Insurtech—the new kid on the block
What is it that CEOs most fear? What elements will have the greatest impact on their ability to deliver on promises to customers and shareholders? These questions formed the basis of PwC’s 19th Annual Global CEO Survey which covers a range of industry sectors. For insurance CEOs, innovation in technology, new market entrants and over-regulation came up as the top concerns. The report also highlighted that the level of disruption anticipated in the insurance sector came second highest, behind only media and entertainment.
The focus on technology in an insurance company’s value proposition is fast becoming a main priority for CEOs across the insurance sector—after all, it is both a driver for the growth in market entrants and a potential solution to address the increasingly complex industry regulations on a national and global scale.
Driven by an atmosphere of uncertainty, so-called insurtech companies—the catch-all term for technology vendors who sell insurance products and services—have seen significant investment and growth. There have been some truly astounding investments made in the last few years. Healthcare startup Oscar Health recently announced it raised $145 million with a company value/worth of more than $1.5 billion.
However, large insurance companies are also launching their own insurtech startups. Last year, Axa invested €100 million ($113.5 million) in Kamet, an insurtech incubator dedicated to conceptualising, launching and accompanying disruptive products and services for insurance.
Insurance CEOs are looking for a map or template to guide their next steps; a parallel industry where technology is at a slightly further stage of development and lessons have been learned. As it happens, something like this does exist: insurtech has taken inspiration in the name fintech.
Finance and insurance—mirroring factors
The wider banking and finance sector provides a very suitable case study both in terms of market players and pressures. There are the blue chip, traditional providers of capital and banking that face increasing regulatory pressures, have a strong reputational prestige to maintain and a natural aversion to uncalculated or uncertain risks. Underneath them sit the many markets, with either common or mutually exclusive components/complexities, serviced by mid-tier and niche organisations looking to gain a competitive advantage through either technology or process efficiencies.
Into this environment comes the nascent fintech provider movement that looks to leverage massive demand. It is fuelling a cycle of investments, and mergers and acquisitions, which have driven the market to exponential growth year on year.
Common trends also pervade both industries such as:
