I wasn’t born in 1964, the year Hollywood made the movie Seven Days in May, but curiosity compelled me to blow three quid to rent it on Amazon last week. The film spawned a flop remake called The Enemy Within (with a hopelessly miscast Forest Whitaker), but the original starred Burt Lancaster, Kirk Douglas, Fredric March, and Frank Sinatra’s wife Ava Gardner. Hard to beat.

It wasn’t the stars, but the timely plot that hooked me. It’s the story of a secret conspiracy inside the US military to eject the president (Jordan Lyman, who couldn’t possibly be a thinly disguised Lyndon Johnson, real president at the time) because the Chief wants to make nice with the Russians. Pure fiction, then.

I was reminded of the film later in the week when I saw the headline The last nail in the coffin of InsurTech disruption. This story was about the $2.6 billion acquisition by Ergo, Munich Re’s direct insurance operation, of Next Insurance.

The California-based insurTech writes US SME policies. It has north of half a billion worth of Business Owners Policy, workers’ comp, and liability premium on its books. It was already 29% owned by the mighty Munich, which no doubt has good reasons for mopping up the rest for such a large multiple (which I suspect are proportional in nature).

Next Insurance, as its name suggests with Jordan-Lyman-like subtlety, intended to disrupt the world of insurance. It planned to apply some whiz-bang technology that would let the upstart underwriter do everything better than the old, incumbent, tech-debt-laden traditional insurers.  

Surprise surprise, they learned fast that insurance is harder than it looks. Just getting the price right and avoiding adverse selection are difficult enough. The there’s the huge barriers to entry. Consider, for example, the near-stifling demands of compliance. And there’s no need for even the bestest technology and AI modelling if you don’t have the historical data to churn through the mincer. Incumbents have that. Disruptstarts don’t.

Insurance technology disruption is happening all around us, but we’re disrupting ourselves. After a few years of concern about becoming obsolete, our traditional, highly experienced, enormously skilled incumbent insurance sector is finally tooling up with the latest gadgets (sometimes by swallowing the upstarts). The enemy of the old is within.

It’s no surprise. 25 years ago, when I was a young underwriter at Hiscox, the eponymous Robert would often say that the insurance companies of the future would be technology companies that offer insurance. But he always believed that successful analogue insurance companies would keep their place by becoming successful insurance technology companies. He never imagined the disruptstarts. This London market visionary knew that to succeed, we would have to disrupt from within.