Insurtech : everyone after a piece of the action

With the worldwide insurance market worth nearly £4trillion, and £2.1billion invested in insurtech last year alone, it’s not surprising that there’s a feeding frenzy going on among service providers. Because, as the latest Future of Insurance publication from Raconteur clearly reveals, everything is up for grabs.

Right across the value chain, from law firms and big data specialists, to Silicon Valley entrepreneurs and fintech pathfinders, there is no shortage of hungry businesses ready and able to move into the insurance space – a fact clearly reflected in the advertisements in the Raconteur paper. Our analysis of its contents (see graphic above) reveals the wide range of players and the main areas of focus for insurtech. Consultancy services, software solutions and customer experience dominate, with a large number of new entrants and technology providers highlighting their skills as risk managers and data specialists. All are poised to disrupt the industry in the same way that fintech transformed banking.

Redefining tomorrow: RDT and the future of insurance

The rise of insurtech is reflected in the amount of column inches devoted to new technology and its power to transform one of our most conservative industries. Not known for innovation, insurance is slow moving, labour intensive, bound by tradition and convention. But if the current media focus on disruption is anything to go by, insurance is on the threshold of big changes and is ready to embrace a digital future.

But who will help to make this happen, and how will insurers stay ahead of the growing wave of technology startups and challenger brands? The debate was joined in last month’s Raconteur Insurance supplement*, distributed with The Times, which provided a snapshot of the issues and players in a changing industry. In this article we comment on some of the trends covered in the supplement, and provide RDT’s vision for the future.

A key theme of the editorial was that although there is a wealth of data available, both structured and unstructured, and a host of digital resources and analytical tools that promise to turn straw into gold, insurers are struggling to find their way – a fact underlined by recent PwC research that found that while 74 per cent of insurers believe their business is at risk of disruption, 32 per cent are not yet engaging with technology firms on any level.

RDT helps the FCA lift the lid on Big Data

In November 2015, the Financial Conduct Authority (FCA) announced that it would investigate the use of big data in general insurance (GI), focusing on private motor and home insurance, and would seek input from industry stakeholders and experts. As an insurtech specialist in the GI sector, RDT provided a written response to questions on data usage – and was the only technology company that the FCA named as a contributor.

The FCA’s questions covered data sources, data accuracy, and how the growing use of digital information might impact consumers and businesses. The aim was to see if big data would foster or constrain competition, whether some consumers might be marginalised because of an increasingly granular approach to underwriting, and whether the regulatory framework needs adjusting in light of advances in technology.

With the help of RDT’s insights, the FCA has concluded that big data is more friend than foe. In its Feedback Statement, published on 21 September, it said that big data is “producing a range of benefits for consumers in motor and home insurance, by transforming how consumers deal with retail GI firms, encouraging more innovation in products and services and streamlining parts of the customer journey.” The FCA said that because the use of data by insurance firms is “broadly working well”, it would not launch an in-depth market study.