What is upstream value capture?
An insurance company/full stack InsurTech acquires/builds a PoS marketplace or provider OR acquires/builds a service provider to generate organic leads for insurance sales.
Value proposition of upstream value capture
Increase in # of customer touchpoints
- Insurance co’s typically have two touchpoints per year (renewals and claims)
- Owning service marketplaces/providers can create multiple touchpoints annually (ecosystem lock-in; up-sell opportunities) – Ping An Good Doctor
Ability to acquire customer at the point of greatest intent
- Owning pre-purchase service providers can provide early access to prospective insurance customers – Baloise and Movu
- Exclusive partnerships between subsidiaries can be leveraged
Diversify revenue stream
- One-time & recurring service fee income – Acko and VLer
Ability to exercise control over risk selection
- Additional data points at underwriting (motor vehicle inspection, healthcare information) – Ping An Good Doctor and Autohome
Example #1 – Baloise & Movu
Movu is a Zurich based home relocation start-up. Baloise Insurance acquired Movu in June ‘17 
Together with InsurTech Kasko, Baloise offers “moving insurance” (goods in transit) for Movu customers. 
Acquisition thesis: Identify homeowners/renter’s insurance prospects (and build a relationship through prior moving service) before they begin the search for insurance.
Example #2 – Ping An and Autohome
Autohome is a one-stop shop for motor-related needs in China. Ping An Group holds 53.9% stake  
Ping An Auto Owner app has 80M total downloads, 45M of whom are motor insurance customers for Ping An!
Investment thesis: Identify motor insurance prospects; introduce them to Ping An ecosystem through Auto-owner app (either acquire or convert over time).
Example #3 – Ping An and Good Doctor
Good Doctor is a telemedicine platform in China and SE Asia (though its partnership with Grab).
The platform has 62.7M MAU and 2.3M MPU as at 30/06/2019 
Thesis: Move from indemnification to risk management within health insurance. Alternative customer acquisition channel (evidence: 39% of new customers acquired by Ping An in ‘19 from ecosystem ventures like Good Doctor.
Example #4 – Acko Insurance & VLer
VLer Technologies is an online car marketplace (vehicle sales, financing & insurance included) in India; Acko Insurance acqui-hired Vler in June ‘19 .
Acquisition thesis (*): Tap into motor expertise for insurance product development. Potentially, re-launch Vler as a car marketplace (just like Ping An runs Autohome in China)
Interesting to note – CarDekho (online car marketplace) launched InsuranceDekho in June ‘19 ; entirely the opposite of this theme (“downstream” value capture).
* – VLer Technologies domain is not longer active; I haven’t found an official statement of the marketplace shutting down
Policybazaar x Docprime
Policybazaar (insurance comparison website) launched Docprime (healthcare portal) in India – December ‘18 
- Advantage – Similar to Good Doctor, proactive risk management. Potential cross-sell opportunity for health insurance to good risks.
Ping An x Lufax
Ping An has a digital lending subsidiary Lufax (valued at $39.4bn)
- Advantage – Lending (mortgages, consumer credit etc) provides a touchpoint to bundle mortgage/gadget insurance; entry point into purchase journey before other insurance companies.
Concerns regarding upstream value capture
Impact on customer choice
- Offering insurance bundled with monthly “service” payments (for example, EMI) may prevent customers from shopping for lower premium policies.
- Exclusive partnerships between subsidiaries might be deemed anti-competitive.
(This statement wouldn’t apply to Baloise & Movu)
Access to asymmetric information
- Data points gathered by the service entity (condition of used car sold or customer’s fitness routine/lifestyle choices) can influence underwriting decisions in favour of the insurance entity.
Questions for you
With regards to insurance companies owning telemedicine and motor marketplace subsidiaries –
- Does upstream value capture serve only the needs of the insurer or is it mutually beneficial to the insured and insurer?
- Do you see any impact on customer choice? If so, is there any action (perhaps, from regulators) that must be taken?
About the author
- Rahul is the Cohort & Communications lead at Accenture’s FinTech Innovation Lab in London.
- Prior to joining Accenture, he was an Insurance Product Manager at Laka Insurance, a London headquartered early stage InsurTech start-up which recently won at the British Insurance Awards 2019.
- Rahul holds a master’s degree in Statistics from the University of Warwick.
- He is an Ambassador at the Asia InsurTech podcast; reach out via LinkedIn or Twitter.
- Views expressed in this article are my own and do not represent those of Accenture, its management, its employees or its affiliates.
- This article does not constitute investment or any other form advice. The author bears no responsibility in the event of financial or other loss arising from actions taken by the reader or any related party on the basis of information represented in this article. The author does have any financial interest in any firm mentioned in the article above; this article is produced for educational purposes.
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