or tampering Drones •  Remote controlled or autonomous, unmanned vehicles •  Allow efficient oversight of individual objects or large areas from a distance Artificial Intelligence • Systems that autonomously adapt to information and their environment • Allows analyzing vast amounts of data from disparate systems through self learning algorithms Connected Devices •  Includes all Internet connected devices, i.e. wearables, smartphones, cars, household appliances, collecting personalized data •  The collected data allows analytics and informed decision making
  • 18. 17CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures New technologies will impact every aspect of the insurance value chain Source: Adapted from SMA Research, Innovation and Emerging Technologies Survey 2015, n=147 insurance executives surveyed analysis, and own analysis Strong Impact Moderate Impact New Payments Blockchain Distribution Underwriting & Risk Claims Management Risk Capital & Investment Management Artificial Intelligence Drones Outside of this white paper’s scope: Rather related to asset management FinTechs Connected Devices
  • 19. 18CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures DronesConnected DevicesData from web and internal sources Connected devices and drones will provide new data sources for the technologies transforming insurance Claims Management Underwriting & Risk Distribution •  Real-time •  At point of demand •  Triggered by rules or consumer intent •  Highly personalised products •  Dynamic behaviour-based pricing •  Built-in-risk reduction •  Faster, lower cost processes •  Less fraud, •  Improved customer experience Low cost, high performance computing Data Low cost hardware New Payments Artificial Intelligence Blockchain
  • 20. 19CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain I.  Artificial Intelligence II.  Connected Devices III.  Drones IV.  New Payments V.  Blockchain 3. Which Players Will Win? Startup Landscape
  • 21. 20CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Predictive analytics goes a step further, extrapolating trends to predict the future Artificial intelligence offers customer-centric use cases in insurance distribution Insurance use casesTechnological capabilities • Determining over which channel customers are most responsive and can best be reached • Deepening of customer relationships, through KYC initiatives and personalized contact • Evaluating expansion targets and better preparing new market entries Artificial Intelligence allows effective analysis of vast amounts of data to gain new insights • Matching different types of insurance to create holistic insurance portfolios and automatically suggesting new insurance policies to clients • Effective determination of cross-selling opportunities for proprietary or third party goods and services Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Artificial Intelligence
  • 22. 21CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Predictive analytics goes a step further, extrapolating trends to predict the future Artificial intelligence offers various risk-reducing use cases in underwriting and risk Insurance use casesTechnological capabilities • Assessing individualized data to improve risk models o  Reducing capital set aside for future claims o  Individualizing all customer insurance aspects • Forming customer portfolios with negative risk correlation • Analysis of internal procedures to speed up processes and reduce costs Artificial Intelligence allows effective analysis of vast amounts of data to gain new insights • Providing customers with individualized plans and strategies to reduce risk • Helping third parties, such as doctors, combat risks before they even emerge Artificial Intelligence Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution
  • 23. 22CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Artificial intelligence reduces costs and fraud cases in claims management Insurance use casesTechnological capabilities • Analyzing fraud patterns and similarities to assess which claims are likely to be fraudulent • Efficient comparison of contractor quality and price • Better interaction between customers and automated communication systems (bots) Artificial Intelligence allows effective analysis of vast amounts of data to gain new insights Predictive analytics goes a step further, extrapolating trends to predict the future • Predicting when and where claims are likely to emerge, allowing more efficient capital allocation and payouts • Automatic intelligent suggestions to clients during the claim filing process Artificial Intelligence Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution
  • 24. 23CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain I.  Artificial Intelligence II.  Connected Devices III.  Drones IV.  New Payments V.  Blockchain 3.  Which Players Will Win? Startup Landscape
  • 25. 24CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Connected devices enable new business models and communication channels in insurance distribution Insurance use casesTechnological capabilities • New business models, such as usage-based vehicle insurance, become possible new offerings • Winning low-risk customer segments with rewards for “good behavior” • Better insights into customer behavior and their attitudes towards their insurer Continuous measurement of individual data from customers and their belongings (such as consumer electronics or cars) Seamless, detailed, continuous communication and interaction with the insurer • Push contextual insurance offerings to customers, especially relevant for short-term instant insurance • Offer new product bundles that combine insurance and subsidized connected devices, to win over tech- fascinated customer segments, such as millennials Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Connected Devices
  • 26. 25CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Continuous measurement of individual data from customers and their belongings (such as consumer electronics or cars) Seamless, detailed, continuous communication and interaction with the insurer Connected devices can help to improve models, decrease risks, and create new products Insurance use casesTechnological capabilities • More precise and personalized risk models • Personalized data allows insights as to how customers can reduce risks • Reduction of risks as devices prevent negative occurrences, e.g. an internet-connected door detecting robberies • Giving customers tools to measure and improve their health or uphold the performance of their belongings, on a continuous real-time basis • Creating products that are an integral part of customers’ lives Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Connected Devices
  • 27. 26CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Continuous measurement of individual data from customers and their belongings (such as consumer electronics or cars) Seamless, detailed, continuous communication and interaction with the insurer Connected devices can reduce fraud, while improving customer experience in claims management Insurance use casesTechnological capabilities • Automated activation or validation of claims • Existing fraud detection capabilities are improved and the basis for new fraud detection capabilities is established • Mobile-enabled claim activation and data input Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Connected Devices
  • 28. 27CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain I.  Artificial Intelligence II.  Connected Devices III.  Drones IV.  New Payments V.  Blockchain 3.  Which Players Will Win? Startup Landscape
  • 29. 28CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Efficient assessment of large areas or individual objects without human proximity being necessary Drones reduce costs and add efficiency in underwriting and risk Insurance use casesTechnological capability • Substitute human with drone visits, for quicker, more precise, and less costly underwriting inspections • Using drones to provide data on a continuous basis to allow for more precise analyses and predictions Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Drones
  • 30. 29CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Efficient assessment of large areas or individual objects without human proximity being necessary Drones improve capabilities while reducing costs in claims management Insurance use casesTechnological capability • Substitute human with drone visits, for quicker, more precise, and less costly claim inspections • Increase inspections of lower-value items that would not have been inspected previously, to reduce fraud • Improved capabilities and reduced costs in post- catastrophe claims settlement • Decreased dependence on contractors’ assessments of lower-value claims Drones Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution
  • 31. 30CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain I.  Artificial Intelligence II.  Connected Devices III.  Drones IV.  New Payments V.  Blockchain 3.  Which Players Will Win? Startup Landscape
  • 32. 31CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Instant mobile payments with a cost structure that makes transfers of minimal sums possible New payments enable new business models and expansion into new markets Insurance use casesTechnological capability • Expansion into and increased offerings in, emerging and frontier markets as well as among the underinsured in developed markets, as lower payment costs and payments of smaller sums make these markets viable • New business models such as short-term instant insurance • Insurance sales with connected devices as sales channels Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution New Payments
  • 33. 32CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Instant mobile payments with a cost structure that makes transfers of minimal sums possible New payments offer more speed and security in claims management Insurance use casesTechnological capability • Instant payments to customers as soon as claims are validated • New payout options, such as coupons • Instant payments to contractors and claim adjusters • Efficient cancellation of payments in case fraud is detected Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution New Payments
  • 34. 33CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain I.  Artificial Intelligence II.  Connected Devices III.  Drones IV.  New Payments V.  Blockchain 3.  Which Players Will Win? Startup Landscape
  • 35. 34CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Delivery of automatic trigger points for self-executing contracts Keeping data safe, validated, and time stamped Blockchain technology allows contract automation and increased security Insurance use casesTechnological capability • Full automation of claims processing and record-keeping, drastically reducing fraud and speeding up processes • Full automation of contractor and adjuster contracts • Payment validation and documentation • Heightened security of internal and external data as well as processes • Drastic reduction of paper based information and processes Risk Capital & Investment Management Underwriting & Risk Claims ManagementDistribution Blockchain
  • 36. 35CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech 1.  Market Opportunity 2.  Key Technologies Along the Value Chain 3.  Which Players Will Win? Startup Landscape
  • 37. 36CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Incumbents, big tech companies, non-obvious entrants and startups will shape insurance to varying degrees Capital Novel data Historical data Regulation Innovative capacity Customer acceptance Business model fit • To assess what role each of the players is likely to hold, we compared the insurance-specific strengths and weaknesses of each type of player • The strengths and weaknesses are summarized along criteria essential to shaping the future of insurance, in a radar diagram
  • 38. 37CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Incumbent insurers have recognized the potential of technology, but are limited in their innovative scope While incumbent insurers are willing to implement changes, they are likely to require partners for innovation Source: Bain & Company Global Digital Insurance Benchmarking Report 2015 • New technologies are often relegated to being topics of future instead of current importance • 60% of insurers feel they lack the internal capabilities necessary to allow digital transformations • Many insurers are limited in implementing technologies due to legacy IT and paper-based infrastructures • Insurers generally lack the ability to use data from new sources such as social media or wearables • Organizational inertia prohibits full-scale innovation • Incumbent insurers possess capital, historical data sets, regulatory knowledge, and a customer base, which ensures them a major role • Most insurers realize the potential and importance of technology • Some insurers have begun to actively search for and integrate technology by directly investing in startups, using accelerators, or by forming internal innovation teams Capital Novel data Historical data Regulation Innovative capacity Customer acceptance Business model fit + -Positive drivers Negative drivers
  • 39. 38CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures • Vast amount of consumer and GIS data, along with cloud computing would allow insurance to be based on more precise risk models, and to be sold using contextual triggers • These companies possess large, loyal customer bases and understand customer needs • Google has driverless cars and smart home devices, while Apple has its Healthkit initiative, both of which may serve as entry points • Directly offering insurance would cannibalize advertisement revenues and may not be a good fit for brand images • Strict unharmonized regulations make global expansion difficult • Building up historical data sets would take much time • Insurance is not perceived as attractive to internal engineering teams • Limited commitment has been shown thus far Big tech companies (Google, FB, Apple, Amazon) have vast data resources, but are unlikely to fully enter the market It is unlikely that big tech companies will enter insurance on a large scale, instead they will form partnerships to create more accurate risk models + Capital Novel data Historical data Regulation Innovative capacity Customer acceptance Business model fit -
  • 40. 39CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Telcos, vertical entrants and other financial service providers will gain importance Direct full scale entry is unlikely; however, limited-scope involvement is probable for all of them • They possess vast stores of data that can be used to create more precise risk models • Burdensome regulation, lacking historical data and expertise, as well as unaligned business models + TelecomVertical entrants FS providers Capital Novel data Historical data Regulation Innovative capacity Customer acceptance Business model fit Telecom Vertical entrants Financial service providers - • Burdensome regulation, lacking historical data and expertise, as well as unaligned business models • Involvement is legally prevented in many countries, furthermore negative public images make competing with established and trusted insurers difficult • Some industries, such as the automobile, healthcare, or real estate industries may directly offer insurance related to their products • Financial institutions posses the capital and data related capabilities to become active in insurance
  • 41. 40CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures • Many startups have the capabilities and expertise necessary to develop and market new technologies • Systems and processes can be created from scratch without preexisting legacy structures • Many of the new insurance-shaping technologies require limited capital and manpower to develop • Startups understand and deliver customer centricity • Funding for the InsuranceTech industry has been increasing • Regulatory requirements are very high, creating significant barriers to full-scale entry • Attaining the historical data to develop risk models is challenging • Regulation severely impairs expansion across international and even intra-national state borders • As insurance is largely based on trust there may be some biases against young companies’ untested concepts Source: Bain & Company Global Digital Insurance Benchmarking Report 2015 Startups are best positioned to innovate, either enabling incumbent insurers or disrupting individual parts of the value chain Startups will drive innovation and form partnerships + Capital Novel data Historical data Regulation Innovative capacity Customer acceptance Business model fit -
  • 42. 41CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Contents About CommerzVentures Our View on InsuranceTech Startup Landscape
  • 43. 42CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Characteristics of promising InsuranceTech startups • Impact: potential either to enable or disrupt the insurance value chain by using technology • Focus: Innovative and clearly defined business model • Setup: Young and independent companies led by entrepreneurs • Outlook: Successful exit conceivable for (prospective) investors CommerzVentures identified the 50 most transformative startups along the insurance value chain; contact us if you think that you should be one of them
  • 44. 43CommerzVentures GmbH ‌ Frankfurt a.M. | March 07, 2016 CommerzVentures Most of the 50 leading InsuranceTech startups are active in distribution and enable insurers, rather than disrupting them 50% 32% 13% 5% Share of startups along the value chain Distribution Underwriting & risk Claims management Risk capital & investment management 68% 32% Share of enablers vs disruptors Enablers Disruptors