Filed Under:Markets, Personal Lines

InsurTech and personal lines: Threat or opportunity?


The author expects the personal lines insurance industry to look quite different in 10 years than it does today, and InsurTech will be one of the change agents. (Photo: iStock)
The author expects the personal lines insurance industry to look quite different in 10 years than it does today, and InsurTech will be one of the change agents. (Photo: iStock)

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 upward in terms of startups, funding, and activity.

Related: InsurTech takes aim at personal lines distribution

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. Strategy Meets Action (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 opportunity? Will InsurTech disrupt the industry, or will the movement fizzle out?

Major role in insurance transformation

SMA’s opinion is this: InsurTech is important. It's not going away. It will play a major role in industry transformation, and insurers of every size must have a proactive 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's 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 5-10 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.

Insurer-InsurTech partnerships now number in hundreds

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.

Related: 3 best practices for collaborating with InsurTech startups

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 it does 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.

Mark Breading is a partner at Boston-based SMA. Email him at This article first appeared on, and is reprinted here with their permission. Opinions expressed in this article are the author's own.


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