Insurers and reinsurers are exerting an increasing level of influence on start-ups in the insurance technology (insurtech) space, according to Willis Towers Watson.
Directly and through corporate venture arms, insurers and reinsurers are increasing their activity in the sector and expanding their focus to invest in a broad range of technologies with potential applications to their core businesses.
The fourth Quarterly InsurTech Briefing, produced by Willis Towers Watson Securities and Willis Re, in collaboration with CB Insights, noted that the 35 private technology investments by insurers and reinsurers in Q4 2017—and the 120 made last year overall—are the highest totals recorded in any quarter and year-to-date, respectively.
Some 65% of their insurtech investments have been in businesses focused on enabling the value chain, as insurers and reinsurers have attempted to enhance the efficiency of product delivery, underwriting, claims and other administrative functions.
In total, $697 million of insurtech funding in Q4 rounded off 2017 at $2.3 billion, a 36% increase from $1.7 billion recorded in 2016 and the second highest total for any year to date.
Insurers and reinsurers have “sent a clear message to potential disruptive outsiders”, according to Rafal Walkiewicz, CEO of Willis Towers Watson Securities, and assumed “a semblance of control over the insurtech revolution” with their significant investments.
Walkiewicz said: “During the year, conversations about disruption of the existing value chain evolved towards an efficiency-driven search for incremental innovation. However, technology revolutions rarely result in redistribution of power among incumbents. It can be argued that incumbents’ collective response to insurtech hype has diminished their ability to recognise true disruption.”