PriceWaterhouseCoopers describes insurtech as the insurance-specific branch of fintech initiatives. Specific, insurtech startups are actively leveraging on technology for providing innovative value propositions to their target markets, thus addressing their efforts in the achievement of competitive advantage.
The insurance industry, according to PricewaterhouseCoopers, has not shown relevant changes for, more or less, 100 years. During the last 10 years, technology has raised transformation and innovations in every sector, carrying around exciting applications and cutting-edge business models. The size of its investments, if compared with fintech startups for the banking and payment sectors, follows pretty much the same pattern. This is an important sign of the external appeal of the sector.
Technology is not the unique driver of disruption. Changes and additional developments in the financial services industry have also affected insurance companies. Customers have significantly changed and so have their expectations and needs.
Therefore, insurance companies should be able to fit this changing environment by adapting their business models to it, putting the customer at the center of their strategies and being active and not reactive, to changes and innovations.
Customer expectations are just one among all the elements relevant in the analysis regarding the drivers of disruption. Technology has had an impact on the so-called tech hurdles, too, relevantly lowering them and allowing access into the insurance industry to several new competitors. The diffusion of open-source frameworks, development on-demand, and cloud computing are other examples of technology facilitators for the new entrants. The results are causing unexpected disruptions and turbulence in the financial services market that was, by its very nature, stable and stationary in all its components.
Insurance companies, as part of fintech, may be identified as one of the branches of this industry where technology may have its best results.