The global reinsurance industry increasingly views the InsurTech space as an opportunity, as its sentiment shifts from “fear to bullishness” and collaboration replaces scepticism, according to a new survey from PwC.
During the second-quarter of 2017 investment in InsurTech by insurers, reinsurers, and also venture capital firms increased by a huge 247% to $985 million, compared with $398 million in the same period in 2016, and the $283 million recorded in the first three months of 2017.
PwC expects this trend to persist at a similar level, and has noted that the global reinsurance sector has shown increased interest in the InsurTech space, as “sentiment turns from fear to bullishness, and from scepticism to collaboration.”
“While concern about disruption and loss of market share undoubtedly remains, reinsurers have noticed that a new wave of startups are focused less on disrupting the entire industry and more on redesigning specific areas of the value chain.
“This offers an opportunity for reinsurers to work alongside these innovators,” says PwC, in a press release statement on its new InsurTech and re/insurance market survey.
45% of CEOs that responded to the survey currently partner with InsurTech in some form, and PwC notes a “new normal” for the reinsurance industry that facilitates and embraces the rise of technology and how this can improve the risk transfer space.
Furthermore, 82% of respondents announced plans to partner with InsurTech, while 68% said they expect to adopt blockchain by 2018, and 94% of respondents said they were targeting better risk insights and knowledge, and also customer engagement.
Patrick Maeder, EMEA Insurance Consulting Leader, PwC, commented; “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. 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 a collaboration between experienced industry players and new ideas and technology will result in new products, reduced costs and more engaged customers.”
The reinsurance sector remains extremely challenging, and returns are continuing to fall across the majority of business lines as competition persists and the supply/demand imbalance remains. In response, reinsurers are eager to increase efficiency and also access new, less competitive and potentially more profitable classes of business, something collaboration with the InsurTech space can assist with.
PwC explains in its report that leading insurance and reinsurance companies will improve the experience for the end user, with innovative and sophisticated solutions that increase value. Furthermore, these companies will utilise technological advancements to lower distribution and admin expenses, and to prevent losses.
“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. They should instead focus on what makes their business unique and where they see future growth coming from. 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,” continued Maeder.