The Connector Podcast - FinanceX #10 - Navigating the Future of Insurance Technology
In the 10th episode of The Deep Dive, hosts A and B explore the rapidly evolving InsurTech landscape. They begin by framing the sector’s need to balance digital transformation with the insurance industry’s legacy of stability, introducing VFinance’s three‑tiered “layered strategy” that categorises processes as precise (fully automatable), goal‑oriented (AI‑assisted with human oversight) and highly adaptive (requiring creativity). The conversation shifts to cybersecurity, explaining the EU’s NIS2 directive, the growing importance of third‑party security assessments, and Tom Askroft’s critique of generic risk scores, emphasizing the need for context‑aware risk appetite. They then discuss Prudential’s partnership with the APIx platform, which enabled gamified insurance experiences and faster time‑to‑market. Next, they unpack parametric insurance, illustrating instant payouts for flight delays, natural disasters and car accidents while noting basis‑risk challenges. The impact of AI on underwriting, pricing, claims and customer personalization is examined, followed by a deep dive into embedded insurance, the EU Insurance Distribution Directive (IDD), the Connected Contracts Exemption, and regulatory pathways for non‑insurers. Regional InsurTech ecosystems are spotlighted: France’s AI‑driven claims and MGA players (Shift Technology, PlusSimple, Descartes Underwriting), Ireland’s API‑centric startups (No Friction, Strat AI, Best Insights, Digipro), the Netherlands’ collaborative network and its spill‑over effect into Belgium, highlighted by Venetia Brooks. The hosts introduce Verestro’s fintech‑as‑a‑service platform that provides instant, card‑based payouts for travel, car accidents and other scenarios, improving speed, security and customer experience. They address the human side of InsurTech, noting job displacement concerns alongside the creation of new roles, and focus on SME cybersecurity vulnerabilities, the high cost of breaches, basic hygiene measures, and the role of cyber‑insurance. The episode wraps with reflections on the global nature of InsurTech, the importance of aligning innovation with regulation, and a forward‑looking question about whether traditional insurance will survive the next decade.
Chapters
Welcome back, Deep Divers. Can you believe it? We're celebrating.
Celebrating.
Yeah. Our 10th episode here at the Deep Dive. We're exploring, as always, the ever-evolving world of finance and tech.
It really has been quite a journey.
It has. And to mark this milestone, I thought, what better way to celebrate than diving headfirst into a sector that's absolutely buzzing with innovation?
Let me guess, insert tech.
You got it. InsurTech.
Ah, yes, InsurTech. I mean, it really is fascinating to see how technology is kind of reshaping this, you know, traditionally slow-moving industry.
You're right. Creating some really, really exciting opportunities.
Oh, absolutely.
And some really unique challenges as well, wouldn't you say?
For sure.
I mean, it's like that old saying, right? You can't teach an old dog new tricks. But InsurTech is proving that even the most established industries like insurance—
Like insurance, yep.
Can learn to adapt and evolve with the times.
Exactly.
Now, To help us navigate this deep dive, we've got a stack of sources.
A stack, literally.
Well, figuratively speaking, of course. Articles on specific companies, trends, and even some opinions from, you know, the big thinkers in the industry.
The thought leaders.
The thought leaders shaping this landscape.
I like it.
So get ready to explore the future of insurance because things are about to get really, really interesting.
They are. And one of the key themes that emerges from all these sources is this idea of balance. Insurance companies, they're grappling with this need to embrace digital transformation while also maintaining that stability and reliability.
Right, which customers expect.
Exactly.
Yeah, it's like walking a tightrope.
It is.
On one hand, you've got the pressure to modernize, to adopt all the latest technologies. But on the other hand, you have to make sure that you don't sacrifice those core principles principles that have made insurance such a trusted institution for centuries.
Exactly. And one company that's offering a really interesting approach to this balancing act is VFinance. Yeah, they're a Belgian tech company, and they're proposing what they call a layered strategy for digital transformation.
Layered strategy. Okay. So what does that mean exactly? Are they saying that not every process within an insurance company is created equal?
Yeah. That's exactly it. They're recognizing that not all processes should be treated the same way when it comes to tech.
OK, I like where this is going. Let's break down this layered strategy.
OK, sure. So they break it down into 3 categories. So first, you have these what they call precise processes.
Precise processes, like what?
Like calculating premiums or renewing policies. So these are the tasks that can be fully automated.
Yeah, where accuracy is really important.
Exactly. And human error, you want to minimize that as much as possible.
Makes sense. You know, computers, they're great at crunching numbers.
Much better than we are.
And following rules.
Yes.
But what about those processes that require a bit more nuance, a bit more human judgment? Surely not everything in insurance can be reduced to just an algorithm, right?
Oh, for sure. For sure. And that's where their second category comes in, goal-oriented processes.
Goal-oriented processes. Okay. So, like, what— give me an example.
Think risk evaluation.
Okay.
Where there's a clear objective, you know, but the path to achieving it might not be so straightforward.
Right. There are a lot of variables to consider, a lot of unknowns.
Exactly. And AI can definitely play a role here, but human oversight is still, you know, absolutely crucial.
It's not a simple yes or no, black or white. Not at all. There's a lot of gray area in insurance.
Yeah, a lot of gray area. Yeah.
Now, this leads me to a question for our listeners. What aspects of insurance do you think should never be fully automated? Drop us a comment on our social media. We'd love to hear your thoughts.
Yeah, because I think it's a really important point. Technology should serve us, not the other way around.
Right.
There will always be a need for, you know, human judgment, empathy.
The human touch.
Exactly. In the insurance industry.
Couldn't agree more. Now, before we move on, there's one more category in Vee Finance's layered approach.
Oh, that's right. That's right.
They call highly adaptive processes.
Highly adaptive, yeah. So these are the areas that are constantly evolving.
Like what?
Like sales and marketing and customer engagement.
OK.
Technology can certainly help optimize those processes.
Yeah.
But human creativity and decision-making are still essential.
So it's all about finding the right tool for the job.
It is.
Recognizing that technology isn't a one-size-fits-all solution.
Exactly.
And it sounds like this layered approach from vFinance It strikes a good balance, you know?
It does.
It allows insurance companies to leverage technology without sacrificing that human element.
Yes.
Which is so crucial to their success.
Yeah, for sure.
Okay, so we're starting to see how companies are tackling this tech integration challenge.
Right.
But, you know, with all this data flowing around, cybersecurity has to be a major concern, right? I mean, you hear about data breaches, cyberattacks all the time. It's got to be keeping insurance executives up at night.
Oh, it absolutely is. And it's not just a concern, it's actually becoming a regulatory requirement.
Is it?
It is, yeah.
So, where does that lead us?
Well, this brings us to our next point.
Okay.
NIS2 regulations and the rising importance of third-party cybersecurity assessments.
Okay, I have to admit, NIS2, it sounds a bit intimidating.
It does, a little.
Can you break it down for us?
Sure. So, in a nutshell, NIS2 is a set of rules passed by the European Union aimed at strengthening cybersecurity across all sectors.
All sectors.
Yeah. And, you know, they recognize that in today's world, everything's interconnected.
Right.
A cyberattack on one company can have ripple effects throughout the entire economy.
So, it's not just about protecting individual companies, it's about protecting the whole system.
The whole system, exactly.
Okay, that makes sense.
Yeah.
But what about these third-party assessments? Where do they fit into all of this?
So, think of these assessments as like a health check for a company's cybersecurity practices. They're becoming really important because, again, with so many interconnected systems, a vulnerability in one company's network can expose an entire supply chain to risk.
Right. It's like a chain reaction.
It is.
One weak link can bring the whole thing down.
Exactly. And what's interesting is that these assessments, they're moving beyond those simple yes/no questionnaires.
Okay.
We need more context. We need more nuanced insights into a company's security posture.
Right, because a simple yes or no doesn't really tell you the whole story.
It doesn't. And luckily, we've got some insights from Tom Askroft.
Tom Askroft?
He's the CISO of Unit4.
Unit4, okay.
Yeah, a major software company. And he's got some pretty strong opinions about this whole thing.
Okay, I'm all ears. What does Mr. Askroft have to say about these assessments?
Well, he raises a really important point about the limitations of these standardized scores, you know?
Okay.
He argues that blindly relying on a generic risk rating can be incredibly misleading.
So, it's not So, it's not enough to just get a passing grade?
It's not, no.
You need to dig deeper, understand the context, the specific vulnerabilities of each organization.
Exactly. He's calling for more thorough investigations, more, you know, detective work, if you will.
So, it's about truly understanding the nuances of the situation.
Nuances, yeah.
It sounds like he's advocating for a more proactive, almost skeptical approach to cybersecurity.
Oh, absolutely. He believes that, um, Organizations need a clearly defined risk appetite.
Risk appetite. So, like, what level of risk are they willing to accept?
Exactly. And this, you know, this tolerance might vary across different departments within an organization.
That makes sense.
He also stresses the importance of going beyond those simple yes or no answers.
Right.
And really seeking detailed information from suppliers to truly assess the risk.
So it's about having those tough conversations, asking the hard questions.
It is, yeah.
It sounds like he's pushing for a more holistic and integrated approach to cybersecurity, where it's not just the IT department's responsibility, but something that needs to be embedded in the company's DNA.
Exactly. And this focus on collaboration and information sharing, that's a theme that emerges in our next source as well.
OK, what have we got?
It's the incredible story of Prudential.
Prudential.
Yeah, a major insurance player, and their partnership with APIx, which is a digital innovation platform.
Interesting.
Right.
What were they trying to achieve with this partnership?
Well, Prudential was looking for innovative ways to engage customers. They realized that the traditional insurance model with all the paperwork and complex processes, it wasn't exactly exciting for the average consumer.
You're telling me.
Yeah.
I think most people would rather do just about anything else than deal with insurance paperwork.
Exactly.
So what do they do?
So that's where APIx came in. They connected Prudential with a network of insurtech startups.
Startups?
Yeah.
OK.
And together, they co-created some really engaging gamification tools.
Wait, gamification?
Gamification in insurance, yeah.
In insurance?
I know, right? It sounds kind of crazy.
How does that even work? I mean, are we talking about turning insurance into a game?
That's pretty much it. So instead of just reading through those dry policy documents, you're interacting with an app that uses game-like elements to teach you about insurance concepts and reward you for making smart decisions.
Okay. So it's about making insurance more interactive, more fun, more engaging.
Exactly.
But did it work? Did people actually use these tools?
They absolutely did. And not only did they boost customer engagement, yeah, they helped Prudential cut their time to market in half.
Really?
Yeah.
Wow. That's impressive. So it was a win-win for everyone.
A win-win for everybody.
Now, what does this tell us about the broader insurtech landscape? Is this kind of collaboration becoming the new norm?
It really seems that way. This case really highlights the power of collaboration in insurtech.
Right. It allows companies to, you know, work together.
To accelerate innovation, yeah.
To share resources, expertise.
Exactly.
Even enhance risk management.
By exchanging insights, yeah.
So it's not just about competition; it's about recognizing that everyone has something to contribute.
Yeah, it's about creating a more collaborative, interconnected ecosystem.
Yeah, exactly. And APIx, the platform that facilitated this partnership, is a great example of how technology can be used to foster this kind of collaboration.
Yeah.
They're bringing together these insurers with these insurtech startups.
Yes.
Creating a space for innovation and growth.
For sure.
OK, so we've seen how companies are tackling digital transformation.
Right.
cybersecurity, and the power of collaboration.
Yes.
But now I want to talk about something that's really, really shaking things up in the world of insurance.
Oh, okay.
Parametric insurance.
Parametric insurance.
Now, I have to admit, the term sounds a bit intimidating.
It does, yeah. It's a mouthful.
But hopefully you can break it down for us.
Of course. And luckily, we have Eric Barna, an InsurTech advisor and investor, to guide us.
Okay, good.
He's got a real knack for explaining, you know, these complex concepts in a way that just makes sense.
Perfect. Let's hear what he has to say.
So in essence, parametric insurance is a completely different approach to traditional insurance, right?
Okay.
Instead of going through those, you know, lengthy assessments and paperwork to file a claim, you get an instant payout based on predefined triggers.
Okay. So it's like an if this, then that for insurance.
That's a great way to put it.
If a certain event happens, boom, you get paid. No fuss, no muss.
Exactly.
But can you give us some, you know, some real-world examples to kind of bring this to life?
Sure. So imagine you're traveling and your flight gets delayed, you know, beyond a certain threshold.
Okay.
With Parametric Insurance.
Yeah.
You get an instant payout based on real-time flight tracking data.
So you don't have to file a claim or wait for reimbursement.
No waiting, no paperwork.
That's incredible. I can definitely see the appeal of that. What other examples are there?
Okay, so think about natural disasters.
Okay.
Parametric insurance can provide, you know, much faster disaster relief.
Right.
Because payouts are triggered by, you know, specific event data.
Okay, so if an earthquake hits a certain magnitude, people with parametric insurance get immediate financial assistance, even before damage assessments are complete.
Even before, yes.
Wow, that's powerful. And this model, it has applications beyond travel and natural disasters, right?
Oh yeah, definitely. Even in, you know, car insurance, parametric insurance is making waves.
How so?
So imagine this. You're in a car accident, right?
Right.
And using AI-powered image recognition, it assesses the damage from photos or videos and triggers instant payouts if the damage meets certain criteria.
So you're telling me I could potentially have my car accident claim settled in minutes instead of weeks?
Potentially, yes.
Sign me up. But I mean, I'm sure there were some challenges with this model as well, right?
Of course. Of course. One challenge is what's called basis risk.
Basis risk, what's that?
So the predefined trigger, it might not perfectly match the actual loss you experience.
I see.
And there's also a heavy reliance on data, right? The accuracy of those payouts depends on the quality and reliability of the data sources.
So it's a trade-off, speed and transparency in exchange for potential discrepancies in payout amounts.
It is, yeah.
Definitely something to consider. But it's clear that parametric insurance is, you know, it's shaking things up.
It is.
Speaking of shaking things up, our next discussion point dives into the broader impact of AI in insurance.
AI, yeah, it's everywhere.
Now, who better to guide us than Amalie Braidberg, a seasoned insurance expert with over 30 years of experience?
She's amazing.
She really paints a picture of how AI is impacting both, you know, the backend operations and customer interactions.
Backend and frontend.
Okay, let's hear it. How is AI changing the insurance game?
Well, for starters, it's streamlining everything from pricing and risk assessment to claims processing and even personalizing services.
It's like AI is becoming this invisible hand that makes everything smoother, faster, more tailored to our needs.
It is, yeah.
But how does this impact us, the consumers?
Well, for one thing, AI is changing customer expectations. We're becoming accustomed to instant gratification, personalized experiences, and seamless digital interactions.
So it's no longer enough for insurance companies to just offer a policy. They need to provide a more engaging, personalized experience.
Exactly.
They need, you know, stronger customer engagement strategies.
Stronger strategies, yes.
That go beyond those traditional intermediaries like brokers and agents.
Right. And they need to be adaptable, catering to both, you know, individual consumers and businesses in this digital age.
It sounds like AI is forcing the insurance industry to finally catch up with the digital revolution that's been sweeping through every other sector.
Pretty much.
But this leads us to another really interesting trend: embedded insurance.
Embedded insurance? That's a fascinating development.
Tell me more. What is embedded insurance?
So, it's all about integrating coverage seamlessly into other purchases, making it, you know, more accessible and convenient.
Give me an example.
Sure. Imagine you're buying a new phone online. Instead of having to shop around for a separate insurance policy, you're offered device coverage right there at checkout.
Okay, so they're bringing the insurance to you.
Bringing it to you, yeah.
Instead of making you go out of your way to find it.
Exactly.
Now, with all these non-insurance businesses offering insurance, there have to be some regulatory considerations, right?
Oh, absolutely. And that's where the Insurance Distribution Directive, or IDD, comes into play.
The IDD?
Yeah, it's a set of rules that governs insurance distribution across the European Okay. And it has some pretty important implications for embedded insurance.
Okay. I'm getting a bit lost in the regulatory weeds here.
I understand.
Could you just, you know, break it down for us? What are the key things we need to know about the IDD and embedded insurance?
Okay. So the IDD, it focuses on 2 key aspects: transparency and authorization.
Transparency makes sense, right? Customers need to know what they're buying, what's covered, what their rights are. But what about authorization? Are we saying that every online store now needs an insurance license?
Not necessarily. The IDD offers a couple of options for these non-insurance businesses that want to embed coverage into their services.
Okay, what are they?
So first, they can obtain an intermediary license themselves, which allows them to, you know, distribute insurance products.
So they become like a, like a mini insurance company.
In a way, yes.
Okay. What's the other option?
The other option is partnering with licensed insurers.
Right. So they're teaming up with the experts.
With the experts, yeah.
Making sure that everything is above board.
Exactly.
Now, the IDD actually offers a shortcut.
It does.
For those non-insurance businesses wanting to just, you know, dip their toes into embedded insurance.
Right.
What's it called?
It's called the Connected Contracts Exemption.
Okay. The Connected Contracts Exemption.
Yeah.
Tell me more.
It applies to businesses selling low-risk—
Low-risk, OK.
—complementary insurance products.
Like what?
Like flight cancellation protection or device coverage.
OK, so those are considered low-risk.
Yes. And these businesses, they can operate without those full licensing burdens as long as they meet certain criteria.
So it's a way to kind of encourage innovation—
Encourage innovation, yes.
—in this embedded insurance space without creating unnecessary regulatory hurdles.
Exactly.
OK. We've covered a lot of ground so far.
We have.
From digital transformation and cybersecurity to parametric insurance and embedded coverage.
Lots of ground.
It's amazing to see how InsurTech is reshaping this industry.
It is.
So let's zoom in a bit and take a look at some specific InsurTech companies and trends from around the globe.
Okay, sounds good.
Now we've got spotlights from France, Ireland, and the Netherlands.
Ooh, exciting.
Each region brings, you know, its own unique flavor to the InsurTech table.
They do.
So let's start with France. What's happening over there in the world of insurtech?
Well, France is becoming a real hotbed for insurtech innovation.
Really?
Yeah. We've got companies like Shift Technology using AI to revolutionize claims processing and Accurate.
Accurate.
Yeah. Leveraging machine learning to make pricing more accurate and efficient.
So they're tackling some of the, you know, the biggest pain points in the insurance industry.
Big ones.
Yeah. What else is happening?
Okay, so we've also got PlusSimple, which is a tech enabled managing general agent, or MGA, that's catering to small businesses, and Descartes Underwriting, making waves in the world of parametric insurance.
Hold on, you said MGA. What's an MGA?
You're right. Some of our listeners might not be familiar with that term.
Yeah.
So an MGA, it's basically a specialized type of insurance agent that has more authority than a traditional agent. They can, you know, underwrite policies, handle claims, and even develop their own insurance products. So they're kind of like a mini insurance company. In a way, yes. Got it.
Thanks for clarifying that. So it sounds like France is really embracing InsurTech. They are. From AI-driven solutions to new business models. Yes, exciting. And then there's Ireland with a growing number of companies joining the APIx platform.
APIx, yep.
The platform that brought Prudential and those gamification startups together. That's right. What kind of companies are we seeing in Ireland?
Okay, so we've got No Friction. Streamlining money movement with APIs.
APIs. Those are basically digital connectors, right?
Exactly. They allow different systems to talk to each other.
Okay, got it.
Then there's Strat AI, using AI for smarter investing.
Okay.
Best Insights, bringing AI to credit assessments.
Wow.
And Digipro.ai, automating document processing.
So it sounds like Ireland is leveraging technology to make every aspect of finance You know, smoother and more efficient.
They are.
And all of these companies, they're connecting through APIs, expanding their reach and impact.
Exactly. Collaboration in action.
Now, what about the Netherlands? What's happening in the world of InsurTech over there?
Okay, well, we have some insights from the founder of InsurTech Amsterdam, who, you know, really highlights the challenges, the opportunities, and that, you know, that collaborative spirit that defines this ecosystem.
The Netherlands is known for its collaborative business environment, right?
Very much so. Yeah.
So, it sounds like their approach to InsurTech reflects that collaborative spirit.
It does. They're focusing on meaningful networking and knowledge sharing, creating a space where insurers and startups can connect and learn from each other.
So, it's not just about attending conferences and collecting business cards. It's about building real relationships and driving innovation through collaboration.
Exactly.
And it sounds like this collaborative approach is paying off. The Netherlands is home to a growing number of, you know, successful insurtech companies.
It is, yeah.
Tackling everything from customer experience to complex risks.
AAR.
So it's clear that insurtech is this global phenomenon.
It is.
With each region bringing its own strengths and approaches to the table.
For sure.
But one thing is for sure, this sector is evolving at lightning speed.
At lightning speed.
And it's impacting every aspect of the insurance industry.
Every aspect, yeah.
From the, from the backend operations to the customer experience.
Absolutely.
Now, it's not just about technology for technology's sake.
Right.
It's about solving real problems.
Real problems.
Making insurance more accessible.
More accessible.
Efficient, and ultimately more beneficial for everyone.
For everyone, yeah.
Okay, we've covered a lot of ground in this first part of our deep dive into InsurTech.
We have, yeah.
We've seen how companies are tackling the challenges of digital transformation, cybersecurity, and collaboration. We've explored the revolutionary potential of parametric insurance and the rise of embedded coverage.
Yes.
And we've glimpsed at those, you know, vibrant InsurTech ecosystems emerging around the globe. But we're just getting started.
Oh, we are.
Stay tuned for part 2.
Part 2.
Where we'll continue our exploration of this exciting and ever-evolving industry.
It's a wild ride.
It is.
Welcome back to our deep dive into the exciting world of InsurTech.
You know, I'm still buzzing from all those amazing innovations we discussed in the first part. It's incredible to see how technology is transforming this industry.
It really is. And we're not done yet. Remember those Instertech spotlights from France, Ireland, and the Netherlands?
Yeah.
Well, there's one more region we need to add to the mix— Belgium.
Belgium. Hmm. Famous for its chocolate, waffles, and... A burgeoning insurtech scene. I have to admit, that's not the first thing that comes to mind when I think of Belgium.
You're right. It might not be as well known as, you know, some of the other insurtech hubs, but Belgium is definitely making its mark.
Okay.
And what's really interesting is how it's benefiting from its proximity to that, you know, dynamic insurtech ecosystem in the Netherlands.
Okay. Now that you mention it, I do recall something about like cross-border collaboration happening.
Right.
Tell me more about this connection between Belgium and the Netherlands.
So we actually have a really insightful interview with Venetia Brooks.
Venetia Brooks.
Yeah, she's the founder of InsurTech Amsterdam.
InsurTech Amsterdam. But we're talking about Belgium, right?
Yeah, we are. But Brooks explains that, you know, that Dutch ecosystem is having a significant impact on its neighbor.
Okay.
She talks about how the Dutch approach to InsurTech, with its emphasis on collaboration and knowledge sharing, is creating opportunities for Belgian startups and insurers alike.
So it's like a ripple effect spreading innovation across borders.
It is. It is. And Books points out some, some unique benefits of the Dutch approach, particularly for startups.
Okay. Like what?
So she highlights the strong regulatory framework in the Netherlands, which, while it might seem strict at first glance, actually fosters trust and stability in the long run.
So it's about creating a solid foundation for growth, right? Ensuring that innovation happens within a responsible and sustainable framework.
Exactly. And that can be particularly appealing for startups looking to scale and expand internationally.
That makes sense. You know, investors and customers want to know that a company is operating within a clear set of rules.
They do.
It reduces risk. But it's not just about regulations, is it? Brooks also mentioned something about the collaborative spirit of the Dutch ecosystem.
Oh yes, absolutely. She emphasized how insurers in the Netherlands are, like, actively seeking partnerships with insurtech startups.
Okay.
It's like they've recognized that these new players bring fresh perspectives and technological expertise that can help them adapt and thrive in this digital age.
It's a win-win situation, right?
It is.
Startups get access to these established networks and resources, while insurers gain a competitive edge by integrating cutting-edge technology and innovative solutions.
Exactly.
But I do wonder, is there a risk that these startups get, I don't know, swallowed up by the big corporations?
Oh, that's a valid concern. How can they maintain their innovative edge within these Well, what we're seeing is that many of these partnerships are structured in a way that allows startups to retain their independence while still benefiting from the resources and expertise of those larger companies. It's about finding a balance, a way to work together without stifling innovation.
So it's less about being acquired and more about creating a symbiotic relationship where both parties benefit.
Exactly.
And it sounds like this collaborative spirit is spreading beyond the Netherlands. influencing the insurtech scene in Belgium as well.
It is. It is.
So Belgium is really benefiting from its proximity to this, you know, this dynamic insurtech hub.
They are.
It's a great example of how innovation can transcend borders, creating a ripple effect that benefits entire regions.
A ripple effect. I like that. And speaking of benefits, let's, let's shift gears a little bit and talk about a company that's leveraging technology to transform the way insurance payouts are handled.
Okay.
We've got a fascinating deep dive into Verestro.
Verestro, okay.
They offer a fintech-as-a-service platform.
Fintech-as-a-service, okay.
Specifically designed for insurance companies.
Interesting. Fintech-as-a-service, that sounds pretty high-tech. Can you break it down for us?
So imagine this. Instead of insurance companies having to build, you know, their own complex payment system, right, they can simply plug into Verestro's platform, okay, and instantly access all the tools they need to make You know, seamless digital payments.
It's like they're providing the building blocks.
The building blocks, yes.
For a modern connected insurance experience.
Exactly.
No need to reinvent the wheel. Just focus on delivering that, you know, exceptional service to customers.
That's it.
And what's really cool is how Verestro empowers these insurers to offer customized Mastercard payment cards.
Mastercard payment cards, yeah.
These cards, they can be issued instantly.
Instantly.
Through a user-friendly web portal.
Right.
Or mobile app.
That's right.
And they can be tailored to, like, specific scenarios.
It can.
Okay, so give me an example.
So let's say you're traveling and your luggage gets lost.
Okay. Classic travel nightmare.
Right. So instead of waiting weeks for reimbursement, your insurance company could instantly issue you a virtual card.
A virtual card?
Yep. To cover those immediate expenses.
Wow. That's amazing. And I imagine this has applications beyond just lost luggage.
Oh, absolutely. Think about, you know, a minor car accident.
Great.
With Verestro's platform, you could receive instant reimbursement for those repair costs directly to your card.
So it completely eliminates all that hassle of paperwork, waiting periods.
The waiting, the paperwork, yeah.
And those frustrating back and forths with insurance adjusters.
All gone.
It really puts the power back in the hands of the customer.
It does.
And it's not just about speed and convenience, is it? Verestro's platform, it also enhances security, right?
It does. Yeah. So these virtual cards, they use 2-factor authentication. Okay. And can be easily added to, you know, digital wallets like Apple Pay or Google Pay.
So it's a win-win for both, you know, insurers and consumers.
Win-win. Yeah.
Insurers, they streamline their payout processes. Yep. Enhance customer satisfaction. Yes. And consumers get instant access to funds and a more seamless, you know, digital experience.
Absolutely.
And it's amazing how Verestro's platform has, like, such a wide range of real-world applications, right?
It does.
We're talking about everything from, you know, advance payments for urgent services to emergency funds for travelers who lose their wallets.
It's true. Yeah.
Like, they've thought of every possible scenario.
Yeah, every scenario.
Where instant access to funds would be You know, a lifesaver.
A lifesaver. Exactly.
They're really transforming the way insurance interacts with our everyday lives.
They are.
And, you know, this brings us to another important point.
Okay.
We've talked a lot about technology and innovation, but what about the human side of InsurTech?
Right. The human side.
How are these, you know, how are these advancements impacting the people working in this industry?
Yeah, that's a great question.
I mean, it's easy to get caught up in all the excitement of, you know, new technologies.
The excitement. Yeah.
But we can't forget about the human impact. Are there downsides to all of this disruption? Are jobs being lost? Are people being left behind?
Those are valid concerns. And while it's true that, you know, some jobs may become automated as technology advances, what we're also seeing is the creation of entirely new roles and opportunities within the insurtech sector.
So, it's not just about, you know, replacing humans with robots. It's about reimagining the way we work. And creating new possibilities for human ingenuity and expertise.
Exactly.
And this actually brings us to our next source, which highlights another challenge facing the insurance industry.
Oh, okay.
Cybersecurity, particularly for small and medium-sized enterprises, or SMEs.
SMEs, yeah.
Now, are they particularly vulnerable to cyberattacks?
Unfortunately, yes. We have an article here from CyberContract, a company specializing in cybersecurity for SMEs, and their findings are quite alarming.
Okay.
The article reveals that a staggering 80% of SMEs underestimate the risks associated with inadequate cybersecurity.
80%. Wow, that's a huge number.
It is. It's like they're, you know, playing Russian roulette with their data.
And the consequences, they can be devastating, right?
They can, yeah. The article states that the average cost of a cyberattack for an SME is a whopping $145,000.
$145,000?
Yeah.
That's enough to, I mean, to cripple many small businesses.
It is, for sure.
But what exactly are these SMEs doing wrong? Are they just not investing enough in cybersecurity?
Well, it's not just about money. The article highlights, you know, several factors contributing to this vulnerability.
Okay, like what?
So, many SMEs, they simply lack awareness of the risks.
Okay.
They think, you know, oh, we're too small to be a target, but that's simply not true anymore.
Right. Cybercriminals, they're not discriminating.
They're not.
They're going after anyone they think they can exploit.
Exactly. Cybercriminals are increasingly targeting SMEs because they often have weaker security measures in place.
So it's a bit like, you know, leaving your front door unlocked and then being surprised when someone walks in. And a lot of these attacks, they're preventable, right?
Many of them are, yeah. The article points out that simple security measures like multifactor authentication and, you know, proper email configuration could drastically reduce the risk.
So it's about, like, basic cyber hygiene.
Basic cyber hygiene, yeah.
But it's not just about technology, is it? I've heard that, you know, human error is often the weakest link when it comes to cybersecurity.
Oh, that's absolutely true. The article stresses the importance of employee awareness.
Okay.
Even the best security systems, they're useless if employees aren't trained to recognize, you know, phishing scams, suspicious links, and other common cyber threats.
It's like that old saying, a chain is only as strong as its weakest link.
Exactly.
You can have the most sophisticated security system in the world, But if one employee clicks on a malicious link, it can all come crashing down.
It can. It can. And the article also points out that regulations are, you know, they're becoming stricter.
Right. We're seeing that across the board.
Yeah. With standards like NIS 2 and DORA pushing companies to strengthen their cybersecurity posture.
Okay.
This is a positive development, but it also puts pressure on SMEs, you know, who might not have the resources or the expertise to navigate this complex landscape.
So it's a bit of a catch-22.
Hello!
SMEs are being told to, you know, up their cybersecurity game.
Right.
But they might not have the resources or the knowledge to do so effectively.
Exactly.
But it's not all doom and gloom, right?
No, it's not.
There are solutions available.
There are.
What does the article suggest?
Well, it emphasizes that cyber insurance can provide, you know, valuable peace of mind for SMEs, helping them mitigate those financial risks associated with cyberattacks.
So it's encouraging to see that, you know, insurers are stepping up to address this growing need.
They are. They are.
Okay, so this brings us back to the, you know, to the core of our discussion.
The core.
InsurTech, it's not just about, you know, fancy gadgets and disruptive technologies.
Right. It's not.
It's about using innovation to solve real-world problems.
Real-world problems.
To protect businesses and individuals from emerging threats.
Exactly.
It's about making insurance more relevant, accessible, And ultimately, more human-centric.
More human-centric. Yeah, I like that.
And speaking of celebrations, remember how we started this episode highlighting our 10th episode milestone?
I do. Yeah.
Well, it seems like Finance X, the publication behind all these insightful sources, is also celebrating a special anniversary.
Oh, that's right.
They're celebrating their 10th edition.
The 10th edition. Wow.
Time flies when you're diving deep into the world of finance and technology, doesn't It really does. And their journey, much like ours, has been all about growth, collaboration, and a passion for exploring the frontiers of finance and technology.
Frontiers. Yeah.
You know, they started as a, as a simple idea.
A simple idea.
A way to bring together diverse voices and perspectives.
Right.
In a curated publication.
In a publication. Yeah.
And now they've evolved into a global platform with contributors from all corners of the financial world.
It's amazing, isn't it?
It's a testament to the power of, you know, sharing knowledge and fostering connections.
Good fostering. Yes.
And it aligns perfectly with what we're trying to achieve here at The Deep Dive.
It does.
You know, we're all on this journey of discovery.
A journey.
Yeah. And it's through collaboration, open dialogue, and a willingness to embrace new ideas that we can truly unlock the transformative potential of finance and technology.
The transformative potential, for sure.
And speaking of unlocking potential, Now, let's shift our focus to a region that's becoming a major player in the world of fintech.
Okay, which region?
Asia.
Asia, okay.
A continent brimming with innovation, a rapidly growing middle class, and a hunger for digital solutions.
It's a hotbed of activity over there.
It's no surprise that, you know, that fintech is flourishing there.
No surprise at all.
Now, we have a source that takes us right to the heart of this, you know, this exciting landscape.
Oh, okay. What is it?
Money 2020 Asia.
Money 2020. Okay.
It's one of the most influential fintech events in the region.
I've heard of Money 2020.
It's a big deal.
A big deal. Yeah.
And the Asian edition is particularly interesting because it brings together those biggest names in fintech, banking, and payments from across the region.
It does.
Creating a space for discussion, collaboration, and dealmaking.
For sure.
So it's not just a conference.
Well, it's not. No.
It's a hub for innovation and growth.
A hub. I like that.
What were some of the, like, the key themes at this year's event?
Well, one of the, you know, the main focuses was the future of cross-border payments.
Cross-border payments. Okay.
With Asia's diverse mix of, you know, countries, currencies, and regulatory frameworks, it's a real hotbed for innovation in this space.
I can imagine.
The Source actually highlights the presence of, you know, key regulators from countries like Malaysia, Thailand, and the Philippines, alongside fintech leaders from companies like, you know, GCash and Airwallex. Interesting.
So it's not just about developing new technologies. It's about creating a, you know, a regulatory environment that fosters innovation and enables these technologies to thrive.
Exactly. And that's what makes Money 20/20 Asia so interesting. Yeah. It's not just a showcase of the latest gadgets. It's a forum for discussing, you know, those real-world challenges and opportunities facing The fintech industry.
Right, because technology alone isn't enough.
It's not.
You need the right environment, the right support system to truly unlock its potential.
You do.
And it's a reminder that, you know, that innovation knows no borders.
No borders.
The insurtech trends and advancements we've discussed, you know, throughout this episode.
Yeah.
They're not isolated to, you know, to specific regions.
They're global.
They're part of this, this global wave of change. transforming the way we interact with insurance and shaping the future of this industry.
That's exciting.
Absolutely. And speaking of shaping the future, let's delve into a topic that's raising important questions about how insurance is distributed and accessed.
Okay, what's that?
Embedded insurance.
Embedded insurance, apparently.
We touched on it briefly earlier.
We did, briefly.
But I have a feeling there's a lot more to uncover.
Oh, there is. We have a source that provides a really deep dive into this fascinating trend. Exploring both the opportunities and the challenges of embedded insurance, particularly within the context of European regulations.
Okay. So for those who need a, you know, a quick refresher.
Yeah.
Embedded insurance is all about, you know, seamlessly integrating coverage into other products or services.
Seamless integration.
Like offering travel insurance when booking a flight.
Right.
Or device protection when buying a new phone.
Exactly.
It's about making insurance You know, more accessible, convenient, and relevant, and relevant to consumers' everyday lives.
Exactly. Instead of having to actively seek out insurance, it becomes an integrated part of their, you know, their purchase experience.
Okay. It sounds great in theory. Yeah. But I can imagine there are some, you know, some hurdles to overcome, especially when it comes to regulation.
Oh, there are.
After all, we're talking about non-insurance businesses now offering insurance products. Right. So how does that work?
Well, that's where the source gets really interesting. It delves into those regulatory considerations surrounding embedded insurance, particularly in the context of the Insurance Distribution Directive, or IDD, which governs insurance distribution across the European Union.
Okay. I remember us talking to the IDD earlier.
We did. We did.
It's all about ensuring that this new model of insurance distribution doesn't compromise consumer protection or create loopholes for unscrupulous actors.
It is, yeah.
So, what does the source say about the IDD and embedded insurance?
Well, it highlights 2 key aspects of the IDD that are particularly relevant to embedded insurance.
Okay.
Transparency and authorization.
Transparency makes sense, right?
It does.
Consumers need to clearly understand what they're buying, what's covered, what their rights are.
For sure.
But how does authorization work in this context?
That's where it gets a bit tricky. The source explains that non-insurance businesses embedding coverage into their services they have a couple of options.
Okay. What are they?
So, like, they can either obtain an intermediary license themselves, which allows them to distribute, you know, insurance products.
So, like we were saying earlier, they kind of become like a mini insurance company.
In a way, yes. But there's another option.
What's that?
Partnering with licensed insurers.
Okay. So they're teaming up with the experts for insurer compliance.
Exactly. So it's about creating a system where everyone plays by the rules. Regardless of whether they're a traditional insurer or a tech company dipping their toes into the insurance water.
Right. A level playing field.
A level playing field, yeah. And the source provides a really practical example to illustrate this.
Oh, okay.
It walks us through the steps that a new digital platform would need to take if they wanted to integrate insurance policies into their offerings.
So it's like a roadmap for navigating the regulatory landscape.
A roadmap.
Yeah. Ensuring that, you know, that innovation happens within a framework that protects both businesses and consumers.
Exactly.
Now, the IDD, it actually offers a shortcut.
It does.
For non-insurance businesses wanting to, you know, just dabble in embedded insurance.
Right.
It's called the—
The Connected Contracts Exemption.
Connected Contracts Exemption.
Yes.
Now, didn't we touch on this earlier?
We did, but it's worth revisiting because it's a really important aspect of the regulatory landscape for embedded insurance.
Right. So remind me, what's the catch with this exemption?
So the exemption, it applies to businesses selling, you know, low-risk—
Low-risk, okay.
Complementary insurance products.
Right, like that flight cancellation protection or device coverage that we talked about earlier.
Exactly.
Okay.
And these businesses, they can operate without those full licensing burdens as long as they meet certain criteria.
Okay, so it's a way to, you know, encourage innovation in this embedded insurance space.
It is.
Without creating unnecessary regulatory hurdles.
Exactly. And the source points out that this exemption can be a real boon for businesses, especially those looking to expand, you know, across borders.
Right, because navigating different regulatory frameworks in different countries can be a nightmare.
It can be a nightmare.
So what does the IDD do to address this?
Well, the EU passporting system, it allows companies to launch embedded insurance in one Okay. And then scale it across the entire European market without needing, you know, additional licenses.
But once you're in, you're in.
You're in, yeah.
It sounds like the EU is really trying to create a unified framework that fosters innovation and cross-border collaboration in this embedded insurance space.
They are, they are.
And that's important, isn't it?
It is, yeah.
Because embedded insurance has the potential to, you know, to significantly increase insurance penetration.
Increase penetration, yes.
Particularly among those who are, you know, who are currently underserved by traditional insurance models.
Exactly.
So we're not just talking about convenience. We're talking about making insurance more accessible to a wider range of people.
More accessible, for sure.
And that's a goal worth striving for.
Absolutely.
Wow, we've covered so much ground already.
Yeah.
From, you know, Belgium's burgeoning insurtech scene to the potential of embedded insurance.
It is true.
It's clear that this industry is really on the move.
On the move, yeah.
But it's not just about, you know, new technologies and innovative business models, right? We also need to consider the regulatory landscape that's shaping this transformation.
Absolutely. Regulations, they play a crucial role in ensuring that, you know, that innovation happens responsibly, protecting both businesses and consumers.
And speaking of regulation, that brings us to our final source for this, you know, deep dive into insurtech.
Okay, what is it?
Which focuses on the NIS 2 Directive.
NIS 2.
A comprehensive set of cybersecurity regulations.
Comprehensive.
It's really setting a new standard in Europe.
It is.
Ah, yes, NIS 2. We touched on it briefly when we were discussing cybersecurity assessments.
We did, yeah.
But I have a feeling there's, you know, a lot more to unpack.
Oh, there is more.
Can you give us, you know, a quick overview of what NIS 2 is all about?
Sure. Essentially, NIS 2, it's designed to, you know, bolster cybersecurity across all those EU member states.
Yeah.
Recognizing that, you know, cyber threats, they don't respect national borders.
They don't.
It aims to create a unified framework for cybersecurity, ensuring that organizations across different sectors, you know, they're prepared to deal with that growing threat of cyberattacks.
So it's not just about individual companies protecting themselves?
No, it's not.
It's about creating, you know, like a collective defense system for the entire region.
A collective defense. That's a great way to put it.
And what does our source say about NIS2?
So this source, it highlights some key aspects of NIS2 that are particularly relevant for, you know, those in leadership positions, like board directors and executives.
Right. Those at the top making the big decisions.
Exactly. And it emphasizes that, you know, cybersecurity, it's no longer just an IT issue. It's a business imperative.
Right. It needs to be part of the overall strategy.
Exactly. It requires a strategic approach from, you know, from the top down.
Okay. So it's not enough to just have, you know, the latest security software installed.
No, it's not.
You need to have a, you know, a comprehensive cybersecurity strategy.
Yeah. Comprehensive strategy.
That's integrated into the, you know, the core business processes.
Into the core. Yes.
And NIS 2, it goes beyond just setting guidelines, right?
It does. It actually introduces stricter enforcement requirements.
Okay. Like what?
So we're talking mandatory incident reporting and potential penalties for non-compliance.
So there are real consequences.
Real consequences, yeah.
For companies that fail to meet these standards.
It's a clear signal that cybersecurity is no longer optional.
It's not a choice anymore.
It's a fundamental requirement for, you know, doing business in the EU.
Okay.
So what else does our source highlight about It points out that NIS 2 significantly expands the scope.
The scope.
The scope, yeah, of organizations that fall under these regulations.
So it's not just about those, you know, critical infrastructure providers anymore.
It's not. It now includes a much wider range of sectors. So we're talking healthcare, transportation, finance, even digital platforms.
Wow. That's, I mean, that's a big change.
It is.
It really highlights the fact that cyber threats they can impact, you know, virtually every aspect of our economy and society.
Every aspect.
It sounds like NIS 2 is really trying to cast a much wider net.
A wider net.
Recognizing that everyone's a potential target.
Exactly.
Okay, so what specifically does NIS 2 require of these organizations?
So the source goes into detail about, you know, the specific requirements, highlighting the need for robust risk management practices, incident response plans, and even the designation of, you know, C-level responsibility for cybersecurity.
So they're not just saying, hey, be more careful with your data.
No, they're not.
They're laying out a very specific framework.
A specific framework, yeah.
For how organizations should approach cybersecurity.
And that includes everything from conducting regular risk assessments to, you know, implementing security awareness training for employees.
So it's a holistic approach.
Holistic, yeah.
That recognizes that cybersecurity is not just about technology.
It's not.
It's about people, processes, and culture.
It's about everything, yeah.
Okay, so it sounds like NIS2 is creating this blueprint—
A blueprint, yeah.
For a more resilient digital landscape.
More resilient, yeah.
Ensuring that organizations are prepared to, you know, to not only prevent those cyberattacks, but also to effectively respond and recover if an attack does occur.
That's a great way to put it.
Now, was there anything else in this source about NIS 2 that really stood out to you?
There was actually one more thing.
Okay, what's that?
So, NIS 2, it allows for criminal sanctions.
Criminal sanctions?
Yeah. Against board directors and executives who demonstrate, you know, gross negligence in the event of a cyber incident.
Wow. So, it's not just the company that's held accountable?
No, it's not.
It's the individuals in charge.
It is, yeah.
It's a big deal, right?
It's a huge deal. It's a clear sign that, you know, cybersecurity governance, it's no longer something that can be Right.
The buck stops at the top.
It does. It's a responsibility that extends to those, you know, highest levels of leadership.
So, it sounds like NIS 2 is really, you know, shaking things up, sending a strong message that cybersecurity needs to be taken seriously.
It does.
At every level of an organization.
At every level, for sure.
And, you know, while some might see it as a, you know, as an additional burden, I think it's ultimately a positive development.
I agree.
It's a necessary step in creating a more secure and resilient digital ecosystem.
A more secure ecosystem.
For everyone.
For everyone, yeah.
And it ties in nicely with some of the themes we've been discussing throughout this entire episode, right? It does. It's a reminder that as we embrace those incredible possibilities of insurtech, we also need to be mindful of the risks.
Mindful of the risks, for sure.
And take steps to mitigate them.
We do.
Innovation and regulation, they need to go hand in hand.
Hand in hand.
And on that note, I think it's time to wrap up this 10th episode extravaganza.
Wow. Has it really been 10 episodes already?
It has. It has.
It feels like just yesterday we were, you know, we were starting out on this journey.
Yeah.
Exploring this, this fascinating intersection of finance and technology.
It's been quite a ride.
It has, hasn't it? But before we, you know, before we sign off, we want to leave you with one final thought-provoking question to ponder.
Okay, hit us with it.
With all the incredible innovations we've explored today, from, you know, AI-powered underwriting to seamless embedded coverage, what do you think the future holds for the insurance industry?
That's a great question. Will traditional insurance even exist in 10 years?
Or will InsurTech completely reshape the landscape?
It's a question worth considering, you know, as we navigate this rapidly changing world.
It is.
One thing is for sure, though. The future of insurance, it's being written right now.
It is. It is.
And whether you're, you know, a seasoned insurance professional or simply a curious consumer, it's an exciting time to be a part of this transformation.
Yeah, it is.
So stay informed, stay engaged, and, you know, keep those questions coming.
Keep them coming.
The Deep Dive will be back soon with more fascinating explorations at the intersection of finance and technology.
Until then, happy diving.
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