InsurTech may have started with independent tech entrepreneurs who wanted to disrupt the stoic but essential insurance industry, but it quickly spawned global partnerships between startups and insurance industry incumbents, according to Accenture's new report, "Fearless Innovation: InsurTech as the Catalyst for Change Within Insurance." Accenture — using data from CB Insights — is reporting that international investment in InsurTech ventures swelled in 2017: The number of InsurTech deals rose 39% worldwide, with the total value of these deals up 32%, to $2.3 billion. Here, Michael Costonis, the global insurance lead at Accenture, illuminates the finer points of his team's new reporting. PC360: How does the InsurTech landscape now compare to a year ago? Costonis: [InsurTech] is now a truly global phenomenon. If you go back two or three years, it was more focused in the world of Silicon Valley. Now we're seeing the investment moving east, and then really around the world. It's clearly a global phenomenon that's showing no signs of slowing down. PC360: What needs to happen for InsurTech startups to be more effective and impactful going forward? Costonis: We've seen a change of stance from the InsurTechs, from the view of, 'We're here to disrupt the insurance industry,' to 'We'll disrupt the insurance industry, but through a partnership with some existing incumbents.' That's a big shift. The view previously was, 'We can go it alone, and we'll disrupt this industry.' Now we're starting to see more partnerships forming between the InsurTechs and the [incumbent] insurance carriers to accelerate their capabilities in the market. Related: 3 reasons Lemonade's CEO wants to disrupt the insurance industry PC360: Some people in insurance argue that InsurTech is more of an investment fad than an industry-innovation catalyst. How do you respond to that? Costonis: Like any trend, there's certainly hype that surrounds it. I think the big difference is a much more rapid acceleration and maturing of new technologies that insurance companies can take advantage of, especially by virtue of the InsurTechs pushing them a bit. But it's no different than when we went from mainframe to client server to web, etc., except it's been compressed into a six- to 12-month period instead of over 10 years. That's the biggest difference. PC360: What, for you, is most revealing in the new research? Costonis: It's where the actual money is being placed, and the types of solutions that are showing up, which are heavily focused on marketing and distribution, really at that front-end of that insurance value chain, where you have the highest degree of customer connection. That's why you'd start to see the view that there be better partnerships formed between carriers and InsurTechs, because they can help them acquire and service new customers. Related: InsurTech takes aim at personal lines distribution PC360: If a friend or colleague came to you and said, "I'm starting an InsurTech!" What would be your advice? Costonis: It would come from two places. One: The choice of underlying technology is pretty important. From our perspective, artificial intelligence is the alfa-trend that's sucking up all the other trends. I think you should be heavily associated with or leveraging artificial intelligence. Second, it becomes really hard to disrupt an industry without a client. So trying to get the right level of partnership with the right player will be absolutely critical. I think that actually in the early stages of this phenomenon, there was this view, 'Build it and they will come.' That's clearly not how it's progressing. PC360: What else should we know about the new report? Costonis: There's also been a shift in terms of the set that's going to benefit from these investments. In the early days, [InsurTech] was heavily focused on health insurance and telematics, and it was more device-driven, if you will. But it's now squarely in the focus of Property & Casualty, right at the meat of the insurance market. See also: Travelers creates online personal insurance product for millennials Here's how one incumbent insurer became an InsurTech startup

Special Reports /

New study: InsurTech goes global, shifts focus to commercial lines

Related Stories

Recommended For You