While insurers keep one eye on the threat of investment and potential market entry from outside players, there are signs of disruption from within: reinsurers are building networks of investments that could bypass the primary market, according to GlobalData Financial Services.
According to Willis Towers Watson, 2017 saw the greatest level of investment in insurtech companies by insurers and reinsurers.
The record-breaking year of investments could in part be seen as a reaction to the threat posed by alternative providers and potential new entrants to the market, such as Amazon and Google.
However, new ranks of competition could also arrive from the existing market environment. Reinsurers have been investing either directly or through venture capitalist arms in a number of insurtechs, as well as in companies that do not directly have a connection to the insurance market, but which could easily weave into networks that drive new solutions into the market.
Swiss Re has established its 24-week accelerator scheme, with 2017 participants not all being focused on the insurance market.
However, the products they develop have the potential to be leveraged and incorporated into insurance propositions.
For example, ignitia provides highly accurate forecasts for farmers operating in the tropics, enabling them to increase crop yield.
Incorporating this technology into an insurance product targeting the agricultural industry will improve pricing accuracy.
Other reinsurers have also been involved in a number of insurtech funding rounds. Munich Re, for example has invested in a number of insurtechs, one of the most significant being Trōv, an app-based on-demand insurance provider.
The year ahead may see the greatest level of disruption to the insurance industry come from within, as a result of the investment activities of reinsurers.
They have the potential to bypass insurers via a cohort of consumer-centric start-ups that meet consumer expectations of personalisation in today’s world.