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InsurTech is composed of the words "insurance" and "technology". It is used as a collective term for the application of modern technologies in the domain of insurance services.
Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.
Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through customer wearables to consult on, offer and/or manage the customer’s insurances.
Introduction
Attitude of the country towards InsurTech-services
InsurTechs are getting more and more popular in Germany. Overall, the political and social climate is positive.
However, there are reservations in the public that German insurance companies are hesitant about innovations. As a result, they are increasingly at risk of missing the boat on new InsurTech trends. It is generally acknowledged in the industry that insurance start-ups offer great opportunities. Nevertheless, very few companies have yet initiated processes and measures to implement new digital products and services on the insurance market. They also expect traditional intermediaries to be among the losers in the InsurTech innovation wave and hope to generate their business through other sales channels in the future.
Nevertheless, the number of InsurTechs has risen in recent years to 160 in Germany. Cooperative InsurTechs form the broad mass of the scene: Almost 85% of InsurTechs rely on cooperations with insurance companies and brokers and would like to work together with established players as digitisation or sales partners. Overall, most InsurTechs are still in the early stages of development; only 3% have reached the maturity phase and have been able to assert themselves as a stabilised, established and profitable member of the German insurance landscape.
It is therefore fair to say that the climate in Germany is definitely turned towards InsurTechs or is becoming increasingly open to them.
Legal affairs
Obligations and requirements to provide InsurTech-services
The insurance business is regulated in the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG) and the German Industrial Code (Gewerbeordnung – GewO). Furthermore, data protection and money laundering regulations also have to be complied with.
InsurTechs are subject to insurance supervision if they conduct insurance business. Conducting insurance business as a provider domiciled in Germany requires a license from the competent German supervisory authority, which usually is the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). Insurance intermediaries or insurance consultancy services require a license not under VAG but rather under GewO. Such licnese is usually issued by their local chamber of industry and commerce (Industrie- und Handelskammer – IHK).
A license for conducting insurance business costs EUR 32.259,00. A license to operate as an insurance intermediary or consultant and to get registered are approx. EUR 300.
The insurance business authorisations may only be granted to public limited companies (Aktiengesellschaften), mutual societies (Versicherungsvereine auf Gegenseitigkeit), public corporate bodies and institutions under public law. The requirements for an authorisation c