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InsurTech Changes The Insurance But 8 Out of 10 Legacy Players Afraid To Lose Their Positions

17 September 2018 15:28, UTC
Denis Goncharenko

2018 was the year of InsurTech development, despite the fact that this process was going on with no screaming events, fanfares, and red carpets. It was just a large-scale development and onward movement, which turns the market over, step by step. The significant thing is, not a single player in the insurance market can possibly ignore it, even with all the desire that they’ve got.

Recently published studies by Swiss Re Sigma give an important signal to investors: technological development will help property and casualty (P&C) insurance companies reach 10% return on equity (ROE). In fact, this means that InsuTtech has become a full-fledged market mechanism and an attractive investment within the shortest possible time. More than that, this is only the beginning: during 2015-2017, many players in the financial and insurance market predicted that 2018 would be a runway for InsurTech. Well, the expectations came true. What's next?

The question is quite rhetorical — the assumptions already exist. Following the events of 2017-2018, Business Insider Intelligence also published a report on market expectations and trends. According to analysts, this year demonstrates fundamental changes in such areas as the creation of policies, underwriting and claims management.

The funding of projects is increasing, thereby allowing them to scale, while large players of the entire insurance market are gradually rolling their own startups out of the "sandbox" to follow the trends. The focus is still on distribution mostly — this area was disrupted with the most significant changes, and the developments have not yet receded. According to the report, the InsurTech projects are still characterized by the creation of completely new business models that are based on modern technologies. Automation, big data and analytics, connected devices, machine learning — all of this has already been successfully implemented as holistic policies for consumers that can be switched on and off on-demand.

A rapid technological breakthrough in the industry is not a random and unpredicted thing: more than 70% of the US audience aged 18 to 30 years already doesn’t trust traditional banking, insurance, financial structures and prefers to use the technological services of the new generation. At the same time, 80% of traditional companies see risk for their business in technological competitors. The US serves as a vector for the world trend in this regard, and it becomes clear where the wind blows: new people are coming to the global market like an avalanche or tsunami. People, who choose technology above all. Following that, the market learns and catches signals — one needs to be prepared for the disruption. Following the actively developing FinTech and InsurTech, new ‘Techs’ emerge. But this is a topic for a separate global overview of upcoming trends .