The Asia InsurTech Podcast spoke with Kevin Angelini, the head of strategy and M&A for Asia Pacific at Zurich Insurance about the Zurich Innovation Championship and how startups can work with insurance incumbents.
Here is the transcript of our conversation.
Michael Waitze
Okay, we are on. Hi, this is Michael Waitze, and welcome back to the Asia InsurTech Podcast. This is the only podcast in Asia focused on insurance that gives entrepreneurs, thought leaders and investors, a platform to discuss how technology is reshaping the insurance industry in Asia. Today, I’m joined by Kevin Angelini, the Head of Strategy and M&A for Asia Pacific at Zurich Insurance. This should be really interesting today. Kevin, it’s great to have you on the show. How are you doing?
Kevin Angelini
I’m very well, thank you. And thanks for having me.
Michael Waitze
It is my pleasure. Before we get into the main part of the conversation, from your perspective, what do you think is the biggest trend in insurance and InsurTech in Asia, and maybe by proxy for the rest of the world as well?
Kevin Angelini
I actually think Asia is quite in line with the rest of the world on this point. And perhaps the changing of the dynamic on how a customer perceives a relationship with an insurance company, be it a corporate who’s looking to manage their risks, or are individuals who are looking to live better and longer. So insurance companies can be part of their journey, rather than just being there when events happen.
Michael Waitze
Yeah, I mean, we hear a lot about being engaged with the clients. And we’ll get back to that in a second. But it’s a great answer, actually. Why don’t we give our listeners a little bit of your background as well, just for some context?
Kevin Angelini
Sure, so I’m speaking to you from Hong Kong today, in Zurich’s regional office for Asia Pacific. I’ve been in Asia for the largest part of my my career and have roots growing up in in Hong Kong, Singapore, in Seoul. But on the professional front, I’ve been with Zurich for just coming two and a half years. Always looking at the strategy and M&A function. So I’m in pursuit of new opportunities for Zurich across the region, be it of a distribution, or partnership or M&A angle, typically growth focused and developing and refining our footprint across the region. Prior to joining Zorica, I’ve been in consulting, and I’ve also been with other insurers, mostly based in Asia.
Michael Waitze
Is there a specific reason why you’ve chosen? And I’ve asked a lot of people this to be in the insurance industry, per se, like was that a conscious decision that you made?
Kevin Angelini
Yes, and no. I started out in professional services, I just started out in finance, and I was with Deloitte at a time where we were going through a typical management trainee program straight out of university and I had chosen financial services. But strangely, at the time, just before I joined they forced us to make another choice, which was did you want to go into banking and securities or into insurance and investment management, basically, the Financial Group was becoming too big. And I was, I thought, you know, I was I had a contrarian view, I think banking was the more, the more sexy option at the time, but I thought, you know, insurance had more opportunities. So I delve into insurance from there and having insurance clients, I did pass on to, to join insurance.
Michael Waitze
So this is always a really interesting part of the conversation for me, where people say, banking, or investment banking or securities was the more sexy part of the finance business. I mean, I and I get it right. And a lot of people that we first had on the show back in 2019, would say, Yeah, nobody wants to talk about insurance or InsurTech. But if you look at what’s changed, just in the last three years, don’t you feel like insurance is kind of sexy now?
Kevin Angelini
I definitely think so. And I do my best in convincing other people that that is, that is also the case. But I mean, there’s plenty of moments when, within the industry, we do feel like we are the poorer cousin of the banks. And I think, you know, most recently in Hong Kong FinTech week, which happened very recently, I think that you definitely felt that. A lot of the focus was on banking and wealth management and crypto and so forth. Whereas in insurance, we just have to try a little bit harder to be heard by customers and other stakeholders. But back back to your earlier question on me making that choice, I’m definitely certain I did make the right choice.
Michael Waitze
I’m sure you did. I want to get back to a report, I believe was released by Willis Towers Watson a month or so ago that said that investment in InsurTech in 2021, just in the first three quarters was almost as much, about $12 million short, of all the investment in 2018 and 2019, the world if it hasn’t moved already, it’s definitely moving in your direction. No.
Kevin Angelini
Definitely. And I think part of evolution is that, you know, startup activity, formation of new companies and funding of new companies comes, comes in a natural cycle. And I think we’re definitely in that part of the cycle where InsurTech is definitely on a fast rise.
Michael Waitze
Okay, I want to talk about this specifically, at Zurich, right? Does Zurich have its own CVC arm? And does it and does expect to benefit from investments in sort of he just brought up the startup world? Yeah.
Kevin Angelini
We do a lot of work and engagement with startups, but we are not a financial investor. So we don’t have a venture fund internally. But in terms of working with startups, we do have a very big outreach and an internal innovation championship and an accelerated. In terms of making that financial commitment and investing into their equity. We typically only do that for companies that have already worked with us for a few years. And we have we have use cases and it can, it can benefit both sides. And we’re happy to put money behind those situations. But in terms of a dedicated venture fund, like what Munich Re has, we don’t have one of those at this time.
Michael Waitze
And how about an accelerator program where you work with some of these companies and then try to accelerate their growth or something like that?
Kevin Angelini
Yeah, on that side, absolutely. And I think we have the largest open innovation outreach within our industry, it’s known as the Zurich Innovation Championship. So this is really designed that our businesses to go out and engage with the startup world, all around the world. So we do it consistently across all of our businesses, all of our territories, whereas there’s engagement, sourcing and onboarding of startups, and then we encourage them to work with as many Zurich entities as possible. And the accelerator actually forms part of that journey.
Michael Waitze
Yeah, and is there one that’s specific to this region? Or is it just something that’s run globally, and it just gets run out of headquarters?
Kevin Angelini
It’s run globally, we have we have regional approaches. Well, actually, in the past, the local businesses would source their own startups that they’re impressed by, and then encourage them to apply to our championship. And then they would go through sort of like a regional vetting process in two steps. So locally, they’d have interviews and, and discussions with local management. And if they’re deemed to be relevant to the services, they might escalate to the to the regional level, so we’d meet them here in Hong Kong for Asia Pacific based companies. And then we choose a few winners that would go to the to the global round. And we’re proud in Asia Pacific, we will always had startups that have made it all the way to the global round. No one’s won it from Asia yet. But but but we’ve always had finalists. And I think this is good, because everybody recognizes the potential of of Asian startups. But we’re gonna do it slightly differently this year. Because when we did it that way, organized by geography, we found that it was harder to have the same startup work with many of our businesses in many places and get to scale, you know, they would be very good at solving a specific pain point in a specific place. But we struggled when it comes to having many conversations with Zurich businesses all around the world. And that was our goal. So we’re gonna encourage companies this time round to actually apply to as many countries as you want to, and try and foster as many as many conversations as you can. So it’ll be more global and more integrated this time, right?
Michael Waitze
Makes sense? And how does this work internally? Do the groups internally get together? Are they encouraged to get together through this championship to identify their own pain points? In other words, is it proactive? Or is it reactive?
Kevin Angelini
So we would define a group of people who are sort of like the community across the world, so who can sort of spearhead the awareness and the execution of the program, but in terms of setting the goals, it’s it is very proactive, so we try and have common pain points, common challenges for startups to apply to and it’s consistent across the across the world. So we have a few categories this year. And we’re soliciting interest as we speak. Now,
Michael Waitze
Can you tell me what those categories are?
Kevin Angelini
Yeah, so we’ve got we’ve got we’ve got four at the moment. The first is most open ended and it’s sort of broaden, inviting creativity inviting startups to tell them what they think. And we call this, how can you help us create the future of insurance, right? So being the insurer of tomorrow, modernizing, predicting trends, and so forth, so this first bucket is very, is very open ended. So we’re really looking forward to seeing what the startup startup creativity can bring to us. The second one is quite common. I think this is where we’ve seen the most traction in InsurTech, not just internally, but across the industry, is how insurance companies interact with customers and our partners. So things like the ability to connect with distributors and things, improving the user experience, making it easy for customers and distributors to work with us. The third one I’m personally most compelled by, and this is helping customers better understand, prevent and mitigate risks. And this goes back to my opening comment on changing that dynamic and the relationship we have. So we want to be able to give our customers be it an individual or a corporate, the right tools and the right ability to make decisions so that they can prevent a disaster, they can prevent a fire, they can prevent losses, and have the tools to be able to understand and mitigate as many situations as possible. So we need the startups to come and contribute their know how so that we can we can package it and bring something to a tool and, you know, change something inside our customers behavior. And then finally, is about supporting sustainability? And how do we build confidence in today’s society. So we invite anyone with an ESG focus that helps us understand emissions helps us understand anything ESG related to help us build a better tomorrow.
Michael Waitze
That’s actually really important to me, I do an entire podcast on social innovation. So that type of stuff is actually really important to me. I want to reflect something to you from a conversation I had, I believe it was last week with Ed Gaze right. Ed runs Lloyds lab in London, which I’m sure you heard of. And we had this really interesting conversation. But one of the things that he said was that he has the ability to bring anybody kind of into the lab that he wants to see what the reaction will be from some of the larger insurance companies and the insurance partners that they have there. And he’s hearing all this conversation about blockchain and distributed ledger technology. And he thought, let me just bring some people in, even if they’re not in the insurance business to just get the conversation going and see if there are ways that blockchain can be incorporated into the insurance journey. Is this something that you and the team are looking at as well?
Kevin Angelini
I would say specifically for blockchain, not so much just yet. But on the second comment you made about bringing in people from other walks of life. Definitely so. I think in insurance, we are definitely guilty of hiring too many of the same type of same types of people. And I think recently, you’ve seen many insurance companies, including ours, looking at bringing in people from different backgrounds. They’ve might have been working in technology, they might have worked within technology for a different type of company. So even in our organization, you know, our chief customer officer came from LEGO, a very different minded organization. So I think we do need this cross fertilization to keep the promotion of innovation and keep our industry progressing in the right way.
Michael Waitze
Yeah, absolutely. Look, one of the other things that you mentioned here was this idea of engagement with the clients and their user experience. Again, I was having a conversation with a startup a month or so ago called Lifepal, which is based in Indonesia. And they were telling me that their media business is almost as big as their insurance business. And I thought it was interesting because they had 4 million people a month coming to their blog, which they did not intend to have that many people and 500,000 people looking at their Instagram channel. Because it’s their where they go and you know this from being in Asia for so long. It’s their where they go to handle this problem of sort of financial literacy at scale, but insurance literacy as well. Do you see big incumbent insurance companies like that getting into that place where you’re trying to engage with your clients on a day to day basis, not just on a product basis, but to educate them to for products about which they may not be aware?
Kevin Angelini
There’s definitely room for that to happen because most of our products are quite complicated and do require a lot of explanation before people are comfortable and willing to purchase but I think we’ve also hit a number of challenges, because financial literacy is one thing, and I think there’d be many people volunteering to sign up for education on that. But for insurance literacy, it is typically not something that people have urgency about. So where I’ve seen that function better, is when you have insurance engagement actually targeted on to a specific customer journey. And insurance companies tend to work with partner companies to distribute propositions and, you know, finding the right moment to talk to somebody about something is, is just as important as what you’re about to talk to.
Michael Waitze
Absolutely. And do you look at this idea of, because I think what you’re talking about is just being contextual, right? And being relevant to the client. Are you looking at scale as well at this idea of embedded insurance and contextual insurance, not just from a conversational standpoint, or an educational standpoint, but from a distribution and purchasing standpoint.
Kevin Angelini
That’s a big and growing focus for us. So we do a fair bit of that type of business already, especially in places like Hong Kong and Malaysia. I think what we’re trying to gear ourselves up for is being ready to have more frequent and essentially more conversations with these types of partners in multiple places. And that has a certain capability and technology built for us to do and we’re already on our way to do that.
Michael Waitze
Yeah, I mean, one of the things we talked about last year was this idea of these new modes and new channels for distribution. Right. I mean, Grab is getting into the insurance business, you see some of the e-commerce businesses also being insurance distributors, how do you work together with them and create these partnerships that are a win win for both parties.
Kevin Angelini
So they clearly have the customer base, which we are interested in, I think our job is to make our process as easy and seamless as possible. Now, that’s not always straightforward in a traditional insurance process, because you typically have to go through an application, which means that as the as a customer prospect, you need to prove your worthiness to the insurance company before we issue your policy. So making that process seamless is I can’t say as an industry have done that terribly well. But we’ve made big strides ahead. For example, a very simple example would be, you know, somebody applies for a type of insurance, I think this would apply for most lines of business. For whatever reason, if there could, if there’s a decline decision by the insurance company, at the moment, the customer just receives your policy has been declined. There’s no opportunity for that customer to say, Oh, maybe I forgot to submit a document. Or maybe I forgot to answer a question. With a declined message, actually, the application loop is closed. And then you need to start, again, almost. Things like that. I think customers nowadays, they apply expectations that they have from other industries, on to working with an insurance company, right? Because you know, you’re dealing with e-commerce all the time you’re dealing with, with online shopping, and so forth. There’s a, there’s an implicit expectation that customers want processes to be easy and seamless. And we still have some work to do.
Michael Waitze
Yeah, I mean, one of the things that people tell me all the time is if I can one click purchase anything I want on Amazon, why do I have to answer, you know, binding questions for my insurance. And, again, I was having a fascinating conversation with the team from penny.io last week, and one of the things that they do is they look at behavioral economics and behavioral science and try to determine what makes people more likely to answer the questions that are necessary to get answered to build an insurance policy. And I’m curious what you think about just the thought process around, can we use data and machine learning to make that process easier for the people to provide their information? Or extrapolate what’s true about them based on their cohort without requiring them necessary to answer all of the questions that we normally ask them? Does that make sense?
Kevin Angelini
It does. And on this point, I think the industry spent a lot of time and been very thoughtful on this. So I think there’s many cases where this is much easier than it used to be, for example, someone seeking property insurance in some places can take a picture that has a location tag on it. And that picture will go into a database, which would, you know, an AI would run to see what the possible perils are, where the location is, and whether there’s an accumulation. So a lot of these things can be automated. I think the complexity is, especially for a multi-line group like us, there’s different processes for different propositions, and how can you try and make them at least in some way consistent and comparable? So the industry has put a lot of thought into this. It does require a lot of collaboration with reinsurers and with regulators. And I think there’s still, you know, a number of open questions as to how new data sources could be used for certain decisions, can they be used for pricing? Or can they be used for pure underwriting decision only? This is something that comes back and forth. And so far, I think, the will of the insurance companies to try and modernize most of this is very strong. But still a little bit of conservatism from the regulators before they allow too much to happen too soon. So I think there’s still a few, a few more stones to turn over before we can call this a success, but definitely heading in the right direction.
Michael Waitze
Definitely for sure. What’s your view on parametric insurance? And is there an ongoing need to educate the consumers, obviously, but also some of the incumbents about like you said, these new data sources taking stuff in real time. And then having whether it’s just pure parametric or even para-indemnity, to protect people.
Kevin Angelini
I find parametric a fascinating space. I think, for individuals, and in this part of the world where there isn’t such a refined knowledge of insurance products, it’s it’s a good way to communicate something in a simple fashion. Because the products can be very simple to explain, you don’t need pages and pages of terms and conditions just need to explain to a customer. If A, B or C happens, you get paid x, right? Right. It’s a very simple concept. And what’s even nicer is that you don’t need to go through a process to file a claim, it should just happen automatically, like your flight delay insurance, or if there’s an earthquake within a certain radius and so forth. That earthquake example, we did launch something in Japan a couple of years ago. So you know, we work with utilities companies. So if there’s certain seismic activity over a certain level, a claim will just get paid, you know, a customer doesn’t need to go and file a claim. I think in places where there is going to be a lot of pent up demand in the coming years is actually parametric insurance for companies, not individuals. So you know, companies investing in big infrastructure projects or, or drilling that requires, you know, water level to be at a certain point, you know, with the right, design, a parametric insurance can actually provide a very good risk management tool for a company. But I think there’s a fair bit of internal know how that needs to be built up before before we see more and more of those.
Michael Waitze
I don’t disagree with you. How do you feel about parametric insurance for internet outages in the sense that it’s one of the strongest connections that companies have to each other to their customers? And if they lose connectivity, they could potentially lose business in the same way, you know, if their factory gets flooded?
Kevin Angelini
To be totally honest, I haven’t seen that one come up very much. But I think it definitely sounds like something that will resonate very easily with with many stakeholders. I think the main challenge that I could see is how do you validate something with an independent index, which is normally something what you need for for most parametric solutions, and I think, for an internet outage, I’m not entirely sure how that could happen. But I’m sure I’m sure something could be worked on.
Michael Waitze
For sure. I want to get back to something you were talking about earlier, where you said that insurance customers, whether individuals or companies want to get the same experience that they have when they’re dealing with other sort of digital goods providers, like e-commerce providers, and Shopify always comes to mind. And I think about this in the insurance space, and I’ll tell you how, and I wonder what you think. So Shopify builds this sort of basic platform. It’s complex on the backend obviously, but the front end is very basic. But it’s a platform. Yeah. And what they do is they give independent developers the right to develop widgets and plugins and stuff like that, which then they can sell. Stuff that Shopify either doesn’t want to, can’t build, doesn’t have time to build, but works seamlessly with their platform through an API, right? Do you see insurance companies moving to a similar model where you’re not just working with startups, but you’re dealing with people that are building sort of very specific products that then can help you connect to other platforms through an API, and give people the ability to do that, obviously vetted and curated and stuff like that? Does that make sense? So in other words, Shogun is a business that builds a frontend builder for Shopify, and they have like a 650, or $700 million valuation, do you see the same types of things happening for companies like Zurich where they have an open API that people can then build products that are vetted and curated by the insurer?
Kevin Angelini
Yes definitely I think this has been a big part of our preparations in order to do business with, with ConsumerTech, or FinTech or ecommerce style companies, whereas, you know, we do need to convince them that, you know, our processes can be well integrated into theirs, that we’re not trying to redefine any process of theirs. And you know, an open API is a very good way of doing that, because it reduces a lot of complexity. And reduces a lot of turnaround time, because I think, you know, due to the amount of processing paperwork, insurance companies, we have a lot of turnaround time compared to compared to more, you know, modern ConsumerTech or e-commerce companies. So, you know, we can’t be in a position where, you know, an e-commerce company thinks that we are complicating their customer journey, or we are introducing potential obstacles into their customer journey, right, we do need to convince them that we have the technology ready, our technology can be integrated into there. So the capability of our integration into third-party platforms has been a big part of our focus in the last few years.
Michael Waitze
And I want to end on not necessarily end, but I want to finish with this, I think and that is consolidation, and a little bit of the M&A question, if my information is right, Lemonade bought Metromile, which is outside of this region, but I think that it’s going to have an impact here as well. With all of the focus, we talked about this earlier on InsurTech, on all the money that’s being poured into insurance innovation and digital transformation at scale. Do you think that this is a watershed event for Lemonade, which is essentially, a VC-funded startup, buying another VC-funded startup is going to be the beginning of a wave, at least in the West for consolidation in this space?
Kevin Angelini
I think that will gain a lot of attention a lot of traction, and we’ll certainly see more of that activity. However, I think, fundamentally, I think there’s a limit to how far these these types of companies can, can go because the main successful digital attackers, and the two companies you mentioned are definitely, of the most impressive within that breed, typically focus on a limited number of pain points and do them very, very well. Whereas you look at most of the insurance companies around that have sort of stood the test of time, you know, surviving financial crises, and World Wars and so forth, tend to be multi line. And I think, you know, there’s definitely room for both, and we need companies like that to challenge our thinking. We need them to craft new avenues to reach customers and bring bring interesting things into the insurance world. But at the same time, there is a room for pooling. There is a room for diversification. I think that’s what most larger insurance companies do very well. Back back to your point, I think, you know, this transaction will definitely trigger a lot of activity. And there’s more to come.
Michael Waitze
Yeah, I think so for sure. And I guess I have one more thing. Since you mentioned it. I do feel like in the past three or so years, there’s been a change in the way that incumbents have looked at InsurTech and vice versa. Again, when we first started doing this, there was a lot of talk about where this little company, were going to move really fast and we’re going to disrupt this 400 year old company. It just hasn’t happened really at scale. Do you feel like that relationship has changed over time to more of a cooperative and rather than a let’s disrupt these guys kind of conversation?
Kevin Angelini
A little bit yes, and I think a lot of a lot of the new wave of startups that that we’re seeing are very keen to work with insurance from day one. And I think not many people really believed that the startups are here to disrupt or take away from the insurance. I think there’s definitely the way forward is to work together and to sort of like how the banks and asset managers have done too. Right. I think that you won’t be too different in the insurance world.
Michael Waitze
Yeah, I mean, the only company that I see that is competing with incumbents, at least in this region off the top my head that’s new is Singlife, right, because they’ve built just a full stack insure from scratch. I mean, not necessarily from scratch, because they’ve done some acquisitions as well, but basically from scratch.
Kevin Angelini
Yes. And I think they’re one of very few that actually raised money to cover the capital needs of running an insurance company, which, which most have not been, I think VCs have typically been funding companies with startup capital, working capital, builds some technology, but not really willing to fund an insurance balance sheet.
Michael Waitze
And to be fair, a Sunday, which is kind of Malaysian-based, but also Thai-based has done the same thing. It’s a little bit of a different size of scale, but they’re moving pretty quickly. And they’re being funded. Yeah, to fund a balance sheet as well. Anyway, very interesting conversation. I want to thank you, Kevin Angelini. That was the fastest 30 minutes of this week for me for sure. The Head of Strategy and M&A for Asia Pacific at Zurich Insurance. Thank you so much for doing this today. That was really great.
Kevin Angelini
Wonderful. Thank you.
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