Switzerland is at the forefront of the InsurTech topic according to the NZZ article “InsurTech heisst das Zauberwort” of 24.07.17. In Europe, only Germany surpasses the Swiss scene with 90 InsurTech startups. The USA is clearly the world leader. Currently, the business models of companies that offer insurance services are changing faster than some members of the Board would like. Changing customer needs force a continuous improvement in offers. Disruptive change through the use of new, digital technologies helps to master these challenges. The Accenture study “Technology Vision for Insurance 2017” offers interesting figures:
First of all the question arises, what exactly is InsurTech and what possibilities can result from this for the future?
Like the financial sector (FinTech), digital change is also affecting the insurance industry. InsurTech, short for Insurance Technologies, describes the opportunities offered by new technologies for digitizing the value chain of insurance service providers. The focus is on digital insurance services such as personalized insurance contracts, individual and customized recommendations for risk-adjusted behavior or ways to reduce the cost of the service supply chain. Concluding contracts online is just the beginning. A concrete application for new digital insurance services is, for example, on-demand insurance for insurance policies that can be easily concluded and adapted online, as Prof. Dr. Hato Schmeiser of the Institute of Insurance Economics at the University of St.Gallen pointed out in an article in the Handelszeitung.
According to Accenture, changes in the insurance industry can be summarized as: “ecosystem disruption caused by technology-driven new entrants and existing competitors alike”. The question now arises as to how a mature industry can adapt to a new ecosystem in order to be successful in the long term. At InsurTech startups in 2017, the most important growth topics were Data Analytics, Artificial Intelligence and Internet of Things. This is closely followed by the general digitalization of the insurance industry, big data and blockchain technology.
As insurance is a data-hungry business, the key areas of common ground where traditional insurers and InsurTech can meet are handling and usage of (Big) Data and improvements in customer experience. About 2/3 of InsurTech’s current activities focus only on a specific part of the value chain. This is why interaction between InsurTech start-ups and between startups and established insurers is becoming increasingly important. There is also a need for insurers to integrate their InsurTech approaches into the comprehensive innovation agenda. As a conclusion for large insurance companies it can now be said that these new technologies must not be kept at distance, because ecosystem disruption is key in the future of innovation in the insurance industry.
For more in-depth insights, the Institute of Insurance Economics offers the InsurTech Innovation Program for executives and tech-savvy employees to provide a better understanding of the booming InsurTech market and its possibilities.