InsurTech entering its second wave
Investment focus shifting from new startups to more established innovators
Even though startup activity in insurance has slowed, InsurTech will continue to play a major role in shaping the future of the industry. How can insurers adapt to these changing times and better leverage InsurTech to speed up innovation and digital transformation?
InsurTechs are looking to carve their own niche in the emerging digital insurance marketplace by catering to evolving customer needs and rising expectations. Many incumbents are often helping to finance experiments by InsurTechs—which would at first appear to be competitors—in part to likely learn about the digital marketplace and perhaps complement their own more traditional business models.
Yet a majority of InsurTechs aren't seeking to compete with, let alone displace, incumbents. Instead, most are being launched to help solve legacy insurer problems across the organisation, from general operations inefficiencies to enhancing underwriting, distribution, and claims functions. Insurers can leverage InsurTechs to speed up innovation and the digital evolution, integrating the newcomers' next-generation technical capabilities and entrepreneurial culture to become the digital insurers of the future.
InsurTechs could ultimately accelerate the transition of incumbents to become more customer-centric, data-driven, and multi-platform-based. InsurTech innovation can help stitch together capabilities across the insurance value chain so carriers are better able to meet the needs of consumers, agents, and brokers.
By collaborating with InsurTechs, we think traditional insurers may be able to more quickly and efficiently innovate in their approaches and operations to take advantage of four strategic options made possible through digital transformation:
- Delivering ahead of customer expectations
- Accessing new markets and segments
- Shifting from purely underwriting risk to providing more comprehensive well-being (in terms of physical and financial security)
- Reimagining the operating model to generate higher profitability