Will Insurtech Break Your Business? »

Insurtech is a movement driven collectively by insurers, technology companies and innovators to deliver a digital revolution in the way insurance products are used throughout the global marketplace.

In much of the same as retail, banking, music and gaming have been through their own digital revolution, technology innovators have increasingly turned their focus to the insurance sector in order to create new ways of; opening new market opportunities, increasing speed to market, improving customer experience, streamlining automation and much more.

Can you afford to ignore Insurtech?

The short answer is yes, but before you do, consider the many now defunct companies who failed to innovate throughout the previous phases of industrial revolution. Insurtech is quite simply the latest iteration in the industrial revolution timeline.

Source: Wikipedia

Blockbuster vs Netflix

The clearest example of the dangers of ignoring the technology movement versus embracing it is the story of two movie rental giants. In the mid-2000s, Blockbuster and Netflix dominated the movie rental market, albeit with two differing business models. Blockbuster offered a bricks-and-mortar model whilst Netflix maintained a mail order service model.

With the advancement of video streaming technology both were faced with a choice to embrace or ignore. Netflix quickly identified that partnering with technology companies would allow them to improve the very thing they were good at, that is delivering video rentals direct to the customer and thereby improving the customer experience.

On the other hand, Blockbuster chose to double down on their trusted money makers, the ancillary retail side of the business i.e. popcorn, soft drinks, plush toys etc under the belief that people will always be driven in-store to rent movies. By chasing the existing revenue model and ignoring the new models created by the technology movement Blockbuster lost sight of the very purpose of its business – and lost out in the long run, eventually closing their doors for good.

How long is the Insurtech hype here to stay?

Just like the share market it is impossible to predict accurately when this wave of Insurtech innovation will reach its peak. It ultimately comes down to the market forces of supply and demand but it is safe to say we are in a bull market. The below chart indicates that Insurtech investment is still on the rise.

Source: CB Insights
Note: The spike in 2015 was due to the $931 million investment in Zhong An (Chinese Online Insurer).

Every year Gartner publishes a Hype Cycle for: Emerging Technologies, Digital Insurance, Life Insurance and P&C Insurance which provides a good indication of what’s hot and what’s not. The Gartner Hype Cycle provides a good graphical representation for the adoption of technology and can therefore be extended to to provide insight into Insurtech technologies.

Source: Wikipedia

Insurers have historically been relatively slow adopters of technology due to legacy systems, complex processes and regulation. One can therefore expect the hype cycle will last for a few more years before we can measure the full impact of Insurtech on the industry. However, whilst Insurtech investment is on the rise, it would generally indicate we are as an industry still in the “Technology Trigger” phase of the Hype Cycle.

Did you know – When did the term “Insurtech” first appear?

The term Insurtech first appeared at the beginning of 2016 and is increasingly being searched for. Interestingly the term Fintech relating to banking technology appeared 3 years earlier and is searched approximately 20 times more than Insurtech.

Source: Google Trends

Disruptors vs Enablers

Insurtech is generally split into 2 categories being Disruptors and Enablers. There is no official definition for these terms and can therefore be open to somewhat subjective interpretation, for the purposes of this article we have applied the below definitions:

  • Disruptors: Are looking to get a piece of existing insurance market share through new ways of working and/or open up new insurance markets which were once considered not feasible. For example, Lemonade (start-up Renters and Home Insurance), Trov (start-up On-Demand, single-item insurance), Cyber Insurance (new insurance product to against Technology related risks).
  • Enablers: Primary motivation is to help existing insurers to address existing problems and pain points through the use of new technology. For example, RPA (automation of business processes), Telematics (long-distance transmission of computerized information for insurance), Analytics (Pricing Model, Claim Decisioning, Personalised Customer Experience).

How should Insurers harness Insurtech Technology?

At first glance, Insurtech is an overwhelming space as there is a lot of activity going across the entire Insurance Value Chain ranging from new personalised insurance products to the usage of robotics to automate and redesign processes.

Insurance Value Chain and Insurtech Topics

In the real world, it would be difficult to implement all these great ideas at the same time because of limited budgets, resources, time, dependencies, disruptions to BAU processes etc. Furthermore insurers should avoid getting caught up the Insurtech hype and mistakenly assume that Insurtech technology is the silver bullet to our problems and will just automatically work out of the box.

As a general strategy, insurers should keep an open mind about Insurtech and the new ways of working they bring to the table but ultimately insurers should select the technology that matches their business DNA, vision, strategy and risk appetite. Finally, insurers should be ambitious when implementing a new Insurtech solution but without impacting the benchmark due diligence and planning normally associated with an equivalent digital transformation project – it is a digital transformation project after all! That’s where Insurance Technology Industry experts come in providing insurers with the expertise and knowledge within this space to:

  • Gain a better understanding of the full potential of the technology
  • Identify synergies and economies of scale (at macro, meso and micro levels)
  • Simplify and create a more agile Business and IT ecosystem
  • Create transparency and establish a well supported baseline
  • Avoid creating another legacy subsystem in an already complex IT ecosystem


Peter Tugby

Managing Director 3CA

Robert Lee

Principal Consultant 3CA

What’s Next?

Over the coming weeks 3CA will be releasing the below article series.

Series 1: We will be exploring the top Insurtech topics within each pillar of the Insurance Value Chain to understand the problems, the solutions and the business value it creates.

  • The Pursuit of Insurtech – Product Management
  • The Pursuit of Insurtech – Sales & Distribution
  • The Pursuit of Insurtech – Customer Service
  • The Pursuit of Insurtech – Policy Administration
  • The Pursuit of Insurtech – Claim Administration
  • The Pursuit of Insurtech – Back Office Enablers

Series 2: We will be breaking down the Digital Transformation Cycle to understand how a simple idea can become a large digital transformation project.

  • Navigating the Digital Transformation Traffic Jam
  • Digital Transformation through the Financial Lenses
  • Breaking Down the Digital Transformation Charter
  • More details to come …

If you like this article or would like to learn more about how 3CA can help you bring your insurance projects in line with the Industrial 4.0 revolution, please contact:

Peter Tugby

Managing Director 3CA
0404 521018

Every once in a while, a new technology, an old problem, and a big idea turn into an innovation.

Dean Kamen


© Copyright 2019 3CA PTY LTD

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