Is the insurance industry doomed or a welcome source of inspiration? With a total of $2.7 billion in venture capital worldwide and a wealth of entrepreneurial spirit behind them, InsurTech startups are turning a dusty industry upside down. But where are these young guns actually undermining the market leaders?
InsurTechs have so far focused primarily on the distribution of insurance products. A well-known example is the Munich-based industry leader among online brokers Check24. Innovations in offerings, however, still come from the insurers themselves. This is the conclusion of a study by the management consultancy Oliver Wyman and the insurance distributor Policen Direkt.
Nikolai Dördrechter, Managing Director of Policen Direkt and co-author of the study, summarizes the results in striking terms:
"The wake-up call from InsurTechs is unmistakable. Digitally operating InsurTechs, fueled by bold growth fantasies, fresh venture capital, and a great deal of entrepreneurial spirit, have triggered a long-overdue structural change in the insurance industry."
Unsettled industry
The study's findings contrast with this: InsurTech startups are not yet able to drive innovation in developing new offerings. While InsurTechs do, for example, enable situational insurance coverage via smartphone or create policies for specific target groups, these are niche topics without significant economic potential, says Dietmar Kottmann, Partner and Digital Insurance Lead Europe at Oliver Wyman. He says:
"So far, the industry has fluctuated between hype and hysteria. It's time to take a sober and analytical look at the issue."
The study sees exciting new areas in the protection of new digital risks, as well as in innovative insurance products related to the Internet of Things and products that utilize big data technologies. These are actually technology topics and thus a domain of young startups.
Cooperation between old and new
Oliver Wyman partner Kottmann sees the future of the industry in the cooperation of existing and new players:
“There is a lot of potential for partnership between old and new.”
The insurance center of Munich, with the global giants Munich Re and Allianz as well as a large number of other companies, is already well positioned for this.
