Insurtech is threatening to put a huge dent in insurers' sales as the race to innovate in the sector intensifies.
The vast majority of insurers (86 per cent) believe 20 per cent of their revenue is under threat from insurtech, according to a survey released today by accountancy giant PwC.
Nevertheless, more than half of the 189 senior insurance executives from around the world polled by PwC said their firms have plans to invest in mobile technology in the next year. Many industry watchers consider London to be the leading light in Europe in the development of insurtech.
PwC global insurance leader Stephen O’Hearn admitted that “insurers still have their reservations, but it’s great to see increased investment in technology such as artificial intelligence (AI) and blockchain”.
A key area for technological investment in the coming year is data analytics, with 84 per cent of respondents saying they have plans to invest in it.
The responses follow Admiral's doomed attempt last November to use data collected from social media sites such as Facebook to offer reduced car insurance premiums.
PwC global insurtech leader Jonathan Howe said: “Companies are increasingly waking up to the potential Insurtech brings. If insurers can successfully use AI and data analytics to help their customers prevent claims happening in the first place, while at the same time delivering the responsive service that they expect from other industries, they will be able to transform how insurance is viewed by customers.
It’s undeniable that existing insurers are still concerned about new entrants muscling in on their revenue, and regulation and corporate culture continues to be a barrier for some when working with innovators.
He continued: “But in the end, whether it is partnering with, or acquiring startups, or fostering innovation internally, insurers need to find a way to bring the benefits of Insurtech into the mainstream. Our survey suggests that this is now about to happen.”