Insurance As A Service (IAAS)

Insurance-as-a-service space as startups enabling other companies to use selected pre-built elements of the insurance value chain on a subscription basis, essentially powering insurance operations for others. This excludes startups who are acting as insurers themselves since insurance is by definition a financial service no matter what billing model is used.

First of all, in the past years, similar model showed good traction in fintech the banking space. Life.SREDA report gives a good idea of it. This path inspired me to look at how the model develops in the insurance sector, given that is follows many patterns of fintech and banking.

Second, as-a-Service model allows for easier trials of business cases from the incumbent point of view. They do not need to rebuild their core all at once for integration, a small-scale trial or even a sandbox test will be sufficient to convince them of using the model. Thus, incumbents, entrepreneurs, and investors should seriously consider Insurance-as-a-service.

Finally, there is a great opportunity to employ SaaS approach to streamline the process of developing ventures, allowing founders to adopt validated blueprints and focus more on the insurance-related part.

Digital core elements

Startups specialised in a particular core process of insurance, e.g. underwriting, customer data management, fraud detection, or claims management. Examples include RiskPossible for underwriting, RightIndem for claims, GST Software for applications, and many more.

Because of specific know-how, digital nativeness and zero-legacy approach, such players can often execute core insurance processes with greater efficiency, making incumbents eager to engage with them. However, challenges arise when the words “customer data” and “cloud” are put together in one sentence since insurers are cautious about data exploitation.

A special engagement vehicle coveted by many startups are corporate sandboxes. There, startups would receive sets of depersonalised data to show proof of concepts. This may well become a trial phase from which IaaS startups should scale.

Process digitisation

Startups helping companies rebuild and their processes in the digital environment. Like Corezoid, they allow customers to build digital processes and connect them into a single system powered by their engine.

Such companies do not carry any licenses and to a large extent can remain industry-agnostic. Having insurance-specific use case significantly improves their chances to launch with incumbents.