Other parts of this series:
Insurance start-ups are attracting plenty of funding but the proliferation of insurtech firms is weakening their influence on the traditional insurance industry.
The insurtech sector is booming. But there’s little sign that it’s disrupting the insurance industry.
Sure, we’ve seen the arrival of smart insurtech firms such as Lemonade, Metromile, Trōv and Oscar Health. And big carriers, including AXA, Aviva, Transamerica, MassMutual and American Family, have forged ties with a variety of insurance start-ups.
Nonetheless, the huge disruption of the insurance industry that many insurtech firms and their backers were forecasting a few years ago has yet to happen. Why? Was all the talk of the staid insurance industry being overturned by tech-savvy newcomers just hype? I don’t think so. Nor do plenty of big investors around the world. More than US$2.3 billion was channeled into insurtech start-ups last year. This is 32 percent up on the previous year, according to researcher CB Insights.
Insurance innovation hubs and incubators in New York, Boston, London, Berlin, Shanghai, Beijing and Bangalore are thriving. There are now thousands of insurtech firms around the world. Each working on a solution they believe will change the insurance industry.
Unfortunately, the proliferation of insurtech firms has blunted their impact on the insurance industry by stalling much of the anticipated disruption. Few insurtech firms have an Uber-type innovation that’s going to be a game-changer for the insurance industry. Most of them are working on narrow, niche applications. They, therefore, need to work with big insurers if they’re going to succeed.
Traditional insurers, however, don’t have the capacity or inclination to engage with hordes of insurtech firms that need their support. They’re unwilling to shift through swathes of proposals looking for a promising application. Nor do they want to try and splice a small piece of promising technology into their existing chain of business systems and processes.
It’s time for Insurtech 2.0
This situation needs to change. It’s too inefficient. It’s blocking the valuable potential of the insurtech boom. It’s time for Insurtech 2.0.
What’s required is better co-operation between insurers and insurtech start-ups. Collaborative hubs and investment partnerships are a start. But closer, more flexible, ties are vital.
At Accenture we’ve championed the importance of the digital ecosystems that are emerging across a wide range of industries. These interlinked webs of digital content and services are going to drive the development of the insurance industry and many other sectors. They provide an ideal platform for a new phase of insurtech collaboration that could accelerate innovation in the insurance industry.
Insurers are already recognizing the importance of new partnerships. Thirty-eight percent of the insurance providers we recently canvassed reported that the number of partners they’re working with has at least doubled in the past two years. In an earlier survey, 76 percent of insurers acknowledged that their competitive advantage will be influenced by their partners and ecosystems.
In my next blog post, I’ll discuss how insurtech ecosystems could accelerate innovation across the insurance industry. Until then, click on to the link below. I think you’ll find it useful.The rise of insurtech: How young insurance start-ups and a mature industry can bring out the best in one another.
The Rise of Insurtech: How young startups and a mature industry can bring out the best in one another.
Find out how insurers and InsurTech startups can collaborate to disrupt and elevate the insurance industry.