First quarter of 2017 Sees $283M Invested in Insurtech Industry as Start-ups Focus on Small Business Insurance. During its inaugural Quarterly InsurTech Briefing in London, Willis Towers Watson Securities highlighted the likely disruption of the $100 billion small business insurance market by digital technology.
This new research is the first of many reports that are produced quarterly in collaboration with CB Insights and Willis Re. It examines how the industry is integrating new technologies into current processes to target friction costs in all aspects of the traditional insurance value chain.
According to the report, the first quarter of 2017 was characterised by a reduction in the total InsurTech funding, a significant decrease (64%) in funding to the sector from Q1 2016.. This could be due to the significant investments last year, now reaching the product launch phase.
As InsurTech hits hype cycle peak, the industry should now focus on sustainable technologies in order to increase the insurance value proposition. This will result in high expectation being developed into productive innovation and applications that will survive and develop into profitable drivers of business.
The report highlights that the potential is significant, with the small business insurance sector expected to see 25 percent of total premium being digitally underwritten by 2020. This potential is responsible for the significant investments made by numerous biggest players in the industry. The industry is clearly embracing new technologies as demonstrated by Travelers’ £400 million acquisition of UK SME insurance broker Simply Business in mid-March 2017 and Munich Re’s development of Digital Partners, its specialist division that focuses on partnering with and investing in emerging distribution start-ups.
According to Rafal Walkiewicz, CEO of Willis Towers Watson Securities, as incumbents face pressure from entrepreneurial businesses that target friction costs in the traditional insurance value chain and the constant influx of alternative capital continue into insurance sector, it is imperative for industry leaders to be open-minded, welcome innovation, and make investment in potential applications.
Walkiewicz also asked market insurance participants to identify technologies that will assist them to adapt their current business models. With such technologies, the participants will be able to position themselves for achievement in a modernised insurance industry that will be different in the future.
You can also get the Insurtech report from the home of the report on the CBInsights Website by clicking here