While some insurance carriers may fear displacement by insurtechs, Axis Re views startups and their distribution models as partnership opportunities, according to Jon Colello, the reinsurer’s president and chief underwriting officer.
"Whether risks are covered by people or technologies, insurtech poses no existential threat,” Colello said, during a keynote at Digital Insurance’s Insurance & Analytics conference in Boston.
This holds especially true in specialty lines, he adds, where many insurance policies are custom underwritten and each customer demands a specific value chain for their unique risk.Unlike personal lines, where most of the interaction is directly between the insurer and customer, the broker—whether retail or wholesale—is also always depended on to play the role of consultant.
In order to properly scale insurtech in specialty insurance, Colello advises carriers to focus on technology that reduces data sharing costs, allowing companies to spend less time aggregating information and more time developing products.
“We’ve seen specialty insurance is a different animal,” said Colello, adding that the majority of insurtech dollars flow into personal lines due to easier scalability and return on investment.
A common misconception about specialty insurance is that companies can win on data and analytics alone, he adds. However, transactions in the space are often small and take a long time for insurers to accumulate sufficient data on large risk pools.
“Insurance [dollars] are made or lost on underwriting. We have to continue investing in deep, robust talent,” said Colello. “Technology will reduce moving a dollar of risk to dollar of capital, but it will be difficult to collapse models.”
