Market Entrants: July 2017

An industry based on heaving legacy systems is not necessarily the most adaptable, but when faced with nimble, niche start-ups, the ability to adapt and invest in new technology is never more apparent.

In January, we said that new entrants, often based solely on a digital presence with a focus on a particular product, are entering the market with increasing pace.  This is continuing, but existing insurers are becoming far more active in this area. Though the market share is minimal right now, the potential to grow is enormous.

Start-ups are finding investment from a variety of sources, from private equity to crowdfunding; and angel investors to insurers setting up ‘innovation lab’ style schemes to support start-up ideas.  The investment potential is so great that this sector has become a subset of FinTech, namely InsurTech, and the UK is the second biggest market behind the US (KPMG).  Investment in InsurTech in the UK in 2016 reached $19million and according to Accenture, almost half of total global investment is in artificial intelligence and the Internet of Things.


These new products are often aimed at the new generation – Millennials – a generation that requires a different approach (see our article here).  Companies such as By Miles (pay per mile car insurance) and ZugarZnap (gadget cover) are using bright, straightforward, snappy-language websites and social media to target their customers.  

PWC’s Annual Global CEO Survey shows that the potential impact of new entrants is very much on the radar and more so than ever – 86% of respondents believe this to be threat to their growth in the market, compared to 65% the year before.  However, this year it appears insurers are responding by getting more involved themselves.  According to PWC, “52% of respondents said that innovation is at the heart of strategy”, and “94% said customer engagement and generating better risk insights are the most important innovation trends for them”.  84% are also planning to invest in data analytics. Given the pace of technology, it will be interesting to see how fast some of these new entrants grow.  One only needs to look at the growth of Uber to see how the right ‘disruptor’ can have a big impact on a market.

Willis Towers Watson’s Quarterly Insurtech Briefing for Q1 2017 supports PWC’s findings, highlighting that several insurers are wondering how to ‘embrace revolution’ – should it be via research and development in their existing structure; partnership; a separate venture capital arm; or wait for a product to be developed and make an acquisition.    

So by 2020 we could be looking at a very different market…