Technology and innovation are on the rise and consumers are hungrier than ever to acquire value adds for their daily lives. New businesses are emerging with new business models and tech at their core, and they are already delivering upon better, safer, faster and more customer focused promises. Tech is disrupting all sectors, from finance, to health, and now Insurance.
With the customers’ continuous access to abundance of information, their needs are evolving specifically in areas of insurance and safety. Thus, the insurance sector is bound to develop and open to innovation propositions to be able to address the increasing customer needs and keep up with the overarching sectorial digital disruption. Nowadays, we see legacy insurers paying more attention to the ever- evolving InsurTech leveraging on big data, AI and IoT to continuously redefine their customer experiences, keeping up with the fast pace and staying ahead of their competition.
InsurTech have become powerful drivers for change in the insurance industry, making customer centric approaches at the forefront of successful disruptions, and cultivating them with investments and venture building is becoming an essential component of insurers’ strategies. The international scene has seen an enormous growth where $41.65 billion had been invested globally into InsurTech across 2,249 deals in 63 countries by the end of 2021.
Nevertheless, as we take a magnified view into the InsurTech ecosystem in the MENA region, we see insurance industry is still struggling to fully modernize. Many incumbent insurers have outdated, neglected IT infrastructure, and instead of addressing this underlying problem in one major overhaul, they seem to pile new applications on top of their legacy systems. It is with no doubt that continuous innovation, digitization as well as customer centricity are the building blocks of winning Insurers and by working closely and investing in InsurTech with comprehensive business models, MENA insurers can speed up their digital disruption and strengthen InsurTech position in the insurance ecosystem seamlessly.
The MENA region is no stranger to investing in tech, in 2022 we have witnessed noticeable growth in the number of small deals as well as a reasonable uptick in the value of the financing rounds allocated to startups at later stages of funding, where the value of investments in tech reached $3.94 billion in 2022. However, out of this value, unfortunately only $17 million was invested in Insurtech. So, what is needed for MENA Insurtech to rise? As we take a deeper look into the region, the Insurtech ecosystem is not structured well enough to allow the growth of diverse new businesses that would strengthen customer centric value propositions for the insurance spectrum.
We have thoroughly evaluated the main pillars for Insurtech growth and a cultivated innovation ecosystem specific for the MENA region. Our research and evaluations helped us identify 6 focus areas that would ultimately enable exponential InsurTech and digital insurance growth within the region with a healthy base, listing them below:
- We need to make incumbents and re-insurers more available to support InsurTech in Fronting their new propositions and provide balance sheets and capacity.
- Each country in the MENA region follows specific regulatory frameworks different from other countries in the region, thus, the need to work on harmonizing the Go-To-Market regulatory requirements in inevitable to support InsurTech scalability.
- We need to provide access not only to capital, which is abundantly available in the wider gulf region, but also to specific InsurTech affine Venture Capital and other Financing structures.
- We have very good talent in Insurance and emerging talent in tech, however due to the absence of InsurTech in general, we are missing digital insurance and InsurTech relevant talent pool. We have different initiatives working with Accelerators and specific InsurTech Labs to train more digital talent but not enough talent to raise the ecosystem.
- We need to provide access and capabilities to grow InsurTech Solutions across borders, mainly in smaller countries, such as Bahrain, Qatar and Kuwait.
- Last but not least, we definitely need to provide a network of local and regional partners that would help in implementing and bringing international InsurTech and insurance innovation to the MENA Region.
With a clear map on what needs to be done, initiating the MENA InsurTech Association was the right thing to do. The Association has started its operations in 2022 with the objective of tackling all these limitations and connecting InsurTech ecosystem players thus encouraging them to drive and rise up with a healthy and bespoke MENA Insurtech ecosystem.
The Association is set to congregate 7 main business streams over 3 phases, with each phase spanning 1-year time. Phase 1’s main outcome is to scout InsurTech out there and give them a head start through mentoring and coaching, competitions that would eventually hone their business models and expose them to successful InsurTech. Another work stream comprises of cultivating the regional network and injecting international expertise and investments this is planned to happen through pre-scheduled and organized Summits that would give MENA region the needed international exposure and allows them to display their ideas and innovations highlighting regional opportunities and limitations throughout their journeys and giving them the chance to create groundbreaking learning environment from practice.
InsurTech from the region and the world will have the opportunity to pitch, learn, exchange knowledge, build their capacity and get a fair chance to front their propositions with insurers. Phase 2 and 3 will aim to harmonize the regulations or at least give understanding for the do’s and don’ts needed for Insurtech to scale across different markets.
Such associations are the starting point for bridging gaps and building a sustainable ecosystem, creating investment opportunities, and diminishing barriers facing the Insurtech revolution in the MENA region. Where there is a mutual win for both legacy insurers, InsurTech and customers value.
It is important to highlight that our journey with the Association since its initiation last year, has helped start ups grow, get investments from leading venture capital, and sign long deals with legacy insurers and beyond. This is the 1st step for building our ecosystem and we are optimistic of the “rise of the MENA Insurtech ecosystem”.
QIC Digital Venture Partners has been the initiator in founding the MENA InsurTech Association in collaboration with other ecosystem partners that add incremental value and insights for supporting InsurTech growth regionally, to build insurance ecosystems through connecting ideas, talents, partners, and capital in MENA. We are taking calculated yet promising steps to encourage investments and deal flow specifically in InsurTech. We believe such initiatives bring in trust and enforces healthy circular economies with diverse contributors to the tech value chain.
It is only natural to highlight that one of the first initiatives we worked on at QIC Digital Venture Partners was to shape and build the MENA ecosystem, involving the right stakeholders by connecting InsurTechs with Digital Insurers, Venture Capital, regulators, researchers, and tech giants.
Authorship Attribution:
Lars Gehrmann – Chief Digital Officer • QIC Digital Venture Partners
Dania Pharaon – MENA InsurTech Association Lead • QIC Digital venture partners
