Insurtech and Personal Lines

Should insurers view insurtech as a threat or opportunity? Will insurtech disrupt the industry, or will the movement fizzle out?


Insurtech is one of the hottest topics of conversation in the insurance industry with executives and professionals of all types joining in. The insurtech startup movement began in earnest about three years ago and is still trending up in terms of startups, funding and activity. Early insurer participants were primarily the large Tier 1 insurers, but a new wave of activity is reaching companies in the middle and smaller tiers. SMA tracks insurtechs globally (almost 1,200 now); mentors and advises insurtech firms; and assists insurers with insurtech strategies. Our research and analyses include assessments by line of business and business area.

SMA’s recently released research report, "Insurtech and Personal Lines: Examples, Use Cases, and Implications,"analyzes the current state of the insurtech world for P&C personal lines insurers. There are over 600 startups that SMA has identified as relevant for this industry sector. Despite all the activity and investment in insurtech, the debate continues about its implications. Should insurers view insurtech as a threat or as an opportunity? Will insurtech disrupt the industry, or will the movement fizzle out?

See also: 3 Forces Disrupting Personal Lines  

SMA’s opinion is this: Insurtech is important. It is not going away. It will play a major role in industry transformation, and insurers of every size must have an active strategy (even if it is just a defensive one). Distribution is a hot area for insurtechs in personal lines and is already having an important impact. New capabilities for underwriting, claims and other areas of the business are widespread and have great potential to improve operations, the customer experience, products and the management of risks. It is true that many partnerships and activities are in the early stages, and the impact on business results is minimal in the context of the huge insurance industry. But insurtech has been a major trigger for new insurer strategies and will be an important part of the transformation of insurance over the next five to 10 years.

Regarding demographics, about 65% of the startups are tech companies with solutions for insurers or agents/brokers. The remaining 35% are organized as insurance entities: either insurers, agents/brokers or MGAs. About one in five are focused on distribution, either providing new tech-based capabilities for agents/brokers or as digital agents. The MGA model is increasingly popular among this crowd. Many more insurtechs are built around data, especially the real-time data being generated by connected things.

Perhaps more important than the demographics are the partnerships, investments and projects that are underway. Insurer-insurtech partnerships now number in the hundreds, and the direct investment by insurers is in the billions. The positive business results from projects are encouraging, but the full impact will come in increasing measure over the next few years. Ultimately, we expect the personal lines insurance industry to look quite different in 10 years than they do today, and insurtech will be one of the change agents. From an insurer perspective, insurtech partnerships represent a great opportunity to be leaders in the new era of insurance.

See also: Insurtech Takes Aim at Personal Lines  

Note: This personal lines research report is a companion to a recently released report, Insurtech and Commercial Lines: A Surge of New Activity.

Mark Breading

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Mark Breading

Mark Breading is a partner at Strategy Meets Action, a Resource Pro company that helps insurers develop and validate their IT strategies and plans, better understand how their investments measure up in today's highly competitive environment and gain clarity on solution options and vendor selection.


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