Accenture’s March 2017 report, The Rise of InsurTech: How Young Startups and a Mature Industry Can Bring Out The Best In Each Other, focuses on the budding relationship between traditional insurance companies and technology entrants.
A new report by Accenture – The Rise of InsurTech – details the exponential effects of technological disruption in the insurance space, outlining insights from within the industry that recognise the need for traditional insurers to evolve quickly and collaborate with young InsurTech companies in the digital ecosystem.
Although collaboration is far from easy and the barriers to change are high, key insights from traditional insurance companies did indicate a growing recognition of the mutual benefits of cooperation. These benefits revolve around using data effectively and effectively meeting customer needs. The data also points to an upward trend in InsurTech investments throughout U.S., U.K., German, and Chinese markets.
The report further highlights key drivers in the growth process, placing particular emphasis on new technologies that are now driving personalisation and applicability in solutions. According to the analysis, three technologies – AI, IoT and analytics – accounted for more than 50% of 450 insurtech deals between 2014 and 2016. In addition to this, the findings further suggest that the investments being made are mainly coming from outside the traditional insurance space; however, as companies recognise the exponential trajectory of technological growth, the numbers have begun rising within this space as well.
On the basis of its research findings, Accenture was compelled to underline the now urgent need for clearer value propositions when operating in unclear market environments where risk levels run high amongst incumbent insurers and InsurTech start-ups alike. In contrast to the lean business approach applied across so many other industries, InsurTech may actually be able to benefit from a more patient approach to the market and traditional infrastructures. In contrast to the lean business approach, insurtech benefits more from qualities such as openness to collaborative efforts in the ecosystem, as well as a dedication to making more conscious decisions about growth. Considering the current industry focus on the non-life space, InsurTech companies could be ruling out other parts of the industry such as commercial and life insurance.
For insurers, the report suggests that fostering a ‘start-up culture’ may help to enable improved capabilities and encourage lean approaches that bring benefits to both company and consumer. Innovation through data is critical, but it must be met by an audience that is well-informed and knowledgeable when it comes to the newest industry innovations and market shifts. Although new partnerships can certainly be beneficial toward driving innovation, it is imperative that these companies make an effort to find their own appropriate product-market fit with new technologies, much in the way that retail banks have been doing in the fintech space.
- For insurtech
- Develop a value proposition that ensures product-market fit within the broader industry of insurance.
- Adopt flexibility towards partnerships within the broader ecosystem, including traditional insurance.
- Be mindful of the boundaries of their solutions.
- For insurers
- Develop an innovation strategy that incorporates insurance technologies.
- Adopt a culture that fosters innovation from within. Offer incentives that encourage innovation.
- Keep an open mindset about partnerships with InsurTech companies and their work practices.
- Develop a vision that looks beyond just the financial space.
To read or download the complete Accenture report – The Rise of InsurTech – click here.