Almost two-thirds of the world's 25 largest insurance companies have invested in insurtech, and by 2018 the majority of insurers worldwide will join them, new research by Gartner claims.
64% of global major insurers have already invested in insurtech, whether directly or indirectly via their venture capital arms, and by 2018 it is estimated that a staggering 80% of P&C insurers worldwide will partner with or acquire insurtechs.
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Insurers will continue to pump money into insurance technology start-ups over the next two years in order to secure their competitive positions, according to the research firm.
Juergen Weiss, managing vice president at Gartner, said insurtechs can stimulate innovation among incumbent industry players and complement existing digital insurance strategies.
However, he said that many CIOs are still not well-versed in insurtech and its benefits.
While digitisation is the top priority for most insurance CIOs, the vast majority are still struggling to progress their digital strategies, the company’s research suggests.
“Gartner has seen growing interest among insurance business and IT leaders in collaborating with insurtechs or making them part of their overall innovation policies, but the research has also found that most insurance CIOs are not familiar with these companies or their value propositions,” Weiss said while speaking at an industry event in Australia yesterday.
“We advise CIOs to identify areas where insurtechs could complement their digital insurance strategies, and evaluate potential collaboration or investments.”
The number of technology start-ups in the insurance industry has more than doubled globally during the last three years, a separate Gartner study suggests, with digital customer engagement, mobile insurance management and analytics the most common technology focus areas.
By collaborating with insurtechs, or at least evaluating them, insurers could reap a number of benefits, according to Weiss, particularly as insurers often complain that they are hindered by legacy IT systems, flat IT budgets and a lack of the right skills or the delivery models to support innovative business models.
However, Weiss also warned of the risks involved with emerging start-ups: “Not all of them will survive… Insurance CIOs will need to develop a fail-fast approach and an exit plan that secures intellectual property and critical resources.”
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