Main challenges to be faced by Insurtech
by SMEBOOK (admin) · January 30, 2021
Five of the most important challenges to be faced by Insurtech industry are:
- Partnerships are stark & sparse: Without the support of a large insurer or two, insurtechs will find it hard to manage the unit economics of the policies they sell; which brings to question the sustainability of this model for scaling.
- Innovation beyond downstream distribution: Most of the insurtech-startup funding pool has moved into distribution, and rightfully so Distribution has brought about long-awaited changes to delivering new products and customer experiences — aspects of the business that Insurance giants consistently struggle to produce.
- Frequent changes to the legal & regulatory framework: A regulatory distinction is essential to separate them — without which a reliable guarantee cannot be given to customers in the event of a loss. Legal and regulatory commitments change with region and country, hence insurtechs are typically unsuitable for covering potentially large losses.
- Attitudes of the next generation: Technology in insurance and advancements to customer experiences are making the furthest inroads, the industry has ever seen. Yet, low insurance penetration levels are still an indicator of how difficult it is for insurtechs to find adoption among the masses.
- Intelligent Customer Experiences: Thanks to Big Tech (like Google, Amazon, Apple, etc.) — customer experience has evolved rapidly. Digital products and services are now highly customizable and can be delivered at a high quality consistently. Yet, it has taken until now for the same to slowly seep into insurance. Sensing a huge opportunity, Big Tech has started moving into the insurance on-demand space, which has forced the larger insurers to adapt quickly.
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