In Italy, 11 million users have used at least a fintech or insurtech service in 2018, 25% of the population between 18 and 74 years old, with a 54% increase compared to 2017. To put it bluntly is the research of the Fintech and Insurtech Osservatorio of Politecnico di Milano, carried out in partnership with Nielsen on a panel of 1515 persons representing the active Internet community.
A figure that is growing strongly, therefore, but perhaps even more important is another figure, namely the high level of satisfaction in the insurance sector with particular services, such as the possibility of managing claims via the Internet and the setting up of instant insurance. Two applications made possible by digital transformation, which will grow more and more in the coming years: the first because it solves one of the main problems between insurance and customer (the claim); the latter, as it addresses an insurance need, perhaps hidden (especially in Italy, an under-insured country) but existing, that is to obtain coverage quickly and on-demand in particular occasions and circumstances. Technology is of course the enabler of this type of applications, and in particular artificial intelligence and big data analytics.
Of course, even more basic functions are still important in the insurance field, such as reporting (via the Internet) the expiry of the policy or the possibility of checking the information relating to the coverage. However significant, this is certainly not the great opportunity that insurtech is offering to new and old players today.
The latter in particular, despite the technological disruption reopening the market and competition, still have many opportunities not to lose ground, as the report also shows that the majority of Italians, compared to their insurance needs, still choose the traditional companies, especially in the health sector, where it reaches 78%, while no other player (banks, postal services, startups, big tech, etc.) exceeds the threshold of 20%.
Obviously, however, a great deal of room for innovation is needed.
Marco Giorgino, Scientific Director of the Fintech and Insurtech Osservatorio, says: “The financial ecosystem must accelerate the process of digital transformation so as not to be found off guard: the opportunities offered by new technologies such as the blockchain, the Robo Advisor platforms must be exploited to offer new valuable services. Banks and Insurance companies can meet the challenges of the digital transformation by focusing on innovation in their strategies and relying on the ongoing cooperation with other players”.
Who are these new players? Of course, the startups are in the foreground according to the research of the Osservatorio. Italy is still lagging behind other geographical contexts such as the U.S. and China, but it’s registering a lot of dynamism: eight startups (between fintech and insurtech) have already exceeded the threshold of one million dollars of financing received for a total of 44 million dollars; outside this register, remember that in 2018 in our country the highest venture capital investment of 100 million euros was made towards the Insurtech Prima Assicurazioni.
Filippo Renga, Director of the Fintech and Insurtech Osservatorio, said: ” Such a growth was not expected. Moreover, not only are we witnessing an ever-increasing cooperation among consolidated players and startups, but also an ever-increasing desire to find new innovative integrated business models”. The insurtech sector now includes 107 startups, according to the census made by Osservatori, and shows the highest growth rate of +174% compared to 2017. 24% of new businesses (fintech and insurtech) have implemented a cooperative business model (B2B) with incumbent companies, but most of them aim to replace banks and insurance companies by offering a limited number of services or even a complete package of banking and insurance services.
What about the corporate market? How do Italian companies compare to insurtech services? The Osservatorio’ survey shows that the market is less dynamic (compared to the retail market) in terms of SMEs: the favourite channel for them is still personal relationship, and the purchase of insurance policies often takes place in traditional ways. 50% of the cases do not involve the use of the Internet and the digital tools are mainly used by the sales force to support themselves: only 15% of SMEs have bought online coverage completely on their own, while the remaining 35% have purchased only partially in a digital manner by contacting an agent through a remote meeting using digital documents. Almost three out of four SMEs manage relations with financial and insurance institutions through the Secretary, the Administration, in one out of five cases the Managing Director is directly responsible for them, while there is only limited use of a trustworthy financial director or professional. The key features leading SMEs to choose an insurance company are the cost-effectiveness of the offer and the flexibility, i.e. the ability of the insurance company to meet company needs.
A market that still needs to be boosted, perhaps starting from these two drivers, where Cloud technologies, Big Data, Artificial Intelligence, Blockchain and IoT can do a lot in the development of new services and business models bringing real value to small and medium enterprises, meeting the real needs. If, on the distribution side of the insurance product, the Italian situation does not currently appear to be particularly susceptible to online-only models, the innovation effort could be well accepted on the insurance product side, for example with regard to cybersecurity, smart building, 4.0 industry, logistics, company welfare, etc..
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