The global insurance industry is worth nearly $ 5 trillion, and insurance companies are at risk of losing a share of this valuable market to new entrants. That’s because these legacy players have been even slower to modernize than their counterparts in other financial services industries.
This has created an opportunity for a group of firms known as insurtechs. These startups are leveraging new technology and a better understanding of consumer expectations to increase efficiencies in the insurance industry. Some are helping incumbents deliver better end products, while others are directly competing with legacy players.
In a new report from BI Intelligence, we look at the drivers behind the increasing number of insurtech companies, how they are helping or disrupting legacy players in the insurance industry, and where legacy players are innovating off their own backs.
Here are some of the key takeaways:
- The opportunity is currently biggest in the US and Europe. That’s because these regions have large, very mature insurance industries.
- Insurtechs’ products and services mostly target retail customers. This includes small businesses and consumers.
- Most insurtechs are acting as enablers. This means that they offer products and services that help insurers and reinsurers improve their processes and better serve customers.
- Of the main players in the insurance industry, brokers are most at risk of disruption. This is because insurtechs can easily replicate their services and are solving historical industry problems faster than legacy players.
- Legacy players are also innovating. In particular, insurers and reinsurers are investing in insurtechs and fintechs working with relevant technologies. At the same time, they are improving their own direct-to-consumer digital interfaces, increasing their disruptive threat to brokers.
In full, the report:
- Explains the structure and current state of the insurance market.
- Highlights areas where insurtechs can help legacy players modernize.
- Describes where insurtechs are competing with incumbents and how their models compare.
- Provides case studies of insurtechs.
- Outlines the legacy response.
- And much more.
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