The insurance industry has remained much the same for more than a century, but increasing collaboration between Fintechs and startups means established companies are about to experience a big shake up, according to a new report.
The PWC report – Top Insurance Industry Issues in 2016 – states that the insurance-specific branch of FinTech, InsurTech, is emerging as a game-changing opportunity for insurers to innovate, improve the relevance of their offerings, and grow.
In 2013, the total funding for InsurTech companies was US$600 million. That figure surged to in excess of a staggering US$1.4 billion in 2015.
“InsurTech has seen funding in line with FinTech investment overall, and we expect investments to increase as new players and investors enter the space,” the PWC report states.
The report adds that as well as startups, the two main drivers of disruption are customer expectations and the pace of innovation.
“The widespread adoption of new consumer technologies in all industries has created new needs for and expectations of insurance solution and interaction channels,” the report says.
With the demands of the shared economy, usage-based models, internet-of-things (IoT), autonomous cars, and wearables, insurers have an opportunity to implement more radical innovations and experiment with new business models, the report adds.
“Incumbent insurers have been able to slide by with incremental improvements. New entrants are demonstrating that approach isn’t enough anymore.”
The report states it is becoming increasingly important for established players to focus on the following six steps to avoid being left behind:
- Meet changing customer needs with new offerings
- Enhance interaction and build trusted relationships
- Augment existing capabilities and reach with strategic relationships
- Leverage existing data and analytics to generate risk insights
- Utilize new approaches to underwriting risk and predicting loss
- Enable the business with sophisticated operational capabilities