InsurTech is a sub-segment of FinTech, the use of computer programs and other technology for enabling banking or financial services. While FinTech is for finance, InsurTech focuses on solving insurance challenges and providing new digital solutions and opportunities.
Over a third of insurers do not have any involvement with InsurTech yet, despite this, almost three quarters of the major insurers believe that a part of their business will be at risk of disruption in the future.
Being aware of this monumental change is the first step. The industry needs to be proactive and show a willingness to engage and work with InsurTech companies to create a mutually beneficial and sustainable model.
PWC’s InsurTech report found that:
56% of insurance companies surveyed felt that between 1% to 20% of their revenues were at risk to InsurTech companies
The leading insurance companies recognize that start-ups have inherent advantages to innovate and launch new business models that they would not be able to do internally. Through venture funding or partnerships, they are creating relationships with InsurTechs to help them get to market.
While InsurTechs have advantages in being ‘digitally native’ and being able to think about insurance problems without past assumptions on ‘this is how things are always done’, incumbent insurance companies have advantages in financial strength, knowledge of the regulatory environment, and years of claims data to accurately price and underwrite risks.
Both sides bring considerable value to the table and that is why insurance company / InsurTech partnerships offer so much potential to realize the innovation being developed by start-ups in this space.
InsurTech and the Future
New tech savvy customers have higher expectations for how their insurance company or insurance broker interacts with them and these social and technological trends need to be addressed by the industry.
So where is the industry going? InsurTech will no longer be seen as disruption but as a transformative force. Insurers and InsurTech companies will partner to overcome the industry’s challenges, and foster new innovative products and services.
If you’d like to continue this conversation about InsurTech, or learn more about how InsureVue can bring digital transformation to your insurance business, please contact us and we’ll arrange a convenient time for a discovery call.