Up to 40% of some insurers’ revenues at risk from insurtech
Between 30 percent and 40 percent of some insurers’ revenues are at risk from the threat being created by Insurtech embracing technological innovations including data, robotics and artificial intelligence (AI), according to estimates by Paul Williams, executive chairman of insurtech company JRW Group.
Responding to the findings of the PWC Fintech report published last week Williams said that only some insurers are starting to wake up to the changes taking place now. They are recognising the real opportunity and threat being created by Insurtech models.
He states that data, robotics and AI will transform the insurance landscape over the next five to ten years.
“These new operating models will require insurers to reinvent the way they price and assess risks. In addition, at the moment insurers’ cost of capital and the expense burden they carry to run 'traditional' distribution models do not translate to what is coming. Insurers who don't adapt will find themselves squeezed out of certain segments of the market,” he said.
“Tinkering at the edges won't work for insurers in the medium term, either. I hope to see existing insurers in the market take a leap of faith and not get held back by a 'this is the way we have always done it' mentality. Having the right skill sets and mind sets sat around the insurer's boardroom table will be critical, and that in itself is a challenge.
“Already we are seeing some forward-thinking insurers create incubators and look at buying in solutions and knowledge in this area. Over the next five years we will see more and more insurers potentially acquire Insurtech businesses and models which will help them transform their business and seize the opportunities available.”
He also predicts that new capital will enter the market aligned to Insurtech models. “Some of these companies which will become future power houses may not even exist today,” he said.
“The PWC report identifies the risks and opportunities facing the industry. As we often see in business, those with a clear vision of how they can meet these hurdles will find the world ripe with opportunities. Others will find it increasingly hard, perhaps hoping to put the genie back in the bottle, but this will be futile.
“Good quality insurers and brokers can be adept at handling change, especially when change drives better outcomes for customers. We should all get ready because a big transformation is coming.”
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