- Where Insurance & Technology Meet

InsurTech, Dead? (Maybe It Just Smells Funny)

It was bound to happen.  A recent article strongly suggests that InsurTech is losing momentum and, as a result, the promised transformation of insurance may be stalled.  And the result?  The author says that, in spite of innovative technology, InsurTechs have “failed to capture the market”.

What is one to do?

Let’s get real ….

Insurance and tech professionals have had a love/hate history since the first card was punched in the 1950s.

Insurance professionals (who can trace their craft back 300+ years) were not wowed by early technologies.  Twentieth century tech was pretty good at accounting and rudimentary data management. But when it came to evaluating risk, modeling products, underwriting, and claims management, analysts and actuaries resorted to ad hoc tools. Slide rules anyone?

Technology’s history is significantly shorter.  However, thanks to Moore’s Law, technology’s reach has become ubiquitous.   We can make demands on technology that were unthinkable a few short years ago.  More significantly, we can expect improvements that  we can’t articulate yet. Singularity anyone?

Unfortunately, the early, very expensive legacy platforms have not been overthrown yet.  As a result, there is a mix of technologies that had to be supplemented with other tools (e.g., personal computers, smartphones, etc,).

InsurTechs changed the pace and the audience …

The InsurTech movement is a big pivot.  Instead of end users building out base technology, InsurTechs found that rapid development of tightly defined functionality could capture the users’ attention.

The difference between InsurTech and previous technologies is business proficiency and speed to market.  With the guidance of users, the InsurTechs learned quickly that customer experience was a critical success factor.  This moved the platform beyond walls the insurance company / broker and to the end consumer.

Successful InsurTechs – such as Slice and Trōv – develop and continually improve apps to operate on a stand alone basis or integrate with back-end systems.

What is the impact?

At the outset, some InsurTechs focused on disruption of the insurance industry and its structure.  However, most InsurTechs are finding that it is easier to join the insurance incumbents, not fight them. (We are pretty friendly after all.)

Flexibility is a mantra, and insurers, MGAs, and agents / brokers are learning to maintain the core business while developing new products, distribution channels, and customer interfaces.

So, who thinks InsurTech is looking ill?

Journalist Ryan Smith  recently penned a short article in Insurance Business (America), titled Is insurtech running out of steam?  Citing data from Tracxn, Smith asks: “Is insurtech – and indeed, the whole financial technology space – losing momentum?”

Smith provides data, noting that there were 1,000 US fintech startups created  in 2015, but only 500 in 2016.

Smith also quotes a report from Accenture:

  • “There are signs that the financial sector transformation promised by these actors is stalled,”
  • Some start-ups have developed truly innovative technology “but have failed to capture the market,”
  • “Early warning signs of the collapse of an integrated financial service provider model are appearing in the rate schedules of asset managers or private banks,”

(There was no title for the report, nor any citation.  My search for the report didn’t locate anything except a loop back to Smith’s publication.)

Reality check…

InsurTech has 1) arrived and penetrated more rapidly than expected, 2) a wider scope of product and service capabilities, and 3) multiple suppliers, some of which are conflicting.

In regards to a decline in InsurTechs, we have to remember that InsurTech suppliers are start ups.  Some don’t make it, others consolidate or get purchased, still others just grow.

Concerning user uptake, the history of tech implementation teaches that innovative products will take some time and education to bring customers along. However, we are seeing the adoption of other ‘unthinkable’ scenarios.  Autonomous vehicles anyone?

 What do you think?

InsurTech and its counterparts are changing the perceptions of suppliers and customers.  We will be showing off the possibilities at our InsurTechTO-17 event on 6 November 2017 in Toronto.  We’d love to have a conversation with you there.


Michael Costonis

As the global insurance practice leader for Accenture, this was a selective use of our view of the state of play. “Capture the market” means take over current established carriers. In fact, our experience is pointing to an increasing number of partnerships between carriers and InsurTech.

Patrick Vice,

Thanks, Michael. Our point was that InsurTech is offering significant opportunities for insurers and intermediaries. And customers are benefiting from the overall impact.

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