Incumbent insurers need to understand the “ABCs” of insurtech – Analytics Arms Dealers, Beneficial Bots, Creative Carriers and Digital Distributors – to get a better grasp of the space, according to a new executive brief from Boston-based research and advisory firm Novarica.
“Analytics Arms Dealers and Beneficial Bots have the potential to help insurers transform and compete, and are likely to have a greater impact on incumbent insurers in the short-term than the Digital Distributors and Creative Carriers, which get a disproportionate level of attention because they’re the easiest for generalist investors to understand,” said Matthew Josefowicz, president and CEO of Novarica, in a press release on Wednesday. “On the other hand, Digital Distributors and Creative Carriers can provide useful examples of how to operate a digital insurer that will be copied by successful incumbents as they transform themselves over the coming years.”
According to the executive brief, Analytics Arms Dealers includes big data, aggregators and telematics; Beneficial Bots includes drones, the Internet of Things and blockchain; Creative Carriers includes micro/on demand and peer-to-peer insurance; and Digital Distributors includes online brokers and “bundlers.”
Late last month, global technology research and advisory company Technavio forecast the global insurtech market to grow at a compound annual growth rate of more than 10% between 2016 and 2020.
In a market research report, the company considered investments made in insurtech platforms in the Americas, Asia Pacific and Europe, the Middle East and Africa. Technavio analysts also highlighted three factors it said were contributing to the growth of the global insurtech market: growth of Internet-based business ecosystems, rationalization of transaction processes and increased need for customer satisfaction.
IT research and advisory company Gartner, Inc. defines insurtechs, or insurance technology startups, as technology companies that are in their early stages of operation; that drive specific innovation across the insurance value chain by leveraging new technologies, user interfaces, business processes or business models; and that leverage different forms of funding, including, but not limited to, venture capital.