Whitepaper - The Domination of InsurTech: Disruption and Adaptation within the Insurance Industry

Posted by Holly Maunders on 04 January 2018

During Module 5 of Squared Online we ask participants to complete a whitepaper on how future digital trends will impact a specific industry. The top 3 whitepapers are shared on this blog as a celebration of all their hard efforts!

Congratulations to Group 2 for this stellar piece of work. Team members include: Dawn Taylor, Shanice Martin, Holly Garbett, Magda Podobinska, Rodrigo Valle Velazco, Jo Stafford, Laura Haigh and Yuly Ospina.


Insurtech, a term inspired from Fintech1, refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. In 2016, global investment in InsurTechs totalled $1.7bn2, and is acknowledged as a global trend. This white paper examines why insurers are investing in the future of their industry, the impact this is necessitating and what incumbents can do to leverage competitive advantage in this changing landscape.

Executive Summary

The era of digital transformation is set to change the insurance traditional business models. This white paper reports on the current climate and identifies how technological advancements in services and processes emerging from InsurTech startups would be utilised to benefit both insurers and startups, and ultimately customers.

  • Insurance has remained an unchanged industry for over 100 years.
  • InsurTech is offering insurers a game-changing opportunity to innovate.
  • 2500% increased investment year-on-yearin InsurTechs by insurers.
  • Competitive advantage will be secured by opportunities offered by InsurTechs.

This white paper explores how incumbents can become leaders of change. It looks at how they can work in unison with InsutTechs to sustain economic vitality throughout Brexit and beyond.

Insurance: Pressure to Innovate in the Era of Digital Transformation

On the one hand, it is widely acknowledged among insurers that InsurTech poses an opportunity rather than a threat, collaboration with these up-to-the-minute tech-driven startups will enhance the sector's offer.

On the other hand, InsurTechs believe insurance is an industry ripe for innovation and disruption yet antiquated in its approach. Acknowledgements such as these set the ground for fertile possibilities for change.

It is therefore no surprise that InsurTech is evidencing a boom. With the advantage of low costs and speed-to-markets InsurTechs offer fast solutions to customers who are responsible for fueling this change, in their quest for instant solutions. This is not without problems for an industry which is risk averse, culturally static and reluctant to change, The variety of breakthrough technologies being developed by InsurTechs are set to spur a fundamental transformation of the insurance industry.

In the UK alone, InsurTech investment went up from £7.3m in the first half of 2016 to £218m, in the same period in 2017. To list but a few: cloud computing, cognitive computing, the Internet of Things (IoT), global positioning system (GPS), advanced analytics, telematics, the sharing economy, mobility, social media and peer networking, peer-to-peer (P2P) insurance, on-demand business models, drones, blockchain, big data, smart contracts, self-service and artificial intelligence (Al) are providing new ways to measure, control, price risk, engage with customers, reduce cost, improve efficiency and expand insurability.

These technologies are also enabling the creation of new insurance products, services and business models, while emerging technology provides opportunities for insurers to modernise and reinvent themselves, This forces incumbents to respond to new sources of competition from increasingly well-funded and nimble InsurTech startups that are beginning to make inroads in the market by focusing on unmet customer demand, bringing down costs and providing new services with their agility to innovate fast without the bureaucracy that can fetter traditional insurers.

Gaps in the Insurance Industry

Insurers unwilling or unable to adapt to new technologies, learn from new market entrants and adjust business models will likely face persistent low growth and declining profits. They Will find themselves unable to compete at a high level with tech-savvy incumbent competitors and innovative InsurTech startups.

How Insurers can take advantage of InsurTech

Objectives: The main objective for incumbent insurers is the retention of customers in their adoption of technology. Improving reputation, which is somewhat tarnished with mistrust being a common preconception held by customers and adhering with regulation compliancy are other key objectives. Ensuring insurers are cybersecurity custodians of the breadth of "Health and Wealth" data held on antiquated legacy systems that fetter adoption of dynamically priced premiums based on customers' behaviours are also key objectives for insurers to address.

Both the 300 years old and the 300 days infant need each other; incumbents to be current and future-focused with a data-driven and customer-centric ethos, and the InsurTech startups who lack industry understanding and processes. A 2016 study evidenced that only 7% of InsurTech deals were relating to life and commercial insurances7. Increasingly, InsurTechs are garnering favour with direct customers.

Customer-Centric Drivers of Change

Solution 1: Do or Die

Goals: Adopt a long-term vision to overhaul existing operations and align with dynamic digital transformation by generating new sources of value based on defined and shared values. A 2016 study found that 9/10 insurers fear losing part of their business to InsurTechs8.

Solution 2: Invest and Succeed 

Goals: Partnering, acquisition and investment in InsurTechs Offer progressive insurers a ready-made source Of innovation with the obvious financial implications associated with such transactions. Industry experts state that there is an increasing trend to partner with those who innovate full-time9 and this is becoming an increasingly popular method that insurers are enlisting when adopting innovation on their agendas.

KPIs: Measuring the success of the adoption of innovation being offered by InsurTechs would be in evaluating the growth in sales. Seeing an increase in all customers' touch points into a digitally transformed insurer along with the adoption of a proactive approach to innovative products. This would go onto support a successful launch to market in a proactive manner for the ever expectant and demanding customer.

Targets: Measured and controlled release of these customer-centric, data-driven technological innovations would be aligned across the insurer's monetary business objectives.

Segments: we pretty much know that these are everybody who needs/wants insurance. A growing and dis-engaged audience are millennials, knowing they statistically will live longer than previous generations, tending to shun traditional life products and annual premiums in favour of late entry to life products and pay-for-usage approaches.

Benefits, Risks and Challenges of Proposed Strategies

Embracing InsurTech will undoubtedly lead to improved UX and efficiency. New technology is already improving the connection with the customer; online and app-driven solutions are making processes faster and more secure10. Regulation is the biggest challenge, Incumbents and Insuffechs implementing technological change may find their ability to respond hampered by slow and unwieldy legacy systems11..

Our proposed solutions12 also lead to their own set of considerations:

Regulation and Technology

Highly regulated environments struggle to keep pace with innovation- This has led to the emergence of Insurance RegTechs; startups that use advanced technologies to help insurers to deal with the burden of compliance whilst simultaneously providing real business value13. The Financial Conduct Authority (FCA) sees change as the new norm and is trying to embrace it. In 2014 it launched Project Innovate, an initiative to help innovators navigate the multiple layers Of regulation, It included a 'regulatory sandbox' to give InsurTech a 'safe space' to trial their business plans without immediately incurring the costs and consequences of engaging in regulated activities.14

Post-Brexit Economy

With Brexit, the risk of Britain losing its leading position to attract investment is a real one. London has attracted a greater amount of investment into startups, shaking up the insurance sector, than any other European location in the last 12 months. For the time being, this tremendous growth has eased fears of a slowdown after Brexit15. However, should the regulatory changes post-Brexit become barriers for further investment, Berlin, Paris, Stockholm or Munich could potentially sweep up the opportunities16.

Impact of General Data Protection Regulation (GDPR)

This regulation, coming into force in May 2018, is perceived as potentially harmful. It is feared that the directive will restrict data collection and processing activities as well as create an additional compliance burden17. However, GDPR aims to level the playing field when it comes to data protection practices making sure EU citizens are protected and any economic growth in the digital era is supported. This legislation will help to rethink existing business models and will lead to better customer engagement. And promoting effective, compliant data management practices will lead to growth and innovation, allowing incumbents to take advantage of the value of data.


InsurTech is clearly here to stay and looks set to accelerate considering the exponential growth in investment evidenced. Thus, there is no doubt that incumbents must embrace InsurTech if they are to remain competitive, and likewise, InsurTechs must acknowledge that working together will increase their chances of survival. However, in order to deliver success, incumbents must ensure that they choose and implement their strategy carefully, taking the necessary due diligence when selecting an innovation to develop or an external InsurTech to partner with, and critically be aware of the complex regulatory implications. With all this rightfully considered, InsurTech offers a fantastic opportunity for incumbents to reposition themselves from antiquated commodities to innovative industry leaders.


  1. https://www.pwc.lu/en/fintech/docs/pwc-insurtech.pdf 
  2. https://www.accenture.com/t00010101T000000__w__/gb-en/_acnmedia/PDF-50/Accenture-Insurtech-PoV.pdf 
  3. http://uk.businessinsider.com/accenture-insurtech-investment-2017-9 
  4. https://www.insurancebusinessmag.com/uk/news/technology/revealed-massive-rise-in-uk-insurtech-investment-77680.aspx 
  5. https://www.iif.com/system/files/32370132_insurance_innovation_report_2016.pdf 
  6. https://www.insurancebusinessmag.com/uk/news/breaking-news/customer-satisfaction-in-insurance-good-but-not-good-enough-59500.aspx 
  7. https://www.accenture.com/t00010101T000000__w__/gb-en/_acnmedia/PDF-50/Accenture-Insurtech-PoV.pdf 
  8. https://www.pwc.com/gx/en/industries/financial-services/fintech-survey/insurtech.html 
  9. http://www.royalgazette.com/re-insurance/article/20170717/pwc-embrace-disruption-or-get-left-behind 
  10. http://www.propertycasualty360.com/2017/09/29/5-advantages-of-investing-in-insurtech-for-traditi 
  11. https://www.pwc.com/gx/en/insurance/assets/csfi-insurance-banana-skins-web-2017.pdf 
  12. https://www.accenture.com/t00010101T000000__w__/gb-en/_acnmedia/PDF-50/Accenture-Insurtech-PoV.pdf 
  13. https://www.the-digital-insurer.com/blog/insurance-regtech-business-value/ 
  14. https://www.fca.org.uk/firms/regulatory-sandbox 
  15. http://www.cityam.com/271151/investment-uk-insurtech-startups-rocketing-easing-brexit 
  16. http://predictions.theactuary.com/2017/09/01/uk-insurtech-investment-hits-record-high/ 
  17. https://www.abi.org.uk/news/blog-articles/2017/10/gdpr-catalyst-or-deterrent-for-innovation-in-insurance/ 

 You can read more student whitepapers here

Find out more about Squared Online: you can give us a ring on +44 (0) 20 7173 5938, or download the brochure to read about the course and the Squared experience.

Topics: Digital trends, Digital marketing, Whitepaper, Business case studies, Squared Network, insurance, insurtech