InsurTechs used to launch insisting they were insurance industry disruptors bringing new ways to bypass traditional players in bringing coverage to consumers. In reality, Swiss Re Group CEO Christian Mumenthaler said, the startups have been anything but.

“The word disruptor is maybe a bit too strong,” Mumenthaler explained on Oct. 20 during an InsurTech Connect ITC Global virtual panel discussion with Paul Desmarais, executive chairman and co-founder of Portag3 Ventures. “It is important to be fair to reality.”

He reminded listeners that early promises about InsurTech’s capacity to create disruptive change were a lot about hype.

“On the primary side, in this InsurTech craze a few years ago, you could clearly see people thought the value chain was ineffective, and they could do better” by bypassing traditional selling channels, Mumenthaler said. “It doesn’t work like that in reality. It’s very hard to do a full-blown primary insurer.”

Mumenthaler acknowledged that InsurTechs have developed technology and platforms that have helped blur the lines between traditional channels of selling and distribution, but he has not seen any go quite as far as those early boasts had promised.

Primary insurers and reinsurers will still play their traditional roles, he said, with longer-term InsurTech influence likely depending on where they are in the value chain. He said, instead, there will be new combinations [between incumbent companies and newcomers] to maximize coverage, and continued variations on distribution.

“It’s not hard to create a digital insurer, but it is hard to sell” coverage in new ways, he explained.

A More Advanced China

Swiss Re is focusing its InsurTech investment on China at the moment, something Mumenthaler said stems, in part, from the widespread opportunities there and China insurers’ embrace of technology. One recent example: Swiss Re in August was the lead investor for Waterdrop Inc.’s $230 million financing round. Waterdrop distributes insurance policies online through its Waterdrop Insurance Mall, provides illness insurance crowd-funding through its Waterdrop Crowdfunding platform and also operates mutual funds.

At the time, Swiss Re said the investment was part of its ongoing focus on China.

“Generally, it is not part of our strategy to invest minority shares in these startups,” Mumenthaler said, adding that Swiss Re either buys companies completely or simply advises.

China is a notable exception because “companies in China are just further ahead than we have in the West, because they were created later and leapfrogged in terms of technology,” Mumenthaler said. “They are much more open [to] innovation, using much more technology and trying to understand risk in a much more granular fashion.”