Reinsurers attempt to avoid outside disruption with record InsurTech investment

There were 120 private technology investments made by reinsurers over the course of 2017 – the highest number recorded for any year to date.

 

Friday 2

Reinsurers attempt to avoid outside disruption with record InsurTech investment

A new report from Willis Towers Watson Securities reveals that incumbents increased their level of influence over the start-up community last year with a 36% rise in InsurTech funding.

 

A total of $2.3bn (£1.6bn) was invested in 2017 – the second highest amount ever – compared with $1.7bn the previous year, as firms looked to a broad range of technologies with potential applications to their core business.

 

“Incumbents sent a clear message to potential disruptive outsiders,” Willis Towers Watson Securities CEO, Rafal Walkiewicz, said.

 

“By investing heavily in start-ups and technology, reinsurance companies appear to have assumed a semblance of control over the InsurTech revolution.”

 

The report shows that 65% of incumbent InsurTech investments to date have been focused on enabling the value chain, with firms attempting to enhance efficiency of product delivery, underwriting, claims and other admin functions.

 

This is thought to reflect the findings of a survey of 600 reinsurance and investment professionals that show 75% believe their company is “moderately” to “extremely” at risk from disruption.

 

Despite this, 72% of innovation resources are devoted to incremental technologies, rather than radical ones, with half the respondents saying their firms are not fast movers in relation to innovation.

 

It was also found that only 20-30% recognise and prioritise substantial inventive contributions from external talent pools, such as accelerators/incubators and venture capital.

 

Walkiewicz warned that less than 10% of InsurTech investments to date have flowed into start-ups targeting full-scale value chain disruption, and that focusing on incremental technologies could leave firms unprepared.

 

“It is possible that incumbents’ collective response to InsurTech hype has diminished their ability to recognise true disruption,” he continued.

 

“High barriers to entry associated with regulation, product complexity and the value of long-term customer relationships may shield incumbents from large-scale disruption.

 

“But external capital entering the industry is searching for potential unicorns, funding disruptive ideas and breakthrough technologies that may seem crazy at first.”

 

Most popular

  1. Cryptocurrency market on ‘the brink of implosion’

    Investors should brace for an imminent collapse in the entire cryptocurrency market following a steep decline in the value of Bitcoin over the last year, a new study from Juniper Research has warned.

     

    Friday 12

    12 October 2018

  2. Insurers and banks stop eight in ten cyber attacks

    Insurance companies and banks have successfully prevented eight in ten cyber attacks on their organisations this year, up from approximately two in three over 2017.

     

    Tuesday 1

    02 October 2018

  3. Two-thirds of large firms at least considering blockchain

    Nearly two-thirds of large businesses with over 10,000 staff are looking to deploy new blockchain projects, up from around half last year, a new survey has found.

    Tuesday 18

    18 September 2018

White paper

  • Quarterly InsurTech Briefing Q1 2017

    Why InsurTech? A Pressured Insurance Value Chain

    By Andrew Sagon, Andrew Johnston and Matthew Wong

    InsurTech is a burgeoning phenomenon that is modernising the insurance industry. It is disrupting the traditional value chain whereby insurers offer loss protection, and shifting the emphasis to risk mitigation. Incumbents face disintermediation as investors in search of higher yields pour money into insurance-linked instruments in the capital markets. And entrepreneurial businesses are targeting friction costs and inefficiencies within every aspect of the traditional value chain.

     

     

  • Insurance big data – float like a butterfly, sting like a bee

    Nimbleness and agility will unlock potential

    By Elinor Friedman, Andrew Harley and Klayton Southwood

    Recent Willis Towers Watson surveys in the U.S. have shown that P&C and life insurers in developed markets are taking seriously the potential of big data and predictive analytics to improve their businesses. Nimbleness and agility, rather than brute force, are likely to be key to realizing that potential.

    Download PDF

  • The new era of insurance analytics

    Driven by technology, toolkits and talent

    By Claudine Modlin and Graham Wright

    Advanced analytics is helping some insurers offer innovative products and solutions. What do insurers need to know about the changing nature of analytics and whether it is worth the investment? Claudine Modlin and Graham Wright discuss technology, toolkits and talent — topics that may help you decide.

    Download PDF

  • How can we manage the dynamic nature of cyber-risk?

    Risk transfer is part of a comprehensive solution

    By Adeola Adele, Patrick Kulesa, Kevin Madigan and Alice Underwood

    Given the dynamic nature of cyber-risk, taking a multidimensional approach that integrates board governance, technology solutions, behavioral change and risk transfer solutions can help reduce risk to a manageable level.

    Whitepaper Form