The Impact of Insurtechs on Traditional Insurance Companies: Financing Volumes Decline as Insurers Invest More in Digital Business Models

The digitalization of business models is still one of the most important topics for insurance companies. The need for digital processes and ecosystems has led to a wave of startups for the insurance industry, so-called insurtechs, being founded in recent years. Many digital innovations in the insurance industry were initiated by start-ups.

“Insurtechs as well as non-insurance companies with their embedded insurance offerings have long since taken on the challenges of greater digitalization in everyday business. With the help of advanced technologies and data analysis, they manage to make insurance processes more customer-friendly, more cost-effective and, above all, faster than conventional insurers. They, in turn, are now in danger of falling behind their digital competitors. In order to be able to assert themselves against them, they have to rethink and develop further,” they also write Philipp Rietsch and Christoph Seidl im Insurance magazine, issue 4/23.

Financing volumes fall

Against this background, many investors, including insurance companies, have invested a lot of money in insurtechs. This financing boom now appears to have passed its peak. While insurtechs, according to the “Global Insurtech Reports Q2 2023” (Source: Statista 2023) collected around 15.8 billion US dollars worldwide in 2021, but in 2022 it was only 7.9 billion US dollars. In the first two quarters of this year, the financing volume is only 2, $3 billion.

This development may be an indication that insurers themselves are investing more in their digital business models in order not to fall behind insurtechs. The big advantage of traditional insurers and their intermediaries is and remains the consulting know-how they have built up over many years, which – at least for complex insurance products – cannot be replaced by digital solutions.

Those: Statesman

Author: versicherungsmagazin.de