Second-wave insurtech tipped to bring ‘more ambitious’ change
A second wave of insurtech is likely to follow a first-generation shakeout and may have a greater impact on the industry, according to a report by Marsh & McLennan consulting group Oliver Wyman and German insurtech investor Policen Direkt.
“The first wave of insurtechs brought forward a lot of activity but little real disruption,” Oliver Wyman partner and report co-author Dietmar Kottmann says.
“There will be a second wave of insurtechs that are savvier, more creative and more ambitious, with the potential to truly change the way insurers cover risk.”
Investment so far has often reflected legacy supply-side thinking and conventional e-commerce approaches, while many insurtechs lack a solid understanding of the industry, according to the report.
“There is a considerable mismatch between the level of insurtech activity, their market potential and the chances for success in several business model segments,” it says.
Several insurtechs have switched “from attack into co-operation mode with the established industry” and focused on evolutionary change, rather than more innovative models.
The report examines opportunities across the insurance value chain, from propositions for products and services through to distribution and operations.
“In certain overcrowded categories, particularly in the proposition and in the distribution segment, a shakeout is extremely likely,” it says.
Nikolai Dordrechter, co-author and MD of Policen Direkt, says there are “some surprising white spaces” offering opportunities for entrepreneurs and investors.
On the operations side, claims is an attractive area for insurtechs, combining high market potential with strong chances of success, according to the report, called Insurtech Caught on the Radar: Hype or the Next Frontier.