Insurtech startups are driving innovation for the industry, finds IBM in a study called “Friend or foe? Insurtechs and the global insurance industry”.
Here’s what they found:
- Eighty-one percent of outperforming insurers have already invested in or are working with insurtechs, compared to only 45 percent of all other insurers – a sign that insurers are embracing the innovation insurtechs are bringing.
- Yet, only 10 percent of insurtech funding comes from insurers. That could leave incumbents in real danger of being stuck with the tail end of the market, and very little of the profits.
- The three most common insurtech business models are digital insurers (26 percent), Big Data analytics and insurance software (23 percent), and comparison portals (21 percent).
- Only 18 percent of insurtechs pursue a strategy of disruptive competition vis-à-vis traditional insurers, whereas 28 percent name their strategy as evolutionary cooperation. The rest are somewhere in the middle, with the majority on the cooperative and evolutionary sides.
Where Innovation Will Come From: IBM
Respondents to IBM’s polling believed insurtechs will improve insurance in three major ways: by improving customer focus, personalizing risk management, and accelerating the creation and adoption of ecosystems. Platforms will be playing an important role in all of this, making insurance customers’ life easier – and hopefully safer.