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Insurers face increasing threat from InsurTech start-ups

Competition within insurance is a significant factor affecting growth, with an increasing challenge from start-up InsurTech companies, according to the latest financial services survey published by PwC and CBI.


29 MARCH 2016 | BY CINTIA CHEONG

Office technology © Shutterstock
Insurers will invest heavily in technology to tackle rising costs and inefficiencies. © Shutterstock


An InsurTech can be described as a firm or a specialist that uses technology to either compete in, or provide solutions to, the industry.

Jonathan Howe, UK insurance leader at PwC, said: “There is an ever-increasing threat from start-up InsurTech companies which are setting the benchmark for communicating and analysing customer needs and breathing down the neck of incumbents.   

“These start-ups are currently small scale compared to the industry but they have the potential to have a major impact”.

Competition, rising costs and low returns on investment also affected overall profitability of non-life firms, and it was expected to fall further in the next three months. 

Meanwhile, growth in profits has been slow for life companies, with expected income from fees and premiums set to fall over the coming quarter. 

The survey found insurers would continue to invest heavily in technology to tackle rising costs and inefficiencies, but they also wanted to use new technology to drive growth through new products and reach new customers.  

The report also revealed non-life firms expected growth to come from new business in the UK over the next 12 months, while life insurers were looking to expand their international client base.

Earlier this month, the Financial Conduct Authority (FCA) announced plans to investigate six life insurers after a review that assessed the treatment of closed-book customers. 

Howe said firms would ensure that employment would remain a priority due to regulatory factors, which require compliance skills.

“Customer acquisition, technology and data skills will continue to be in high demand, while recent regulatory announcements – such as the FCA review into life assurers’ treatment of long-standing customers – will also ensure compliance skills remain at the top of insurers’ recruitment wish lists,” he said.

The survey is based on responses from four life and 22 general insurers. It forms part of a wider research across financial services.