Almost a third of industry insiders in a GlobalData poll felt the greatest challenge in the next couple of years will come from insurtechs, ahead of existing competitors, Big Tech providers, banks, and new players.
Insurtechs have generally been collaborative with leading insurers. The industry has extremely high barriers to entry due to regulation, lack of brand recognition and trust, and the need for large amounts of liquid money. Insurtechs have often not challenged insurers on underwriting policies but partnered with them in certain areas, such as integrating Internet of Things devices or implementing AI.
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Insurtechs can focus on more specialised areas and have greater expertise than insurers, as a result. However, industry insiders clearly now see insurtechs as a form of threat. Big Tech companies such as Amazon or even Tesla within the motor space are often discussed as serious threats to insurers due to their digital capabilities and high levels of consumer trust. Insurtechs have almost double the number of responses in this poll, though.
While it is difficult for insurtechs to challenge incumbent insurers, it is possible. Lemonade has established itself as one of the leading global players in theproperty and casualty market in recent years. The US-based household insurer has moved into pet insurance and expanded into Europe. It has also made aname for itself as an industry leader in AI adoption, customer service, and flexible online payment options. Insurtechs such as Lemonade do pose a threat to the industry as they offer a service that consumers—especially younger ones—have come to expect from other industries. This could make incumbent insurers look old-fashioned by comparison, and that is perhaps why insurtech startups are now seen as such a threat.
Insurtechs are unlikely to threaten insurers across their whole book. However, specialist players such as those popping up offering renters’ insurance inhousehold insurance and usage-based motor insurance can combine to offermore variety to consumers and chip away at market share.
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By GlobalData
