Tech-enabled Innovation Amongst Incumbent Players in the Insurance Sector
Much has been written about the rapid digitalization taking place in the insurance sector. Enabled in part by rapidly growing insurance technology “insurtech” investments, numerous new entrants are testing existing processes, distribution channels and incumbent positions.
Less has been written about the tech-enabled innovation taking place amongst incumbents themselves. Whether a broker, carrier or an administrator, many incumbents have embraced emerging technology. Some have pursued IoT to enhance data analytics and underwriting. Others have embraced workflow automation to break down silos internally and with external channel partners. Still others have implemented blockchain-based smart contracts.
To implement the innovation, incumbents have tapped all possible resources. Legacy enterprise software vendors have been asked to provide additional and better products. In-house and outsourced talent has been leveraged for customized solutions. And in many cases, new insurtech players have teamed up with incumbents. In fact, numerous key players are either investors in insurtech companies or have acquired them outright. Notable recent activity includes (i) Willis Towers Watson’s acquisition of TRANZACT, (ii) Zurich’s acquisition of Sea Pine and (iii) CoverHound’s Series D funding from a group which includes Aflac, Chubb, Hiscox and MS&AD. While it may be unusual, many insurtech startups are currently working in partnership with incumbents rather than competing to displace them.
In the insurance sector, knowledge and relationships remain key. As a result, existing players will continue to maintain a strong position in the foreseeable future. That said, they are cognizant of the demands of the modern insured. They are also well aware of the benefits of tech-enabled processes. As new technology continues to be embedded into workflow, incumbents in the insurance space are continuing to demonstrate their resilience and their openness to innovation. This openness will manifest itself partly through their continued M&A and capital investments.
MHT Partners, a leading business and information services investment bank, will continue to follow insurtech investment trends as tech-enabled innovation takes hold in the ever-evolving insurance industry. To learn more about MHT, please contact Kevin Jolley (email@example.com) or Sam Bahmanyar (firstname.lastname@example.org).