With the evolution of bank-FinTech narrative[1] from competition to collaborative innovation[2], the insurance industry was bound to follow the steps, re-evaluating risk management frameworks in place, re-building customer experience, and overall, taking a fresh look at the insurance value chain to explore opportunities that technology companies offer.
“InsurTech innovation is occurring across the entire insurance value chain – from distribution and marketing, product design, underwriting, claims management & balance sheet management, and across all lines of insurance – property and casualty, life and health. Distribution is the area of highest focus. InsurTechs are reaching new customers through new distribution mediums – addressing generational shifts in the way people communicate, access information and make decisions – while not disturbing traditional channels.” – NAIC[3]
In the past few years, more than 75% of funding deals in InsurTech have been led by traditional insurance incumbents[4]. Such investments enable them to evaluate the capabilities of these startups and then go for a strategic partnership via a pilot/actual implementation. The MEDICI Team recently analyzed InsurTech partnerships of 25 insurance incumbents[5], categorized in the following major areas of operations:
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Digital Claims Management & Fraud Detection
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Smart Underwriting & Risk Management
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New Product Development
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Customer Engagement (Bot/Voice)
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Connected Insurance (IoT + Telematics)
In total, there were 95 partnerships established by these 25 incumbents with several InsurTech startups. Digital distribution was the most active area of collaborative innovation, with 20 strategic partnerships between incumbents and InsurTech
