Sometimes, the simplest innovation wins. Delving into the 156 InsurtTech ventures in our database, we see a lot of comparison sites. These clearly work well markets such as India, China, Africa and Latin America where lots of consumers are buying insurance for the first time. Comparison sites also have a proven revenue model. However we see pressure on this model as Insurance value chain shifts thanks to P2P and Blockchain. In this post we look at where the puck is headed in more mature markets and why these comparison sites will have to morph to a more sophisticated Robo Broker model.

How much better are you at SEO?

If I give you a comparison of prices from different insurance companies, I can make money sending the resulting click to the insurance company. This proven model works in many industries and the venture does not need to be regulated.

This model relies on the comparison site being better at attracting traffic through SEO, paid search, affiliate marketing, social marketing and all the other traffic building tools. This will come under increasing pressure as the 3 layer Insurance value chain (Broker to Insurance to Reinsurance) shifts thanks to P2P and Blockchain (as we explore here and here). So there will be pressure on Insurance companies to control more of the end customer experience. At some point Insurance companies get better at online traffic building and the comparison site loses their advantage. Like all arbitrage games, this takes longer to play out in practice than one assumes from theory. So we expect comparison sites to thrive in different geographic markets for some time. However, at some point the comparison sites will have to morph into regulated Robo Brokers. This is already happening in mature Insurance markets

Will you be there when I need you?

Insurance is not a particularly price sensitive market. Consumers care more about whether Insurers will be there in the stressful event that they will need insurance. That is also why it is such a regulated market. The old fashioned local agent was a phone call away in those stressful times and they can help you to navigate the claims process.

This is a sales job at one end and a customer service job at the other end. This means that Robo Brokers have to a) be regulated b) have some real expertise and c) offer an omnichannel customer service experience (because even the digital natives want to speak to a human when dealing with a stressful event).

One can witness Zenefits getting into trouble for focussing too much on sales and too little on the customer service.

Knip is a Robo Broker in a mature market where consumers love buying Insurance. They are one of the few VC backed Swiss Fintech ventures to have raised a Series B, so they are clearly executing on their plan.

NextGenIns This Boston based company was founded in 2009 and we see no VC funding, so we assume that they are bootstrapped. They focus on Affinity marketing.

SurelyGroup. This London based company sells direct as a Robo Broker in niche areas (eg caravan insurance). They also have a line of business helping Insurance companies sell direct.

White Label services for existing brokers

Another strategy that we see is providing White Label services for existing brokers. These traditional brokers are the lion’s share of the business today. So it makes sense to offer them services that bring them into the digital age. We found three interesting companies in this category:

• Massup This German venture is a recent graduate of Startup Bootcamp Insurance. They focus on helping brokers sell annex insurance (translation all those things you might forget to insure because they don’t fall into the obvious categories).

• MiEdge This Boston venture sells prospecting services that are compliant with form 5500 (governing employee benefits in America).

• Premfina This Boston venture sells cash flow financing services to brokers (so they can get paid upfront despite the customer paying monthly).

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought-leader.