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Insurers fear fifth of sales under threat from technology

Insurers fear fifth of sales under threat from technology

More than half of insurers believe they will lose a fifth of their revenue as more technology-based solutions enter the sector.

Research from PWC revealed 20 per cent of insurers polled feel the damage to their business could be even greater, placing up to 40 per cent of revenue at risk, while 10 per cent believe they could lose more than 40 per cent of revenue as technology-based solutions enter the sector.

However, according to PWC, the more than 189 senior insurance executives polled were more engaged with technological advances and opportunities than others in the finance world, being willing to partner with innovators from outside the sector.

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PWC's 2017 Global FinTech survey found that although there is reluctance among insurers to embrace technology, there is also a “growing understanding and acceptance” of the benefits InsurTech can offer.

The report notes that 58 per cent of the global insurers surveyed intend to invest in mobile technology over the next 12 months.

Both those in favour of and against InsurTech largely agree that customer engagement and generating better risk insights are the most important innovation trends for them. 

More than four in five plan to invest in data analytics.

However, just below two in three are concerned about regulation and data privacy when working with start-ups.

The report stated 81 per cent of insurers are now familiar with blockchain technology, and 68 per cent plan to adopt blockchain as part of their in-production system by 2018. 

Blockchain can be implemented to automate claims processes, resulting in cost savings.

It can streamline data, which benefits underwriting, and collate catastrophe risks and losses, aiding post-event analysis and helping with the claims process.

Stephen O’Hearn, global insurance leader at PWC, said: “Innovation in insurance, driven by the rise of InsurTech, has come a long way over the past year and there is no longer any question of whether companies will be involved with InsurTech.

"It is a question of how they use it to their advantage and tie it into their overall business strategy.

“Insurance has always been an industry based on data and it is encouraging to see insurers investing heavily in a new wave of technology enabling them to use the data they have at their disposal in the best possible way for their customers and their own bottom line.”

Paul Litster, protection director at Specialists4Protection, said: “Further integration of technology can only improve the way we touch base with clients.

"If they prefer to make use of apps, webchats and other means of extracting information before making a decision, whether this involves speaking to someone at the end of the process or not, it is their choice. 

“We welcome any improvement that benefits us and our clients, and of course tick all the regulation boxes. Companies that turn away from tech innovations risk losing customers who will be snapped up elsewhere.”