The amount of worldwide InsurTech investment in the second quarter of 2017 surpassed that seen in the previous three combined, according to new report from PwC.
It shows that global insurers, reinsurers and venture capital firms invested $985m (£735m) between April and June this year, bringing the total for 2017 up to $1.26bn.
This is the highest amount of InsurTech funding recorded since the second quarter of 2015, with investment expected to continue at a similar level, as innovation becomes the “new normal” for reinsurers.
“A change has happened in insurance, and it’s hugely encouraging to see both insurers and reinsurers increasingly view InsurTech as an enabler rather than a competitor,” PwC EMEA insurance consulting leader, Patrick Maeder, said.
“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.”
How worldwide InsurTech investment has changed since 2014 is shown below:
It was found that reinsurers have noticed a new wave of startups that are less focused on disrupting the entire industry, and more on redesigning specific areas of the value chain.
In response, reinsurers have started to realise how exploring new technologies and talent groups can help them play a leading role in transforming their industry, with 82% saying they plan to partner with InsurTechs.
PwC said that the industry has fostered a successful culture of stability, self-reliance and gradual change, but that this can obstruct innovation.
It argues that, despite hesitation and concern about disruption and loss of market share, now is the time for all insurers and reinsurers to work with innovators to modernise the industry.
“Reinsurers should not be overly concerned about startups directly disrupting their product offerings, and should instead focus on what makes their business unique and where they see future growth coming from,” Maeder continued.
“They 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.”
Businesses in Europe, the Middle East, and Africa (EMEA) are spending four times more of their budget on insurance for property, plant and equipment (PP&E) than they are covering cyber exposure.
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