Successful InsurTech collaboration could enable insurance companies to adopt the latest technology more quickly, reduce operating expenses, improve their distribution reach and enhance customer retention. Fitch Ratings believe the success of these partnerships will play an important role in the future market position of insurance companies.
Fitch expects technology-based innovation and digital-first solutions in the insurance sector will intensify the competition from non-insurers, such as tech companies – especially in sectors where tech companies have access to concentrated market shares. Moreover, due to the technological changes that facilitate more ubiquitous access to information, Fitch Ratings expects market demand to shift towards the quality of the product rather than the familiarity of well-known insurance brands. This poses a threat to traditional insurance companies that rely heavily on brand loyalty and heritage to maintain their competitive edge.
Not all InsurTech activities are regulated under current regulatory frameworks, and this creates a regulatory grey zone. The consequent regulatory interpretation risk could deter providers of capital. However, Fitch Ratings expect more clarity to emerge as financial services regulators prioritise technological innovations.
Source: Fitch Ratings
