Established insurance player QBE has the answer to the threat of disruption from technology-driven startups — buy into them.
The company is looking for innovative insurtech startups, planning up to invest $50 million in early stage businesses this year.
Chairman Marty Becker told the company’s AGM today “insurtech” startups have raised more than $4 billion in early stage funding over the last couple of years.
He says these startups want to bring smart technology to market but many of them lack a holistic product offering or a clear path to market.
“That’s where QBE comes in,” he says.
“Earlier this year we started a formal and rigorous process to comb the insurtech landscape for early stage businesses that would add greatest value to our business and to our customer relationships, with a view to partnering with — and investing in — the businesses with greatest potential.
“We are planning to invest up to approximately $50 million in these opportunities in 2017.”
QBE is forecasting subdued growth for insurance premiums for the rest of 2017 because of intense competition. In February QBE posted a 23% increase in full year profit to $US844 million ($1.098 billion) and announced a $1 billion share buyback.
Becker says the business environment is changing at an accelerating pace with technological, social, behavioural and demographic changes all playing a part.
“This changing environment is creating both opportunity and challenge for insurers the world over,” he says.
“On the positive side there is a clear demand for new products — cyber coverage and new products relating to the Internet of Things are just two examples.”
However, he says some applications of technology may have a far-reaching impact on insurance.
One example is the possibility that autonomous vehicles will be less prone to collision.
“Meanwhile there are scores of Insurtech startups looking to build a business by attacking components of the traditional insurance value-chain,” he says.
“As an incumbent insurer operating in this changing environment, we can do no better than be guided by our vision for QBE to be the insurer that builds the strongest partnerships with customers.”