There is a growing recognition among insurers that insurtech represents more of an opportunity than a threat and that insurers should seek to collaborate closely with this latest breed of technology-fueled startups.
In this series, I’ll discuss the key findings of our Rise of Insurtech report and outline pathways to partnership between traditional insurers and emerging startups. I’ll examine some interesting insurtech partnership case studies and discuss ways in which insurers can take bold steps toward fully embracing a culture of innovation.
Insurtech is enjoying record growth. While 2016 saw $1.7 billion in insurtech investments, things are only picking up in 2017. A recent report by Willis Re, Willis Towers Watson Securities and CB Insights found that investment in insurtech startups in the second quarter of 2017 totaled $985 million, a rise of 148% on the previous year. Q2 saw an 88% rise in the number of transactions year-to-year, setting a record of 64 transactions in the quarter.
While the growth hot spots were traditionally located in North America (primarily California and New York), this year saw significant markets emerging in China, India, Germany and the U.K. Insurtech is now a global phenomenon.
See also: Digital Insurance 2.0: Benefits
Which technologies are behind this surge? Accenture analyzed more than 450 insurtech deals and found the insurance industry is investing in technologies that help companies better understand their customers so that the companies can deliver hyper-personalized services. These technologies include artificial intelligence (AI), analytics and the Internet of Things (IoT) — areas where traditional insurers are, arguably, falling short of meeting evolving customer demands. Insurtech may help bridge that gap.
Accenture’s Technology Vision for Insurance 2017 found that 87% of insurers agree technology is no longer advancing in a linear fashion but, rather, at an exponential rate. Insurers know new technologies are changing their customers’ expectations and are transforming the entire industry. They also recognize the need to innovate rapidly and at scale to retain their competitive advantage.
Partnering with insurtech startups may offer insurance incumbents the opportunity to do just that. Though insurtechs are often thought of as potential industry disruptors, many insurers view the rise of insurtechs rise as an opportunity to partner with agile startups and expand ecosystems. Indeed, Accenture found that 44% of global insurers plan to pursue digital initiatives with startups in the next two years.
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In my next posts on insurtech, I’ll look at some specific challenges and opportunities traditional insurers face as they seek partnerships with insurtech firms.
To learn more in the meantime, register to download Accenture’s report The Rise of Insurtech here.
