As we know, the insurance market has always been about networks, partnerships and in-depth knowledge of the market, so how can young start-ups compete on a level playing field?
As major insurers invest in new innovative technology, be that by VC or setting up their own 'tech garage', it remains to be seen how they will adopt innovation into their traditional business structure - and if they can achieve this, will customers really view this as a disrupter?
Standard and Poor's report points out how they do not believe Insurtech will fully replace the highly regulated and capital sensitive traditional insurance model, but it will pressure some much needed change to existing processes.
Standard & Poors said that “the boards of insurance companies may be overestimating the market impact of many of the small insurtech companies that have arisen.” The S&P report gives these startups credit for having drive and for lacking “legacy liabilities and structures traditional insurance companies have inherited.” What is more, these new companies have state-of-the art information technology systems and aren’t saddled with managing “costly physical distribution networks,” S&P noted. But S&P said insurtech startups are weakened by the lack of “back book and strong client relationships that many established insurers rely on when financing new business.” What’s more, most of these young companies are in niche spaces.