According to Gartner only 12% of insurance leaders consider their organisations to be digitally progressive. This fits my gut feel and makes it unsurprising that the majority of them are predicted to partner with or acquire insurtech firms in the coming few years.
What is naturally the next interesting question is how effectively will we see those partnerships/acquisitions going.
The idea of refreshing years of legacy IT may be frightening. Similarly, building new distribution channels from scratch is typically difficult. The difficulty of these does not make the cultural change required to engage effectively with insurtech players any easier.
Currently I see a lot of excitement and harmony, but most of the recent incumbent/insurtech initiatives are too new to pass judgement on. As we reflect back in a year or two I would expect to be seeing a fair number of failures and some clear winners and losers among the incumbents in terms of who got it right around the selection, the pricing, the integration and the cultural evolution.
According to Gartner research, 64 percent of the world's 25 largest insurance companies have already invested directly or indirectly via their venture capital arms in insurtech startups. Gartner predicts that 80 percent of life and property & casualty (P&C) insurers worldwide will partner with or acquire insurtechs to secure their competitive positions by the end of 2018. Gartner's research indicates that only 12 percent of insurance business and IT leaders consider their organizations to be digitally progressive, while the majority believe that their organizations are digital beginners or intermediate, at best. Reasons for this include a lack of agility caused by legacy IT systems, flat IT budgets and a lack of the right skills or the delivery models to support innovative business models.