Article Synopsis :
The rapid growth of InsurTech startups brings a new level of innovation and disruption to the industry with many carriers acting to leverage the not-so-hidden opportunities. In the report “InsurTech – A golden opportunity for insurers to innovate” PwC identifies three of the biggest drivers of InsurTech led disruption:
- Changing customer expectations: Customers expect personalized insurance. “One-size-fits-all” no longer works
- The high pace of innovation: The shared-economy, autonomous cars and IoT bring opportunities for radical innovation
- Increasing number of startups in the sector: New players who innovate quickly can close gaps in the market where incumbent insurers have failed
As part of their Future of Insurance initiative PwC interviewed several industry executives identifying six key opportunity areas for incumbents as they work to meet evolving customer needs while improving core insurance functions:
- Meet changing customer needs with new offerings.
- Enhance interaction quality to build trust in 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.
At a strategic level traditional insurers are:
- Exploring and discovering – actively monitoring new trends and innovations. Some are even establishing a presence in innovation hotspots (e.g., Silicon Valley)
- Partnering to develop solutions – developing potential use cases geared to specific business challenges
- Contributing to InsurTech’s growth and development – identifying areas of need and opportunity and encouraging/working with startups to develop appropriate solutions
- Developing new products and services – refining and even redefining product portfolio strategy resulting in the design of new risk models tailored to underserved and emerging markets
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Digital Insurer's CommentsInsurTechs have a commitment to excellence – defined as superior customer experience – and succeed or fail on their ability to do something in the market better than anyone else. What they lack in size they make up for with intelligence, grit and determination.
InsurTechs fall in two categories: disruptors, who challenge the existing market, and enablers, who help incumbents do better work. Working with both types is both essential and equal parts danger and reward. Relaxing traditional investment and partnership guidelines is the first step toward success with these firms. The good ones have multiple options and will insist on doing business on their terms, not yours.
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