Digital transformation has long since arrived in the insurance industry and offers companies in the area of "InsurTech" (InsurTech). Investments in this area in the second quarter of 2017 even exceeded the combined investment volume of the previous three quarters – this is shown by the new PwC report "InsurTech: The new normal for (re)insurance."
Specifically, investments by global insurance companies, reinsurers, and venture capital firms in InsurTechs increased by $247 million from $398 million to $985 million compared to the second quarter of 2016. In the first three months of 2017, InsurTech financing totaled $283 million. PwC expects financing and investments to continue at a similar level. The report also confirms growing industry interest in the InsurTech startup scene.
Pioneers instead of competitors
"The insurance industry has undergone a transformation. It's extremely encouraging to see that insurers and reinsurers are increasingly viewing young InsurTechs as enablers rather than competitors. While there remains some concern about disruption and loss of market share, most have recognized that the startup wave is predominantly focused on reshaping specific parts of the value chain,"
explained Thomas Windhager, Partner in Financial Services Consulting at PwC Austria.
Don’t slow down innovation!
In this new world, collaboration is key to success. However, while 82% of reinsurance companies say they plan to collaborate with insurtechs, some hesitancy remains. According to PwC, the reinsurance industry maintains a culture of stability, autonomy, and incremental change—but this can be a barrier to innovation. The report makes it clear that now is the time for insurers and reinsurers to work with innovators to modernize the industry.
"Insurtech pioneers have quickly become the backbone of innovation in the industry. However, reinsurers shouldn't worry too much about the startups immediately threatening their product offerings. Instead, they should focus on what makes their business unique and where they see sources of future growth. By collaborating with new, technology-savvy talent, they can actively shape a process that will undoubtedly lead to the transformation of their business and the entire industry."
says Windhager.
