Insurers to invest in data analytics to fend off threat from insurtech firms
Most insurers expect the new wave of insurtech firms to take revenue away from them, a new study by PwC has found.
But PwC’s 2017 Global FinTech survey also shows that insurers are not going to sit back and let their new rivals take the business.
According to the findings, the insurance part of which is based on responses from 189 senior executives in 39 countries, 86% of insurers are concerned that they are at risk of losing revenue to insurtech firms.
Some 56% of the insurers surveyed believe up to 20% of their revenue is at risk from insurtech, 20% believe up to 40% of their revenue is at risk, and 10% believe more than 40% of their revenue could be lost to insurtech rivals.
But the survey also found that insurers are fighting back. Some 52% of insurance respondents said innovation is at the heart of their strategy, and 94% said customer engagement and generating better risk insights are the most important innovation trends for them.
PwC said: “The industry is waking up to both the challenges and the opportunities.”
The survey found that data analytics will be the main area for insurers’ technological investment in the coming year, with 84% planning to invest in this area.
PwC global insurance leader Stephen O’Hearn said: “Insurance has always been an industry based on data and it is encouraging to see insurers investing heavily in a new wave of technology enabling them to use the data they have at their disposal in the best possible way for their customers and their own bottom line.
“Undoubtedly insurers still have their reservations, but it’s great to see increased investment in technology such as AI and blockchain and an interest in partnering with others in order to make the most of this excellent opportunity.”
PwC global insurtech leader Jonathan Howe added: “It’s undeniable that existing insurers are still concerned about new entrants muscling in on their revenue, and regulation and corporate culture continues to be a barrier for some when working with innovators. But in the end, whether it is partnering with, or acquiring startups, or fostering innovation internally, insurers need to find a way to bring the benefits of InsurTech into the mainstream. Our survey suggests that this is now about to happen.”