InsurTech Changes The Insurance But 8 Out of 10 Legacy Players Afraid To Lose Their Positions
TechnologyBit News Today2 min read
2018 was the year of rapid development for the InsurTech sector, even if the progress happened without major publicity stunts or fanfare. It was a steady, large-scale evolution that is slowly turning the insurance market upside down. The key point is that no single player in this space can ignore the trend, much as they might wish to.
Importantly, Swiss Re Sigma recently published studies showing how technological advancements could help property and casualty (P&C) insurers achieve a 10% return on equity (ROE). This means that InsurTech has become a fully-fledged, attractive market mechanism and investment target in record time. And that's just the beginning. During 2015-2017, many financial and insurance market players predicted that 2018 would be a runway for InsurTech. It appears that those expectations were met.
The key question now is: what's next? The answer is somewhat predictable. Following the events of 2017-2018, Business Insider Intelligence published a report on market expectations and trends. Their analysts believe that 2018 marks fundamental changes in areas like policy creation, underwriting, and claims management.
Funding and Scaling
The funding of projects is increasing, allowing them to scale up, while larger insurance market players are starting to move their startups out of the "sandbox" to follow these leading trends. The primary focus is still on distribution, as this area saw the most significant disruptions with no signs of regression. As shown in the report, InsurTech projects continue to create completely new business models based on modern technologies. Among these are automation, big data and analytics, connected devices, and machine learning — all successfully used to create holistic, on-demand policies for consumers.
Consumer Shift
A rapid technological breakthrough was not random or unexpected: over 70% of the US audience aged 18 to 30 already refuse to trust traditional banking, financial, and insurance institutions. Instead, they opt for the latest generation of technology-driven solutions. Backing up the trend, 80% of traditional companies see risk for their business from technological competitors. The US acts as a leading indicator for the global trend, with an influx of young, tech-savvy consumers entering the market. Patterns like these suggest that the market is adapting, signaling its readiness for disruption.
