Reinvention, decacorns, gender equality – all eyes are on InsurTech

As the industry undergoes a third wave of transformation, investors are following the InsurTech space closely. “InsurTech Queen” Sabine VanderLinden provides her insight to FinTech Global on reinvention, decacorns, and gender imbalances in the industry.

Sabine VanderLinden, CEO and managing partner at venture validation firm Alchemy Crew, has over 25 years of experience in the insurance sector. She began her career with Lloyds of London after completing a double degree in business and finance, before venturing into the consulting world, working for the likes of IBM and PwC. Driven by results, VanderLinden then began specialising in technology consulting, working for software companies such as FICO and Pega.

Five or six years ago, VanderLinden then moved into the FinTech space, and subsequently, the InsurTech sector after tech ventures she was working with wanted to move into insurance and were exploring initiatives to do so. This enabled her to become the managing director of Startupbootcamp and build its InsurTech programme in 2016, an accelerator programme scaled across Europe and Hartford, Connecticut.

Also known as the ‘InsurTech Queen’, VanderLinden was attracted to the industry by its relationship-led attitude. “As a woman in industry and in finance, I liked the more approachable side of the insurance market at the time.”

VanderLinden said that after working for large companies for a long time (around 18-19 years), she decided it was time to reinvent herself. “I felt that I could add more value by working with smaller businesses,” she said. The InsurTech Queen was convinced that insurance was ripe for innovation, and there was something special to be done by combining technology and insurance.

Breaking boundaries

Last year was a watershed year for InsurTech ventures. VanderLinden reported the industry raised over $53bn in investment funding since 2015, and one third of that was raised in 2021. VanderLinden said the sector is now going through its third wave of reinvention.

“When InsurTech started in 2015, most of the InsurTechs which came to market focused primarily on providing customer experience for insurers,” VanderLinden said. When she started the bootcamp accelerator programme, she noticed probably 30% of InsurTechs used innovative and emerging technology. Most of them were using old tech to try to create new customer experiences, so they did not yet have an understanding of artificial intelligence or the cloud that we have now, she said.

InsurTech companies have come a long way since then, and many leverage AI and cloud technology to revolutionise processes. However, VanderLinden said this third wave is all about InsurTech combined with other sectors, and if companies want to survive, they must adapt to this. “An InsurTech cannot survive on its own in the third wave,” she said, “If you look at bolttech or some of the things the unicorns are doing, what they have done is build a digital ecosystem which includes InsurTechs, FinTechs, Retail and LegalTechs among other for instance.”

VanderLinden continued, “The third wave, is breaking those boundaries… The smartest ventures, the ones you will see becoming unicorns in the near future, are those who think laterally; they think in terms of digital ecosystems, not just about themselves, but about orchestrating others, as well as serving the customers better.”

A key part of this, VanderLinden said, is embedded offerings. “The industry has been unbundled and is being re-bundled differently. What you find is, the re-bundling is much more of an ecosystem base to serve very specific customer segments. Maybe you want to serve the digital nomad, maybe you want to serve women with health issues, or to serve the LGBTQ population. You will see now a lot of banks and financial services being designed for such segments.”

We are seeing, VanderLinden continued, how insurance can be re-bundled to serve the customer by leveraging embedded techniques. She pointed to InsurTech bolttech as an example, their business model combines a lot of different players to respond and cater to customer needs very fast. Last year, the company raised $210m in Series A funding, the largest Series A raised by an InsurTech last year.

An InsurTech decacorn on the horizon?

In her recent InsurTech Insights report, VanderLinden highlighted that 21 InsurTech unicorns, out of a total of 35, achieved their horns in 2021, and one third of these came from Europe. When asked what drove these companies to the coveted billion-dollar valuation, VanderLinden said that trends brought about or accelerated by the pandemic had a big role to play.

Around July of 2020, investors realised the way to enable a mass shift to a remote working environment was through technology and digitalisation, and so they started investing in startups that focused on these. Where previously the majority of investment went to existing, well-known insurance players, and only a small portion went to smaller InsurTechs, this latter portion accelerated significantly during the pandemic, VanderLinden explained.

This sustained investor interest means we could see the industry’s first decacorn in roughly another year, VanderLinden said, predicting that bolttech is on the right path toward such a status. “They transacted $5bn of insurance premiums, from 700 distributors, 150+ insurers, and they have 8+ million customers transacting at the moment across 30 markets. You just need that to double in their case to go on to achieve decacorn status.”

Gender imbalances 

A recent report by Swiss reinsurance found that women’s representation in leadership positions in the re/insurance industry is improving, but progress is slow. The company found that women represented about a fifth of re/insurance company executives in 2019 and only 10% of CEOs. VanderLinden said that as someone who often finds herself being the only female on specific boards, there is still not enough female representation.

This is particularly confounding given the value that women can bring. VanderLinden said in her experience, there are three additional key traits that women often bring to boards: empathy, laser-focus and creativity. “A lot of women, because of having children, have to be highly focused on the outcome. I’ve had conversations with a lot of friends in high positions with two or three children and they said they’ve really had to learn to multitask.” Women also add a creative lens on problem solving, in addition to greater empathy. Men can also bring these skills to the board, VanderLinden said, and it also does not apply to all women, but rather is an observation of her experiences.

VanderLinden said the biases in the InsurTech and FinTech industry is something she herself still encounters and witnesses in her work with startups. However, younger generations of investors could bring about change. VanderLinden said that millennials and Gen Z’s are much more gender fluid, “they don’t see colour, they don’t see gender” she said. “And I think you probably need a generation to see change, as well as people like me, who are pushing on and making sure that you have opportunities for women who are there.”

Gender imbalances are improving, and VanderLinden noted that there are more female founders entering the InsurTech space. “Last year, I talked to many female founders, some came from major companies. Whether they were in banking or consulting, or at partner level in a major consultancy firm, they have decided to shift their lifestyle and take on board the fact they have the skills to build a business,” she said. The pandemic may have helped this trend, for the work-life balance aspect, VanderLinden added.

“More and more InsurTechs are trying to make sure they rebalance their boards and bring in more female talent, probably to align with ESG requirements, and to demonstrate to investors they are doing that.” Moreover, the market is demanding it, VanderLinden said. Customers may look at annual reports, see the pictures on the company website and make choices affected by that. It will take time to reach equality, she continued, but this is a shift we will continue to see.

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