Insurer and reinsurer, QBE, is planning a major move into the evolving world of insurance start ups and other financial technology driven companies in the next year with shareholders at yesterday’s annual meeting in Sydney being told their company has a $50 million budget to spend this year alone.
CEO John Neal told the meeting the company has already "screened over 200 companies with solutions that looked beneficial to our business.”
And the company has already narrowed that down to around seven (no names were given) with decisions due later this year.
“(F)ollowing due diligence I expect we will form initial partnerships with three or four Insurtech companies, and I look forward to sharing more detail of our progress at the Annual General Meeting next year,” Mr Neal told the meeting.
He said QBE is looking for companies with value in “analytics, digital and Internet of Things solutions”. He said these investments had to be in companies "we believe can add value to our underwriting and claims processes, providing efficiency and service benefits for QBE and for our customers.”
"Detailed discussions with our seven short-listed companies have been well received…. many of these companies are not well placed to “disrupt” any element of the insurance industry on their own, requiring the knowledge, experience and expertise of established players to succeed.” QBE chairman Marty Becker also briefed shareholders on the rationale for QBE’s move into the digital ‘disruptive’ world.
‘(T)he business environment is changing at an accelerating pace. Technological, social, behavioural and demographic changes are all playing a part,” he said.
"This changing environment is creating both opportunity and challenge for insurers the world over. 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.
"We are also taking the opportunity to harness digital technology and big data to bring increased science to the underwriting process and a more sophisticated approach to providing holistic risk management services.
"However, we are also mindful that some applications of technology in society may have a far-reaching impact on the insurance our customers require in years to come – an 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.
"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. If we have the mindset and capabilities our customers are looking for, they will continue to value their partnership with QBE.
"Tapping into new technologies to get closer to our customers is essential to delivering on this objective, and we are working hard to do so right across the business. Our Group Digital Innovation Lab is experimenting with emerging technologies while embedding data & analytics into all our decision-making is one of the six themes that forms our strategy for QBE.
"Our challenge is to harness the benefits of incumbency. While Insurtech startups have raised more than $4 billion in early stage funding over the last couple of years, generally with the goal of bringing smart technology to market, many of these companies lack a holistic product offering or a clear path to market.
"That’s where QBE comes in. 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,” he told shareholders.
QBE shares edged up 0.7% to $12.98, on a day when the market had its worst day in six weeks, falling 1%.
