Traditional insurance vs Insurtech
Published on Sep 12, 2019 | 2 mins read
Technology and new data sources are re-shaping the insurance industry. Adopting new technologies is key for insurance to improve their operations, optimize processes, and reduce cost.
Insurers have been slow in adopting the latest technologies until now. However, this trend is changing. New players with advanced technologies have started to enter and disrupt the insurance industry, forcing traditional insurance to change their way of doing business.
What is insurtech?
“Insurtech is the emergence of innovative and disruptive technologies that are transforming the current insurance industry model. Improving efficiency and enhancing customer satisfaction are some of the Insurtech benefits.” – insureon
Over the last few years, it has impacted nearly every segment of the insurance business, bringing innovative and customer-friendly services to market.
Traditional insurance can still compete.
An interesting survey by Oliver Wyman (a global management consulting firm) has revealed that most European consumers would prefer to use a traditional insurer over an Insurtech. They surveyed 5,000 individuals from Europe and found that the majority of respondents trusted traditional insurance more (71% in Germany, 69% in the UK, 58% in France, 56% in Spain, 48% in Italy).
How could the traditional insurance and insurtech reach the “sweet spot”?
According to Mckinsey, the winning model will require a combination of traditional strengths from established insurers and new skill sets brought by insurtechs.
Incumbents have established players with trusted brands, a loyal customer base, strong operations and they already have a huge amount of data at their disposal.
They also have the financial means to enter new markets and launch new products and services.
Insurtechs are digital organizations and small startups with a razor-sharp focus, excellent technical capabilities and an agile culture well suited to innovate and drive change.
“It’s easy to see their complementary nature. The challenge becomes finding the “sweet spot,” where collaboration is most successful—and then implementing it.” – Mckinsey
When it works, the result can be amazing. Traditional insurance benefit from a portfolio of superior solutions to offer their customers while insurtech are given the ability to scale quickly and prove the value of their offering.