How InsurTech is reinventing insurance

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Our 2016 global report has just been released with a particular focus on . Yes, yet another -Tech, after RegTech, etc. but it was about time FinTech reaches the industry. While all and everyone in banking and wealth Management has come to realise that digital and Fintech is here to stay, the insurance industry has ultimately come to the same conclusion at a slower pace.

yet, as of today, 74% of Insurance executives see their industry at risk of disruption through InsurTech over the next years – see Figure 1

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The biggest game-changers that interviewees see in InsurTech are:

  • Responding to changing customer needs and behaviours (most likely through new value propositions and enhanced UX)
  • Using data analytics on existing data to generate better risk assessments

 

Even bigger disruption potential lies in combining the IoT (Internet of Things), with smart sensors, and linking it to data analytics for risk assessments. These approaches, however, are not yet in the Focus of Insurance executives around the world. But they soon may be. A shift from risk pooling and “averaging” premiums to individual, tailored solutions even in personal line insurance, incl. risk adjusted pricing, will lead to a “Segment of one”, where every customer is unique and gets her individual insurance solution that fits like a glove.

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Interestingly, not too many well known start-ups have emerged in Insurtech (yet). But the interest especially of the larger insurance companies around the world in artificial intelligence, machine learning, and advanced analytics shows that InsurTech is taking more and more center stage.

And: other than their colleagues in banking, the insurance industry did not have their 2008 crisis as a “moment of truth”, but still benefits from a untarnished image in the public opinion.

Lots of opportunities for new (and old) InsurTech start-ups.

A nice example for the new wave in InsurTech is Berlin-Based P2P start-up “friendsurance” (http://www.friendsurance.com/). For risks that traditional insurance companies are not prepared or willing to underwrite, a p2p sharing (insurance) economy may be the answer.

People pool their premiums and then decide on pay out against claims from real or virtual “friends”. There are similar ideas around that even take that process decentral, and put it onto a blockchain. Thus we may see insurance-type smart contracts soon managed decentrally on a blockchain.

Exiting times and clearly worth following the InsurTech field closer.

Start by reading the full 2016 InsurTech report here: https://www.pwc.lu/en/fintech/docs/pwc-insurtech.pdf


  is Partner/ Vice President at Strategy&, a member of the PwC network of firms (formerly Booz & Company)