"We do not expect traditional insurance business to be fully replaced by insurtech companies, as the insurance sector is highly regulated and capital-intensive, with barriers to entry," S&P noted. "Instead, we are seeing larger established insurers actively invest in setting up insurtech joint ventures through which they can take advantage of their proprietary data, rather than outsourcing to pure technology-based entrants." Insurtech companies and technology are envisioned as ways to bring innovation and disruption to the insurance industry, and this has happened through startups, but also including larger company investment participation. Allianz, for example, has Allianz X, a division focused on developing new insurtech concepts and companies. Hiscox is among participants who helped back Indio, a commercial insurance broker platform.
After a long period of debate as to whether the hype is justified, the time of insurtech is at hand, with innovators in this sector helping to reinvigorate insurance with tech-driven business models that completely transform the customer experience. That's the central message to emerge from the InsurTech Rising International conference in Paris in October, according to Alex Thomson, co-founder at Naked insurance. "Insurance has a reputation for being a conservative industry that resists change, but the overarching theme at InsurTechRising International was that we're starting to make material progress in using technology to rejuvenate the industry, but the best is yet to come," says Thomson, who was invited to take part in a panel discussion about bridging the gap between corporates and startups in the insurance industry. "We're seeing a lot of innovative thinking coming to the fore in insurance, along with investments aimed at transforming the customer experience. At last, insurance is entering the digital age."
Forget the days when insurance salespeople call and drop unannounced at your doorstep, hoping you hear and believe their version of why their insurance company and rates are the best. The fintech sector in the Middle East, despite being relatively small when compared with the likes of the US or Europe, has grown tremendously these past years with locations such as the UAE, but also Egypt, Jordan, and Lebanon emerging as regional fintech hubs. Insurtech in the GCC is quickly becoming a force to be reckoned with. Aqeed.com, a new UAE-based insurtech platform, says it's a technology company focused on helping consumers understand, manage, and buy insurance on their platform, with plans to expand to Saudi and other Middle East markets, according to Entrepreneur, a local industry site. The business was launched in April 2018 and has successfully raised $18 million in funding with the promise to quickly morph a conventional sector into a digital one.
About one-quarter of insurtech companies are focused on insurance distribution, according to an analysis of nearly 800 companies by Strategy Meets Action. The analyst firm codified its findings in a research report, "2017 Insurtech Landscape: Aligning to Business Opportunities," authored by partner Mark Breading. He says that it's no surprise that a large cohort of insurers are focused on distribution. "If there is an area of the business that can be disrupted more than others it is distribution," Breading says. "The insurtechs see a more digital way to interact with customers.