Insurers know they’re facing disruption. But how bad is it and what can they do about it?
We all know the insurance industry is facing disruption on all sides. Insurers are being challenged to adopt new technologies. They have to compete with digital-first companies. And, at the same time, they’re trying to meet customer expectations that seem to change daily. But how vulnerable is the industry really?
Accenture’s groundbreaking Disruptability Index is designed to help companies from all sectors navigate this uncertain future. It maps current levels of disruption across industries. And looks at susceptibility to future disruption.
For insurers, the results aren’t unexpected. The performance of the insurance industry has been comparatively weak compared to other sectors. For example:
- Average top-line growth rates slowed. They went from 7.9 percent in 2017 to 5.7 percent in 2018, placing insurance 13th lowest across 18 sectors.
- Average growth rate of net assets decreased. They dropped from 13.8 percent in 2017 to 0.7 percent in 2018, placing insurance 16th out of 18.
Emerging disruptors and outsiders are also exerting pressure. In 2018, venture capital investments in insurtech rose 80 percent to $4.3 billion. Over the last three years, unicorns (starts-ups with $1 billion or more in capitalization) with the potential to disrupt insurers grew in number from 7 to 14. Investments in insurance from platform players (Amazon, Rakuten, Softbank and Tencent) have also skyrocketed, from $0 in 2017 to $642 million in 2018.
Where to next for insurers
Insurance companies that have a robust understanding of disruption will be better equipped. They’ll be able to respond to an evolving digital landscape. They’ll recognize how important it is to develop products and services that reflect customers’ personal values. And they’ll understand how they can differentiate themselves in a disrupted market.
But simply surviving in this era of disruption is not enough. In my view, insurers should be aiming to thrive.
In the following posts, I’ll look at:
- Why insurance ranks so high on the Disruptability Index.
- How you can get better at countering disruption.
- Ways you can improve your competitive agility.
In the meantime, if you’d like some extra reading, check out our report: Breaking Through Disruption: Embrace the Power of the Wise Pivot
If you’re ready to respond to disruption with innovative new strategies, reach out to me directly.