In its inaugural Quarterly InsurTech Briefing, Willis Towers Watson Securities, the investment banking business of leading global advisory, broking and solutions company, Willis Towers Watson, highlights the potential for the $100 billion small business insurance market to experience transformational digital disruption.
This new research, the first of a series of quarterly reports produced in collaboration with Willis Re and CB Insights, analyses how the industry is incorporating emerging technologies into existing processes to target friction costs within every aspect of the traditional insurance value chain.
Perhaps surprisingly the report outlines a reduction in the total InsurTech funding in the first quarter of 2017, but suggests this could be a result of the significant investments in 2016 now reaching the product launch phase.
As we reach a phase of ‘peak hype’ for InsurTech, the industry now needs to focus its attention on sustainable technologies that can increase the insurance value proposition, so that early, perhaps inflated expectations, can be developed into productive applications and innovations that will survive and become profitable business drivers.
The potential, the report highlights, is significant with the small business insurance sector seeing up to 25% of total premium being digitally underwritten by 2020, and this potential has been the driving force behind the significant investments made by many of the industry’s biggest players. From Travelers’ £400 million acquisition of UK SME insurance broker Simply Business in mid-March 2017, to Munich Re’s development of Digital Partners, its specialist division focused on investing in and partnering with emerging distribution start-ups, the industry is evidently embracing new technologies.
Rafal Walkiewicz, Chief Executive Officer, Willis Towers Watson Securities, said: “As incumbents face pressure from entrepreneurial businesses targeting friction costs within the traditional insurance value chain and the continued influx of alternative capital into the (re)insurance sector, it is important for industry leaders to demonstrate an open mind, embrace innovation and invest in potential applications.
“(Re)insurance market participants must also not be afraid to “fail fast” if they are going to identify technologies that will help them adapt their existing business models in order to position themselves for success in a streamlined insurance industry that is likely to look much different in the future than it does today.”