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F i n a n c i a l S e r v i c e s

Insurtech—the threat that


inspires

Incumbents need to keep their eyes out for new entrants


that use technology to create a strategic advantage. The
size of their share in the next generation of the insurance
industry is at stake.
New, technology savvy players are that enter the insurance sector, taking
entering the insurance sector, bringing advantage of new technologies to provide
the full force of their innovative, disruptive, coverage to a more digitally savvy customer
opportunity-laden power. They will alter base. In some locations, regulatory barriers
the terrain on which incumbents compete, have been lowered. In Australia, Singapore,
bringing changes not unlike those seen in and the UK, for example, insurtechs have
banking with the emergence of the financial been encouraged to test their innovative
technology companies (“fintechs”). business plans on specific client segments
without the need to conform to the full
Fintechs, many of which began as start- regulatory frameworks that apply to
ups, have attempted to disrupt the banking incumbents. Like fintechs, insurtechs are
sector for over a decade now. They extending innovation throughout the sector,
function with much lower cost burden creating a competitive threat to incumbents
than traditional banks, free as they are but also potentially valuable opportunities
of the burden of banking operations, for partnering on the changing terrain.
branch networks, and legacy IT systems. Customer expectations of instant digital
By developing innovative products and transactions sustained seamlessly across
delivering them digitally in a fraction of the digital channels are increasingly the norm.
time, they made inroads into business lines While insurtechs have not yet made deep
traditionally dominated by incumbents. inroads into the sector, they are growing fast
and stand to capture a meaningful share of
The fintech story has been changing, value pools within a few years. How quickly
however. Forward-looking banks have incumbents adapt to these inexorable
responded to the challenge, digitizing their market changes will determine the size
operations and offering an array of innovative of their share in the next generation of the
products and services through digital insurance industry.
channels. As revealed in a recent McKinsey
study, furthermore, the focus of fintech The rise of insurtechs
activity has partly shifted away from directly
targeting end customers and competing Over the past few years, insurtechs
with incumbents. Traditional banks and have emerged in the insurance space.
fintechs are increasingly becoming partners Investments have grown by leaps and
in ventures in which the incumbents retain bounds—whereas $140 million was
ownership of the end customer, while the invested annually in 2011, investment
fintech help to improve the user experience climbed to $270 million in 2013, and
and customer centric approach. Fintechs1 $2.7 billion in 2015.2 Over this same period,
have indeed changed the face of banking, the most successful insurtech ventures
but traditional financial institutions are moved beyond the seed and venture-capital
catching up, turning what seemed to be a rounds of financing to advanced funding
pure threat into a strategy for the leap into the
2 The contours of the insurtech landscape presented here are
next generation of financial services.
based on CB Insights, a provider of info on VC deals, and
the proprietary McKinsey Panorama Insurtech database.
In insurance, a similar pattern is developing. This database is a McKinsey solution containing essential
information on ~500 insurance technology companies
“Insurtechs” are technology-led companies worldwide. Constantly updated by a dedicated team of
experts, Panorama Insurtech describes the key elements of
insurtech offerings, underlying business models, and targeted
1 Miklos Dietz, Jared Moon, and Miklos Radna, “Fintechs customer segments. The database is detail-rich and can be
can help incumbents, not just disrupt them,” July 2016, used to zero in on particular success stories, technological
McKinsey.com. trends, parts of the value chain, or insurance products.

2
rounds. The average investment per retail, as millennials and more youthful
insurtech has risen fivefold, from $5 million age segments take over from the baby
in 2011 to $22 million in 2015. An analysis boomers. Young, digitally savvy segments
from Panorama Insurtech database of the are less company-loyal and tend to treat
companies’ geography of incorporation financial products and services, including
shows that despite the US has been the insurance policies, as interchangeable as
pioneering market for insurtech, now long as they fulfill personal needs. They
only 46 percent of the companies are value convenience and like to execute
headquartered in the region with another transactions remotely—if possible, without
40 percent based in EMEA. After the US, direct interaction with the institution. For
the UK and then Germany are the homes the plugged-in cohorts, the use of 24/7
of most insurtech companies. Asia-Pacific digital channels to receive an insurance
region accounts for only 14 percent of quote or submit a claim is infinitely
the insurtechs but is expected to be the preferable to a branch or office visit.
fastest growing region in the coming
years. Insurtechs are active in all major Although much of the focus of insurtechs
insurance products and business lines, is on personal lines, they are also starting
with concentrations in the P&C business to move into the commercial segment.
and in the marketing and distribution areas As in personal lines, insurtechs in
of the value chain (Exhibit 1). commercial lines are bringing innovation
to products, for instance, peer-to-peer
Where insurtechs are now and digital brokerage, often targeting
the small- and medium-sized business
Not unlike fintechs in banking, the initial segment. However, commercial lines
focus of the insurtechs has been on the insurtechs are also focusing on loss
retail segment: 75 percent of insurtech prevention and efficiency (e.g., drone
business is in serving retail clientele, with inspection for underwriting and claims).
the remainder in the commercial segment.
Online and mobile channels and digital In terms of lines of business, 46 percent
technologies offer many quick wins in of insurtechs in McKinsey Panorama

McKinsey’s Panorama Insurtech at a glance

McKinsey Insurtech Database includes more than ~500 commercially successful


insurtech start-ups. Each start-up’s business model is analyzed in detail to understand
what is the area of the value chain, line of business, customer segment, etc. where they
focus and to get insights on their monetization model.

The database can be a distinctive tool to map and navigate the insurtech universe to find investment
or partnership opportunities. It is also useful to shape the vision of the insurance industry,
mapping potential future directions of the insurance business to prioritize relevant innovations.

3
Exhibit 1

ged across
InsurTechs
InsurTechs
the value
have
havechain
emerged
emerged
and lines
across
across
of business,
the
the value
value chain
chain and
and lines
lines of
of business,
business,
with concentration
distribution
with concentration in
in distribution
distribution
Share of innovations in Insurtech database Share
Shareof
ofinnovations
innovationsininInsurtech
Insurtechdatabase
database
<4% 4%-10% >10% <4%
<4% 4%-10%
4%-10% >10%
>10%

4% p&c
p&c 17%
8%
8% 10%
4%
4% 17%
17%
7% 10%
10% 7%
7%

health
health
3% 11%
5%
5% 8%
3%
3% 11%
11%
6% 8%
8% 6%
6%

2% life
life 9%
3%
3% 2%
2%
5% 9%
2%9% 5%
5% 2%
2%

Marketing Product
Product
Distribution Pricing
Marketing
Marketing Claims
Distribution
Distribution Pricing
Pricing Claims
Claims
development
development

d in the database
~500
~500
(excluding
commercially
commercially
wealthmost
most
management-
well-known
well-knowncases
casesregistered
registeredininthe
thedatabase
database(excluding
(excludingwealth
wealthmanagement-
management-
related
related
writing and policy innovations);
innovations); Includes
issuance Includessales;
sales; Includes
Includesunderwriting
underwritingand
andpolicy
policyissuance
issuance
Source:
Source:McKinsey
McKinseyPanorama
PanoramaInsurtech
InsurtechDatabase
Database

Insurtech database are focused on calories burned, or in-home flood and


property and casualty, 33 percent fire detectors that autonomously signal
on health, and the remaining on life. emergency services. Along the insurance
Insurtechs target primarily pure risk value chain, insurtechs are active in
insurance, where they have developed distribution (37 percent) and pricing
access points to the value chain based (23 percent). Within distribution,
on innovation. Technologies such as 75 percent of insurtechs focus on
telematics and the Internet of Things enabling distribution, by making
have enabled new product development products available to customers at
in motor, home, and health that drive their convenience, facilitating product
customer engagement and retention. comparison, and simplifying the
Insurtechs have attracted consumers purchasing process. These activities
with selective discounting based on build on the successes of aggregators
the intersection of smart devices and such as comparethemarket.com or
risk-minimizing behaviors, offering, confused.com—e-commerce pioneers
for example, meters for car mileage or that moved into financial services in

4
the 21st century and are now the leaders Insurtechs are finding the value pools
in digital insurance.
Insurtechs clearly represent a market
The insurtech edge is in its early adoption risk for incumbents. With their nimble
(and adaptation) of new technology. operating model and digital innovations,
Almost all insurtechs rely on a digital they will initially target attractive profit
customer interface for sales and service pools unlocked by digital and capture
but many insurtechs are also adopting share among certain customer
newer technologies and concepts that segments. Insurtech start-ups have
incumbents are only just beginning to only begun to address the potential
experiment with. Eight important new value pools; insurtech is still in its
technologies that have not been widely infancy, but already beginning to have
adopted by incumbents are already being an impact on the industry.
used by insurtechs to solve real business
problems. Certain of the new technologies The global insurance industry represents
specifically support insurance product a staggering $4 trillion premium
innovations, including microinsurance, volume according to the McKinsey
usage-based insurance, and peer-to- Global Insurance Pool. At the same
peer insurance; others have applications time the industry currently attains
in many industries and include machine relatively modest growth levels in the
learning, robo-advisory, and the Internet of regions where insurtechs have the
Things (Exhibit 2). Blockchain is an example highest penetration, i.e. Western
of a new technology that is being used Europe and North America. In these
by insurtechs (see sidebar “Blockchain regions only the 4-year growth in
in insurance—opportunity or threat?”). health significantly outperforms

Blockchain in insurance—opportunity or threat?

Blockchain is a distributed ledger technology with huge innovation potential in all areas of
financial services. To date, it is largely in the banking arena where blockchain use cases
have been identified. However, the blockchain technology also offers potential use cases
for insurers that include innovating insurance products and services for growth, increasing
effectiveness in fraud detection and pricing, and reducing administrative cost. In these
application areas insurers could address some of the main challenges they are facing today–
such as limited growth in mature markets and cost reduction pressures. Implementation of
blockchain has a long-term horizon as it depends on network effects as well as on defining
the regulatory conditions. Also, before initial implementation steps are taken, the benefits
and limitations of the technology need to be fully understood. Considering all of this, now
is the best time for the insurance sector as a whole and for individual insurance players to
further investigate the blockchain technology and its potential.

5
Exhibit 2
InsurTechs are adopting new technology & concepts, especially wit
re
optingInsurTechs
InsurTechs
adopting
echs InsurTechs
new
InsurTechs
are adopting
new are
are
are
new
technologyadopting
adopting
technology
are
adopting
technology
data
& new
new
new
concepts, technology
&& machine
adopting technology
concepts,
new technology&
& concepts,
especially
technology
&especially
concepts,
learning and& concepts,
&within bigespecially
concepts,
concepts,
especially
within especially
within
especially
especially
big within
usage-based big within
big
within
within
insurance big
bigbig
ne data
machine
arning data
learning
data
and &
data
& machine
and&
& machine
and learning
machine
learning
usage-based learning
usage-based
machine and
learning
learning and
usage-based
usage-based
insurance
usage-basedand
insuranceand usage-based
usage-based
insurance insurance
insurance
insurance
insurance

%
20 20 20 20
20 20
20
%
%%%

13
12
13 13 13 13
13 13
13
12 12 12 10 12
12 12
12 10
10 10 1010 10 10 10
10 10
10 10
10 10
10

4 4
3
4 4 4 4 4 44 44 44 44
33 33

Micro- Blockchain P2P Robo- Gami- IoT Usage- B


insurance advisory fication based M
hain
P2P P2P
Micro-
Micro-
BlockchainMicro-
Micro- Robo- Blockchain
Blockchain
P2P Robo-Blockchain
Blockchain
Gami- P2P
P2PP2P
Robo-Gami-P2PIoTGami-IoT
Robo-
Robo-
Robo-
Robo- Usage- Gami-
IoT Usage-Gami-
Gami-
Gami- Usage-
Big-data IoT
/ IoT
IoT IoT / Big-data
Big-data Usage-
/Usage-
Usage-
Usage- Big-data
Big-data
// insurance
Big-data
Big-data // l
insurance
insurance
insurance
insurance advisoryfication
advisory fication fication
advisory advisory
advisory
advisory fication
based based
advisory ficationbasedMachine Machine
fication
ficationMachine basedbased
basedbased Machine
Machine
Machine
Machine
insurance
insurance learning learning
insurance
learning insurance learning
insurance
insurance
insurance learning
learning
learning
~500
~500 commercially
commercially most
most well-known
well-known cases
cases registered
registered in
in the
the database
database
Source:
Source: McKinsey
McKinsey Panorama
Panorama Insurtech
Insurtech Database
Database
nown
ssally cases
most
registered
registered ~500
~500
registered
well-known
in
in the
the~500~500
commercially
~500
commercially
~500 commercially
commercially
in the
database
database most
most
commercially
database
commercially
cases most
registered most
well-known
most
well-known
most well-known
well-known
cases
cases
casescases
well-known
well-known
in the database cases
registered
registered
cases registered
registered
in
ininthe
registered
registered thein
thein
database
database
inthe
the
thedatabase
database
database
database
urtech
ybase
abase Source:
Database
Panorama Source:
Source:
Source:
Insurtech McKinsey
McKinsey
Source:
Source: McKinsey
McKinsey
Panorama
Panorama
McKinsey
McKinsey
Database Panorama
Panorama
Insurtech
Insurtech
Panorama
Panorama Insurtech
Insurtech
Database
Database
Insurtech
Insurtech Database
Database
Database
Database

GDP growth with 6.2 percent against costs typically by providing customers
2.7 percent nominal GDP growth while with a digital interface and using a direct
P&C and life only attain 3.0 percent and model. The remaining insurtechs have
2.5 percent growth respectively. built their value proposition around
lowering costs for policy administration,
Exhibit 3 shows the primary value claims management, etc. through digital
proposition per insurtech according and leaner processes.
to the McKinsey Panorama database
highlighting how the insurtechs are In terms of finding new ways of growing,
attacking the market. Forty percent one key to insurtech success is that they
of insurtechs have a primary value are venturing into untapped markets and
proposition built around finding new addressing unmet needs. BIMA, a mobile
ways of growing, i.e. by introducing microinsurer based in Sweden, provides
new products or services or entering small-ticket insurance in emerging
new segments, and another 22 percent markets, where mobile penetration is
are focused on lowering acquisition relatively high and insurance coverage

6
is very low. By providing insurance through For the insurtechs focused on lowering
mobile subscription in target markets, operating costs their value proposition
BIMA has experienced solid growth since is built around their digital and lean
its inception in 2011. It now reaches operating models. For incumbents
20 million customers in 15 countries in this value proposition will become
Africa, Asia, and Latin America, providing even more challenging over time as
pay-as-you-go insurance and mobile the insurtechs will continue to enjoy
health services mainly to people living on the advantage of being purely digital
less than $10 a day. Another example of as they increase the scale of their
an insurtech finding new ways of growth operations. Direct insurer InShared
is Slice that provides coverage for Airbnb has shown this in the Netherlands,
rentals meeting a previously unmet, but where they have grown significantly
growing demand for coverage in the in a saturated market while keeping
sharing economy. staff and costs to a minimum.

Exhibit 3

surTechs
re adoptingare adopting
new
InsurTechs
InsurTechs newespecially
technology
are
are technology
& concepts,
especially &especially
concepts,
focused
focused on especially
within
on growth
growth andbig
and within big
reducing
reducing
ta &
ne machine
learning learning
acquistion
acquistion
and and usage-based
expenses
expenses
usage-based insurance insurance

20 20
%
Increasecustomer
Increase customerexperience
experience 22
22

Growth Increaseup-selling
Increase up-selling 10 13
10
40%
focused
focused
Growth 13 12
12 ondriving
on driving
growth
growth
10 1010 10
Increasecross-selling
Increase cross-selling 88

Reduceacquisition
Reduce acquisitionexpense
expenseratio
ratio 22
22
4 4 4 4
3

Reduceadministrative
Reduce administrativeexpense
expenseratio
ratio 18
18
Cost
Cost
reduction
reduction
Decreaserisk/capital
Decrease risk/capitalcost
cost 12
12
ro-
hain Blockchain
P2P P2P
Robo- Robo-
Gami- IoTGami- IoT
Usage- Usage-/
Big-data Big-data /
rance advisory advisory
fication fication based based
Machine Machine
Reduceloss
Reduce insurance
lossratio
ratio 88insurance
learning learning

commercially
nown most well-known
cases registered cases registered in the database
in the database
e:rtech
McKinsey Panorama Insurtech Database
Database
~500commercially
~500 commerciallymost
mostwell-known
well-knowncases
casesregistered
registeredininthe
thedatabase
database
Source:McKinsey
Source: McKinseyPanorama
PanoramaInsurtech
InsurtechDatabase
Database

7
As the insurtechs make inroads into bots to provide robo-advice through
the insurance industry they might a digital customer interface with
increase the overall growth levels of digital distribution.
the industry, and will certainly gain
market share with their digital models. ƒƒ Targeted product concepts. Insurtechs
Investors and industry talent are are able to offer personalized small-
believers. Lemonade, a US-based ticket products based on usage
peer-to-peer insurer has attracted or value-added services. Cuvaa
significant funding from premier allows customers to buy hourly
investors, as well as talent from car insurance on demand using
leading insurers, on the promise their mobile phone. Kasko and
to “uberize” insurance. The start-up Simplensurance offer insurance
may succeed or it may fail, but its coverage as an add-on purchase
prelaunch reception and its early within e-commerce websites.
results are indications of the level
of disruption that can be expected. ƒƒ Full automation. By an automated-
only approach, insurtechs cut
How insurtechs differ from costs and accelerate processes
incumbents to meet customer expectations.
SnapSheet, for example, offers
Insurtechs are able to go to market end-to-end automated claims
in fundamentally different ways than management, while the Claim
incumbents can. One advantage Di mobile app “shake and go”
insurtechs exploit is their freedom allows claimants to interact with
from legacy products, processes, their carriers on the accident site
and IT systems. They are able to just by shaking their phone.
design digital processes, products,
and systems from the ground up, ƒƒ Data-driven decision making
relying on the latest technology. and insights. With access
Like the fintechs, insurtechs target to diverse sources of data,
particular value pools in the sector, including telematics from
rather than seek to provide end-to- installed boxes and smartphone
end solutions. Simpler IT and simpler apps, insurtechs are applying
operations translate into less investment machine-learning techniques
and quicker returns. Insurtechs use to offer innovative, personalized
their digital expertise to maximize value products and services. Metromile,
in a number of ways characteristic for example, offers pay-per-mile
of truly digital enterprises: auto insurance to low-mileage
drivers in some US states. FitSense
ƒƒ Increased connectivity. Insurtechs allows life and health insurers
such as digital brokers Knip in to use data from wearable
Germany and Clark in Switzerland technology in underwriting,
are using artificial intelligence and pricing and claims handling.

8
Shifting gears: Insurers adjust for connected-car
ecosystems

Vehicles are increasingly being outfitted with sensors that gather a massive amount of data
that has never been available before. All the participants in the connected-car industry—
automakers, insurance companies, insurtechs, sensor and chip manufacturers, and
digital-platform giants—stand to be affected by this trend.

For insurers, the challenge will be investing in the technologies and relationships that
will allow them to use real-time data streaming from vehicles to offer new products and
services to customers, as well as to create long-term growth for the company.

Learn more about connected car ecosystems in “Shifting gears: Insurers adjust for
connected-car ecosystems,” on McKinsey.com.

Insurtechs build their business ƒƒ More frequent interactions.


models by addressing the pain On-demand insurers like Trōv are
points customers experience in able to offer consumers a mobile-
their relationships with incumbent enabled on-off switch for coverage.
insurers. They especially seek to These innovations promote customer
heighten customer interest and relationships and raise awareness of
foster interaction. They do this in insurance by making it more relevant.
a number of ways:
ƒƒ Digitizing “moments of truth.”
ƒƒ Social engagement. Peer-to-peer Customer pain points, whether
insurers, such as Friendsurance, arising in advice or claims, can make
Lemonade, Guevara, and Inspeer, or break customer relationships.
use policyholder pooling to lower Advisory solutions to these “moments
rates, but also create a social of truth,” such as PolicyGenius and
contract with the policy holder HeyBrolly, tackle customer concerns
that many traditional insurers about being over- or underinsured.
would envy. ERSTE Digital, a digital Likewise in claims, Bauxy allows
broker offering add-on coverage, its customers instantly to initiate
sells through social media channels, straight-through claims processing
including YouTube, Instagram, by taking a photo of an invoice and
and Facebook. submitting it electronically.

9
A few insurtechs at a glance

ƒƒ Onsurance recommends personalized insurance to drivers based on their driving


habits. These are tracked with Mojio, a proprietary tool that customers plug into their
vehicles which transmits data to the cloud. Onsurance deploys an algorithm on the
data collected to find better products in the insurance market and when it does, sends
an alert to the customer.

ƒƒ Trōv is an on-demand insurance platform based in Australia and the UK offering


coverage for accidental damage, loss, or theft of objects of particular importance
to customers, such as laptops, bicycles, or musical instruments. Trov aims at young
people, offering them a highly responsive customer interface with simple and speedy
sign-on. A single screen displays all the items prospective customers would like to
insure; acquiring or relinquishing coverage is as simple as switching a button on or off.

ƒƒ SPIXII is an insurance “chatbot”—a software application that can interact with


humans to carry out specific actions. SPIXII is like an automated insurance agent that
guides clients to select policies, receive quotes, and decide on coverage. It operates
through a simple user interface much like instant messaging. SPIXII is sophisticated
enough to direct questions to clients on the risks they face as well as answer typical
questions on insurance products.

Insurtechs also manifest a next-generation The insurtech pathway to improved


entrepreneurial culture. Founders are often performance
tech-savvy innovators with experience
in software or insurance companies. For incumbents, the news is not all bad—
Unencumbered by heavy operations and far from it. Insurtechs are not everywhere
high investment requirements, they are able seeking to displace traditional insurers.
to take risks to see what works and what The insights generated from McKinsey
doesn’t. They embody the ethos of a digital Panorama Insurtech database suggest that
start-up culture, in which companies appear, 61 percent of all insurtechs today focus on
fail, and sometimes reappear in modified providing services to insurers, simplifying
form, with the lessons of a failure incorporated and digitizing parts of the insurance
into a new plan. They tend to adopt a flat value chain (see Exhibit 4). Only a small
organizational style, attracting employees proportion, 9 percent, are aiming to replace
that strongly identify with the company and the incumbents while 30 percent are
its mission. With few if any layers separating focused on disintermediating the customer.
staff from top management, insurtechs can Many insurtechs rely on incumbents
more easily make adjustments and act on to underwrite risks. And incumbents
the latest experiences. are beginning to draw inspiration from

10
Exhibit 4

on enabling
focused theInsurTechs
Most
on
Most insurance
InsurTechs
enabling value chain
are focused
focused
the insurance
are ason
valueonchain
enabling
enabling the insurance
as the insurance value
value chain
chain as
as
and disrupting
mediating and theto
opposed
opposed value
to
disrupting chain
disintermediating
disintermediating
the and disrupting
value chain and disrupting the
the value
value chain
chain

Disrupt
Disintermediate
Disintermediate full value
customer
customer chain
Disrupt full value chain Disruptfull
Disrupt fullvalue
valuechain
chain

0 30 9 9 30
30 99

61 61 61
61

Enable valueEnable
chain value chain Enablevalue
Enable valuechain
chain

ered in the database ~500commercially


~500 commerciallymost
mostwell-known
well-knowncases
casesregistered
registeredininthe
thedatabase
database
Source:McKinsey
Source: McKinseyPanorama
PanoramaInsurtech
InsurtechDatabase
Database

insurtechs, studying how they work and banking. That experience helps establish
using the new technologies and services the dimensions of the threat as well as
as they develop their own innovations and the opportunities it harbors. Insurers
digital initiatives. The leading digitizers can begin to act by focusing attention
among insurers—those that have taken on three broad topics: the innovation
pages from the insurtech playbook—are landscape, their own priority areas for
not only more profitable than their less- action, and possible operating models.
digital peers but are also growing faster.3
In particular, Insurers’ innovation strategy
In developing strategies to respond need to be more externally oriented to
to the insurtech challenge, traditional monitor and analyze continuously the
insurers have the advantage of the innovation ecosystem that insurtech are
lessons of the fintech experience in building. On the other hand, Insurance
incumbents need to assess their business
3 See Tanguy Catlin, Ido Segev, and Holger Wilms, “The
hallmarks of digital leadership in P&C insurance,” August
and strategy pain points to have a clear
2016, McKinsey.com. view on which area of the value chain and

11
which line of business can be enhanced next-generation insurance ecosystem.
efficiently with innovation coming from Incumbents must adapt or lose
insurtech. Engaging with and being inspired market share, this much is known.
by insurtech could allow incumbents to In particular, they will have to address
digitize faster and better and improve their the much higher level of customer
chances in the new digital world. engagement that the insurtechs
are attaining. Adaptation will bring
There are different approaches incumbents benefits in many operational areas,
can use to cope with insurtech, they can leading to cost improvements, better
internally develop the technology-enabled capital allocation, and greater revenue
business model they get inspired from or generation. Insurers need to analyze
acquire the company directly. Many options the innovation landscape, compare
are in between, from developing a digital their in-house technological capabilities
lab to founding a corporate venture capital, with insurtech solutions, and consider
from collaborating with an insurtech to their options for moving forward—from
partnering with a venture capital fund. digitizing operations to acquiring or
partnering with insurtechs.
However, there is no universal solution,
and every strategy depends on the specific
context, company ambition and pain point Tanguy Catlin is a senior partner in
being targeted. McKinsey’s Boston office; Johannes-
Tobias Lorenz is a senior partner in the
A future article will look into how leading Düsseldorf office; Björn Münstermann
incumbents are collaborating with is a partner in the Munich office; Peter
insurtechs to meet the digital challenge. Braad Olesen is an associate partner in
the Copenhagen office; and Valentino
   Ricciardi is a specialist in the Milan office.

The risks insurtechs present to traditional The authors wish to thank Henk Broeders,
business models are real, as digital Gergely Bacso, and Gunnar Dölling for their
innovation relentlessly redefines the contributions to this article.

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