BY Fraser Tennant
Global investment in InsurTech rose sharply in Q2 2017 as reinsurers become more open to its potential for transformation rather than disruption, according to a report out this week.
In ‘InsurTech – the new normal for (re)insurance’, PwC notes that investment in InsurTech by global insurers, reinsurers and venture capital firms surged by 247 percent to $985m, compared to Q2 2016 ($398m). The first three months of 2017 saw $283m of InsurTech funding.
Furthermore, the report predicts the rate of funding and investment will continue at a similar level and highlights an uptick in interest in InsurTech from the reinsurance industry as sentiment turns from fear to bullishness, and from scepticism to collaboration.
“A change has happened in insurance and it is hugely encouraging to see both insurers and reinsurers increasingly view InsurTech as an enabler rather than a competitor,” said Patrick Maeder, EMEA insurance consulting leader at PwC. “This uptick in enthusiasm is vital to ensure the industry engages with innovators to help shape its own success. Neither party can survive this wave of disruption on its own and collaboration between experienced industry players and new ideas and technology will result in new products, reduced costs and more engaged customers.”
Although 82 percent of reinsurance companies say they plan to partner with InsurTechs, including a new wave of start-ups, to explore how new technologies and talent groups can help them play a leading role in transforming their industry, concern about disruption and loss of market share remains. “InsurTech innovators have rapidly established themselves as the backbone of innovation in this industry but reinsurers should not be overly concerned about startups directly disrupting their product offerings,” continues Mr Maeder. “They should instead focus on what makes their business unique and where they see future growth coming from.”
The report also notes that startups are focused less on disrupting the entire industry and more on redesigning specific areas of the value chain, which provides reinsurers with an opportunity to foster a culture of collaboration, embrace the innovative potential within their businesses and ultimately modernise the industry.
Mr Maeder concluded: “Reinsurers then need to find the best way of directly working with this new wealth of tech-savvy talent to place themselves at the heart of what will undoubtedly be a transformation for their business and the wider industry.”