Latin America is ripe for insurtech innovation.
It’s a huge potential market with little penetration and a lot of talent. The LATAM Insurtech Accelerator program, launched in partnership with BrokerTech Ventures, is giving regional insurtechs a kick-start this year.
Like any emerging market, there is attractiveness in the quality of development vis-à-vis more developed markets but at a much lower price point. So more recently, you see that we can develop platforms like Betterfly or others that are not that well known just yet. We say “recently,” but we’ve been doing it for a couple of decades now. That’s one angle.
The other angle is, again like many emerging markets, we have a lot more propensity to be innovative by virtue of our volatile economic circumstances. People need to be innovative to solve certain problems that we have. The good news about the Betterflys of this world is that, once someone breaks the glass ceiling, there’s a lot more attention for the people who come behind, and that’s what we’re benefitting from in the last year or so.
Number one, BrokerTech Ventures has two years of experience under their belt, so they know how to run an insurance-specific accelerator. We benefit a great deal from those lessons learned, and that allows us to go faster than if we were doing it on our own. The other thing they bring is a network effect that would take us years to replicate. Just the fact that we have people from BrokerTech Ventures having visibility into our accelerator and that being communicated to Israel and through all of the associated companies to BrokerTech Ventures creates an exponential effect for us.
Last but not least, with BrokerTech Ventures as a foundational partner, we will benefit from having today an Israeli presence, a [Latin American] presence, and hopefully a European presence—and why not an Asian presence in a couple of years? That would be a network for insurtech development unlike any other in the world.
All of the above? We are not creating any barriers to the type of insurtechs that come in. What we are doing is making sure that these are proper companies, that already are, at least initially, funded, whether it’s friends and family or actual seed funding; that they do have a product that is already operational with a B2B customer that is using the product. Our role in accelerating them would be either to help them polish their value proposition and their approach to market so that we can help them grow within their market or internationally within the region.
We are also looking for different types of value propositions. Latin America, for example, hasn’t been quite famous for having insurtechs catering to specific needs of say, women. We would love to have one of those. More than 40% of our insurtechs in the region are focused on distribution solutions. We want to have some distribution solutions, but we also want to have more things along the lines of claims and servicing, more along the lines of [artificial] intelligence and, for example, fraud management and things of that nature.
We are convinced of the fact that the more people who are insured, the better our economies are going to be. You can correlate the penetration of insurance vis-à-vis GDP, and the higher that ratio is, it correlates with more developed economies. We want to do that. We want to have more people insured to improve our economies.
Number two, we need to simplify how insurance gets distributed. That requires a lot of digitization and collaboration with the channels that can reach the most people which are certainly not the insurance companies. It’s more like banks, it’s more retailers, it’s more different types of entities. It’s probably less about property and casualty and more about health and life, but it is the combination of all those things in the right mix that is going to allow us to get more people and a greater insurance base.
The last bit that’s important in all of this is to make sure we have all the right control mechanisms to make sure insurance is something that truly protects people. There’s nothing worse than for us to get people into the banking system only then to be susceptible to cyber attacks and loss of wealth because of that.