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Insurers Expect Arms Race to Acquire Tech Capabilities
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Kelly22
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Kelly22,
User Rank: Author
12/10/2014 | 4:14:04 PM
Re: Totally not surprising
Good point. I think as insurers really narrow their focus on broadening their tech capabilities, they will be focusing less on whether the companies they acquire are insurance-specific, and more on how advanced their technology is.
KBurger
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KBurger,
User Rank: Author
12/8/2014 | 12:41:00 PM
Re: Totally not surprising
Those are very good points, thanks for your feedback. We should keep in mind that these deals will not all necessarily be "traditional" types of acquisitions where an insurance company buys another insurance company/distributor (e.g. Allstate/Esurance). I could see a company like Chubb buying a tech company with Internet of Things expertise, or a health insurance company buying a wearables technology firm. It's not just about acquiring market share or customer segments, it's also jump-starting the necessary technology prowess to expand products & services or to change processes.
janderson088
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janderson088,
User Rank: Moderator
12/6/2014 | 12:15:50 PM
Re: Totally not surprising
As insurance carriers do this, one thought to consider is the integration of digital capabilities within the carriers' business model and value stream. Seems obvious but I have seen that some have not weighed this out as well - very much in a hurry-up mode ('me-too?' so they are not left behind). This becomes a missed opportunity.

Expanding on Ms. Burger's example, I expect that the market connection Allstate made by acquiring esurance (smart) would be different then one that a Chubb Group might make to bolster its position with the HVHO market. And certainly, the application (Unless Chubb was looking to grow in a segment like esurance.)

Even more intriguing in this nascent market capability is the immediate lift and learning that traditional carriers get by acquiring start-ups with their focused skills. We may also expect to see acquisition that bolster increased application of mobility in the Life Insurance segment as they use DFO mobility to enhance their distribution centric models.  
Kelly22
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Kelly22,
User Rank: Author
12/5/2014 | 11:59:38 AM
A board-level issue
Digital really should be a board-level issue so that execs can spearhead the change in mindset that Gasc describes. While it isn't too surprising to learn that insurers are looking to acquire tech startups, it's good to learn that more of them are seeking to expand beyond their traditional businesses. This news is also good for the startups hoping to work with bigger companies.
KBurger
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KBurger,
User Rank: Author
12/4/2014 | 4:10:05 PM
Totally not surprising
This is very interesting but totally not surprising. We are seeing a similar trend in banking and capital markets. And we've seen it in deals such as Allstate acquiring Esurance. It makes a lot of sense -- acquisition is a much faster way to get up to speed in emerging, digital areas than developing those capabilities internally (although it should still be a priority for financial services companies to do this concurrently). This trend also underscores that the emergence of tech-enabled non-traditional competition, which an issue that FIs must confront, is not necessarily all "bad", as insurers can learn from these new businesses -- and of course, the new competitors are the prime targets for acquisition.


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