InsurTech-as-a-Service: solving the innovator's dilemma in insurance? [Interview with Korint]

This podcast is brought to you in partnership with the company Korint, which operates its InsurTech-as-a-Service offering in France.

I am delighted to have the opportunity to discuss with its CEO, Jean-Baptiste Limare who will shed light today on what InsurTech-as-a-Service is all about. He will also detail the challenges that this trend echoes in the insurance industry and how technology benefits various players in the value chain.

In a second episode, we will specifically discuss Korint's offering, its differentiation in terms of technology or product, and above all, the ROI achieved by its clients.

You can check Korint's LinkedIn profile to learn more about its solution.

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For French ???? speakers, you can listen to that discussion:

• On Spotify or Apple Podcast
• On Youtube

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Florian Graillot - Hi Jean-Baptiste, thanks a lot for being with us today. Before we begin, could you briefly introduce yourself for those who may not already know you? It would be great to get an overview of your background and your current role at Korint, to shed light on what you'll be sharing with us today on the topic of InsurTech-as-a-Service.

Jean-Baptiste Limare - Hello Florian, I'm delighted to chat with you today. To introduce myself: I'm Jean-Baptiste, founder and CEO of Korint. I've been working in the insurance industry for ten years now, primarily within a major European group called the Admiral Group, where I worked both in the UK and France. During these ten years, I was tasked with launching new business units for the Admiral Group. I was sort of an internal entrepreneur. I launched three of them, including the main one in the UK called Veygo, which offered on-demand insurance for peer-to-peer car sharing. So, it was in the realm of new mobility. It was technically a bit of a gamble in terms of insurance, or so people told me, since it involved insuring young drivers for short durations, with vehicles that weren't theirs since they were borrowed vehicles. In the end, it was a great success as I now know they generate tens of millions in revenue and it's a very exciting business for them. I returned to France in 2020, where I launched Kooalys, which focused on fleet insurance, still within the Admiral Group.

Then in 2022, with my co-founder, we decided it was time for us to spread our wings. So, we started Korint, which is an insurtech that facilitates the deployment of innovative and digital products in the B2B mobility sector.

Intro

The title of the podcast refers to InsurTech-as-a-Service because it's a term often used by corporates themselves to describe technological offerings that cover all or part of the value chain. I often summarize this as a revamp of the information system. And for you, how do you define this trend to obviously echo what you're developing now at Korint?

Well, for me, InsurTech-as-a-Service, the way I see it, is that in our insurance market, to innovate and launch new products, to truly deploy new offerings in the market, you need tech but you need more than just tech. And that's really one of the convictions we have at Korint. First, you need tech, product platforms, technological platforms capable of doing ten times better than what currently exists.

That means ten times better in terms of costs, data quality, execution speed, and customer experience.

We need to bring about technological disruption, and there needs to be a before and an after. That's obvious.

But if that were enough, all insurance would already be 100% digitalized, and would have already transitioned into fully online markets. The Amazon paradigm is not at all realized in the insurance domain today.

The analysis I have is that there have been very powerful reasons that make it difficult to digitalize insurance, so you need tech but you need more than just tech. You need highly advanced business skills because to deploy new products to digitalize the market, there are compliance issues, very technical underwriting business rule issues. Reporting in insurance is something that is not obvious. So, for insuretech to become a service, for it to be something that can really be deployed by market players, you need both tech and business skills. And so, it's these two sets that will enable the creation of innovative offerings, turnkey offerings, reassuring offerings for partners, allowing them to press the button.

Leveraging technology in the insurance industry

Super clear! It reminds me of a remark I heard while preparing a panel recently. A VC was wondering, as tech opportunities in insurance - or InsurTech B2B to simplify - multiply, whether insurers really have that many needs. Beyond the joke, his remark is quite interesting. And I always wonder how technology specifically addresses a need. In other words, can existing players do the same thing without necessarily having as good a technological solution? I'm convinced they can. But what's your take on the issue? Going back to the challenges you mentioned at the very beginning of our discussion, can corporates, in a way, already manage on their own?

Well, that really resonates with my experience in a large insurance group. So, I would say yes and no. Yes, large players have all the capabilities to do everything internally. I'm not here to teach partners like Willis or large insurers about their business. There's absolutely no issue there. However, where we need to be clear is that it's more difficult for them to do it than for us.

Firstly, because you have to remember that the main focus of an existing player, whether it's an insurer or a broker, is still on existing portfolios, servicing existing clients.

At a corporate, you cannot jeopardize the present for the future.

So, it's essential to remember that 80% of an existing player's attention will go towards the current portfolio. Then, what I've noticed a lot is that there's a chicken-and-egg problem. What does that mean? It means that as long as we're not sure about the potential of a project, it's very difficult for any organization, especially in insurance, to allocate resources to it. And in insurance, to launch products, you need a wide range of skills. To launch one of our products, you need to check for compliance issues, there's reporting, there's data, there are underwriting rules, there's document editing.

So, in fact, we always need to bring together a lot of skills. However, these are projects that are difficult to implement at the beginning when you don't even know if the initiative is worth it.

In my experience, what tends to happen with insurers is that this chicken-and-egg problem tends to confine them to products that are big, mature, have an established market, and are familiar to teams in terms of market operation, distribution rules, etc.

So, the rational behavior of these players, faced with the challenges of the insurance world and the difficulties of deploying new products, is to say: we're going to conquer the neighboring big market. Which is a rational approach, but fundamentally prevents them from positioning themselves on new uses.

It's a fairly simple problem: for an insurer or a broker, if we say that the cost of a new product is 1.000, in these conditions, it's rational to focus on big, mature projects with clear profitability because the market is already there.

Our job is to ensure that a new product no longer costs 1.000 but 100 or 10. And that's what will unlock a whole host of interesting projects that are currently below the insurer's threshold because when you only have the opportunity to launch maybe one or two new products a year, you'll focus on the essentials.

If you move to five or ten new projects, a whole bunch of interesting ideas become relevant to explore. And that's why InsurTech-as-a-Service is really crucial for the industry as a whole. It allows the industry to regain product innovation capability to deploy these new offerings. Between green mobility, climate risks, digitization, there are shelves full of new products to launch, which are currently blocked because it's difficult to deploy new products. So, InsurTech-as-a-Service for me is an absolutely essential issue for the industry, and if we manage to unlock this problem, we have incredibly exciting futures in terms of innovation. The world has never needed insurance more, there's no debate about that!

Indeed, I won't argue with you on that point. And as I listen to you, it's interesting because you suggest that InsurTech-as-a-Service goes well beyond just the distribution topic. When it comes to technology in insurance, we often think of the notion of APIs, generally with a distribution perspective. But here, you're going further. Can you detail for us how, in your opinion, technology benefits the insurance value chain in a broader sense?

I think there's a huge challenge in digitization, in the issue of product platforms. In fact, we see a lot of digitization topics, which I tend to qualify as "surface digitization." They're often focused on front-ends, on customer journeys, on things that are superficial. But they don't allow for deep digitization. So, for example, what will happen is that you'll have offers where they promise you a 100% online journey, but it will only be truly available in 50% of easy cases, where there are no complex business rules. However, as soon as there's an exception, whether it's a vehicle value or a slightly complex vehicle power, whether it's a NAF code or an activity that doesn't exactly fit the underwriting criteria, then we're back to manual processes where digitization doesn't exist at all, and where the customer experience is therefore degraded.

Digitizing only the easy cases is not digitizing. Because behind it, in terms of operations, you haven't really saved or optimized your resources. Because you still need as many hands and as much time to handle exceptions. In terms of data quality and underwriting quality and the underwriting tunnel, you're still in the same universe, in fact. You have business rules that have been set and where exceptions are handled manually. And in terms of product agility, you're still exactly on the same subjects, meaning: yes, you've made a nice front-end, where you've deployed something that looks impressive, but behind it, you still have the same compliance issues, data quality, and reporting quality.

The conviction we have is that in fact, we shouldn't be afraid to go into the heart of the engine of the product platform, that we need to insure a new generation of these fundamental logic engines that allow for the management of insurance policy transactions.

For example, what we offer is the ability to instantly and 100% online manage the entire life cycle of a fleet contract, even very complex ones, including its subscription, fleet movements, billing, all transparently for the client. It's this kind of deep digitization that really unlocks value for the client, the distributor, and the insurer.

This mainly applies to B2B insurance subjects, where products are more complex. Today, digitizing a home insurance journey, that's done. Digitizing simple B2C journeys is not yet achieved, but there are really offers available. However, for B2B offers, we're still far from there.

The 'make or buy' dilemma in insurance

Talking about technology in insurance without thinking about the famous "make or buy" dilemma is difficult. Every company indeed questions whether to rely on external technology rather than developing it in-house. It's a challenge you're confronted with when presenting the Korint offer to insurance actors, right? That's a question! And then, the second part of this question is to know (if indeed you are confronted with this phenomenon) whether you have identified ways to convince insurance actors to explore your offer rather than considering internal development?

For me, I see this dilemma every single day. The typical use case is people who come to us because there's a desire to launch a new product, and systematically, they try to do it in-house, but they don't have the capacity because the roadmap is already filled until 2028.

This often triggers discussions with us, which consist of saying: if we could do everything in-house, we would, but let's be realistic, it's completely impossible! Generally, partners realize that working with new actors and especially with us, there are a lot of benefits.

The first one is solving this blocked roadmap issue. So with us, products that were impossible to deploy in 2024 or 2025 become possible.

There's already a somewhat black-and-white benefit: an opportunity to test and grow.

On existing products, we bring three major benefits. First, there's the issue of operational gains, the expense ratio. In complex industries like B2B, which are distributed by brokers, distribution and operational costs are between 20% and 30% of the premium. We're talking about significant amounts. So by optimizing operational costs on these subjects, we can easily talk about a 5% to 10% combined ratio optimization. Without even mentioning customer satisfaction, conversion, and all the optimizations we can make in terms of portfolio growth.

The second element is data. We provide quality 2024 data. This is particularly important in B2B subjects where we generally have very little customer data, especially for SMEs/ETIs in B2B.

When you have huge portfolios to insure like EDF's, the portfolios are so gigantic that you create the history, it's enough, there's no problem. To address the thousands of small businesses, which represent 80% of the market for products such as fleet insurance or damage insurance, for example, we have very little data. We solve this problem by generating very good quality data that allows much finer subscription and actuarial analyses and by integrating third-party data if necessary. In terms of actuaries and risk selection quality, we have a second important value unlocking lever.

And the third is compliance issues. Traditional products have compliance issues that are poorly controlled. When you manually recalculate the premium and regularize it by hand, you have errors. When you make quotes in PowerPoint or Word, you have traceability issues with your duty of care that aren't perfect. So here, we really have very strong business gains. We have the opportunity to tell our partners that with us, you can focus your IT teams on the essentials.

The IT teams of a large partner are meant to focus on the major existing businesses whose maintenance is the core of the engine. And we allow them to free up resources without losing the capacity to innovate and grow.

Continue to maintain the essentials while continuing to explore new products.

And then, there's a bit of a paradigm question. It should be noted that "buy" today is becoming more and more natural. I see this a lot coming from Anglo-Saxon markets. Today, you don't have a large British insurer that doesn't use a Guidewire-type solution or another.

Today, when each actor has its own system and internal platform, the reality is that each actor reinvents the wheel every time. Whereas there's a lot of value to be created by using technologies that are now increasingly mature and that allow for radical optimization of gestures and deployment.

The act of signing an insurance product and editing it is still a gesture that can be done once and for all. Similarly, setting up automatic payment or direct debit is not a completely new gesture either.

So there are really a lot of recurring gestures that a third-party platform can perform much more effectively and scalably than proprietary solutions.

And here, I'm talking specifically about actors who are somewhat medium-sized, who have a real need for commercial aggressiveness to grow but who don't have the capacity to have tens of thousands of developers in-house.

"Buy" is becoming a new obvious choice for me because the offers are now more mature. It's visible in Anglo-Saxon markets, so I think it's also happening in Europe.

Conclusion

Indeed, it's a trend we're seeing more and more. The double angle is very clear, which is indeed to make a distinction between the very large players and the rest of the market. These are two slightly different capacities for innovation, for doing new things. And the second element that you also mentioned right at the beginning, which was this idea of making a difference between the run, the operations, serving existing clients, and then giving oneself the capacity to do new things. And the teams, when they are on one, they are not on the other. The goal is to be able to do both at the same time. And that's where the "buy" makes sense. Knowing that, and as you detailed, in the "buy," there is also the partnership aspect. It's not just about buying external solutions, it's about working with external actors. That's the definition we can give for the "buy."

If you want to learn more about the subject, better understand the value and benefits that this technology brings in terms of distribution and more broadly in the digitalization of insurance products, I invite you to subscribe to this newsletter, because we'll be back in the next episode, still with Jean-Baptiste. But this time, we will focus more specifically on his company, Korint, its value proposition, and obviously the ROI for its clients.

Thanks a lot Jean-Baptiste !

Thanks a lot Florian !

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Learn more about Korint.