According to a recent report from Willis Towers Watson, insurtech funding skyrocketed during the second quarter of 2017, and claims management appears to be the next battleground for startups.
In its latest quarterly insurtech briefing, the brokerage giant found that global insurtech funding volume has actually increased 248%, to $985 million, with a record 64 transactions over the quarter. In addition, the quarter saw $289 million of early-stage funding volume and 27 technology investments by insurers, which also represents a quarterly record.
The report noted the importance of claims and claims management. Rafal Walkiewicz, CEO of Willis Towers Watson Securities, said claims managers have the potential to be the insurer of the future, noting that “it is a $170 billion global industry currently controlled approximately 90% by incumbents. And it is booming with innovation.”
Walkiewicz added that claims management can be the “most powerful driver of customer satisfaction and retention. Industry executives estimate that clients who go through a personal auto claim could be up to 40% less likely to renew their policy, regardless of outcome.
“The claims management conversation with a client provides the greatest insight and opportunity to improve risk mitigation, making it increasingly core to the evolving, consumer-focused insurance value chain,” Walkiewicz said. “We believe claims management could assume additional prominence at the expense of other functions, including distribution, underwriting and capital management. Effectively harnessing this conversation through technology, whether developed internally or through partnerships or acquisition, will be a key source of differentiation for incumbents going forward.
“Dedication to risk mitigation means proactively managing premium volume down,” Walkiewicz added. “It can be diffcult for some incumbents. Claims managers do not have that problem. They are built as a money-for-service model.”
The report noted that due to the cost of claims adjudication, the area could be a target for both incumbents and outsiders alike as disruptors aim to eliminate or reduce friction costs and inefficiencies in the insurance value chain.
“The claims experience represents a customer’s most meaningful interaction with their insurer and demonstrates the true value of the underlying insurance product,” the report said.
Distribution is also still attracting plenty of investment attention – the report noted that 64% of P&C transactions and 42% of life and health transactions over the second quarter of 2017 involved companies with a focus on distribution.
