The number of partnerships being struck between large insurers and technology start-ups has been increasing significantly, with 35% more struck in 2018 vs 2017 according to CB Insights.
However, just 10 insurers represent 40% of partnerships agreed in the last two years, suggesting a bifurcation between a select group of carriers embracing new technology and others who risk being left behind.
CB Insights' data includes a variety of "partnerships": insurers providing capacity to start-ups (who are acting as a managing general agent (MGA)); insurers distributing their products via new online channels; and trialing software tools / new data sources from start-ups.
Reinsurers have been particularly active. By working with start-ups and providing balance sheet, reinsurers are leveraging more nimble, digitally native businesses to expand their books of business. Munich Re is the most active partner with a total of 18 partnerships agreed in the last two years (including MGA and some non-MGA agreements).
However, some start-ups have already become frustrated with operating under the constraints imposed upon them by the typical MGA model. CEO's tell us that they want to control all of the levers of their businesses (pricing, underwriting and claims), and to do that, they must become full-stack insurance companies. Metromile abandoned the MGA model after launching in just 8 states. Others are getting ready to follow.
Since the start of 2017, there have been more than 180 partnerships struck between (re)insurers and tech companies around the world. The number of partnerships occurring each quarter has grown from fewer than 20 in Q1’17 to over 30 in Q4’18.