The Travelers acquisition of Simply Business for £400 million earlier in the week is the most significant InsurTech related deal of 2017 so far. It tells us an awful lot about where the world of insurance is heading in the digital age - it's something of a revelation in the biblical sense of the word.
Here's my top 10 insights
1. The digitisation and commoditisation of distribution to SME's is and remains a gold mine. It took a while, but Simply Business cracked it and the £400 million valuation reflects that
2. There's still a role for intermediaries in the digital age, even in a commoditised world. The key is the provision of value and Simply Business did that by designing the right products to meet the specific needs of their SME clients and fully understanding how to make distribute them digitally.
3. It's all about Engagement. They key components of insurance in the future are the ability to engage the customer, data and capital. Think Amazon, they can sell us anything as their technology is great and we trust them as a brand. For an intermediary to succeed they need to win the engagement battle and pass the right data in the right way to their insurance partners who provide the capital and licences.
4. Like pop stars, you don't really hit the big time until you crack the U.S. SB was sold for £100 million last year and sold on again this year for 4 times that. The only difference in the business that I can divine is that they opened and office in the US in the meantime and started bringing their unique approach to a bigger market with greater potential.
5. The increasingly global nature of insurance, means that technology centric businesses will find it easier and easier to migrate their propositions to other countries and scale quickly. For this partnerships with insurers like Travelers with a global footprint is crucial.
6. The symbiosis between incumbent insurance world and InsurTech innovators is now total. This acquisition at this price is an effective admission by Travelers that SB will provide something that is critical to their future success and that it's cheaper to buy for £400 million than do it yourself from scratch!
7. For aspiring entrepreneurs, there are several lessons to be gleaned. The most important of which is patience. SB is 12 years old and has had its ups and downs in that time. They were formed before the word InsurTech was even invented and now their time has arrived. Unless you're really lucky it takes time to build a £100 million business in this or any age.
8. SB never lost focus or belief in their model. I know that from personal experience. I have taken them ideas which I thought were excellent (I tend to think that all my ideas are excellent!) and they never bit on any of them because they only wanted to provide bespoke products to businesses with less than 25 employees.
9. Getting the right culture, selecting quality employees and providing a stimulating environment for everyone to work in will pay handsome dividends. There is a connection between SB's success and the fact that they won Sunday Times Best Place to Work 2015 and 2016.
10. Travelers is keeping a very careful eye on the InsurTech space. You can even be a small start up in the UK like Brolly with an umbrella logo and catch their attention! When they see a business they like, they'll write a big cheque.
Travelers has snapped up Simply Business, a UK-based online insurer for £400m, more than three times the price the company was sold for less than a year ago. The deal comes as incumbent insurers are rushing to secure a spot in the digital world, investing heavily in start-ups and more established online insurers.