The Influence of InsurTech on The Existing Insurance Business Model

Abstract

New technologies, like InsurTech (FinTech in the insurance industry) is predicted by scholars to undermine the future effectiveness of the existing insurance business model. Scholars agree the low rates of digital transformation in the insurance industry and the wave of technological advancement in the external environment, poses a dilemma for existing insurers. Existing Insurers have the option to adapt to, collaborate with, or be eliminated by InsurTech. This research explores the influence of InsurTech on existing insurance business model. A qualitative, exploratory approach was undertaken where data was collected through ten semi-structured, face to face interviews. The interview data was analyzed using a thematic data analysis. The study found that the challenges experienced by existing insurers are the drivers spurring the growth of InsurTech in the industry. That InsurTech has the potential to spur business model innovation for existing insurers, by innovating the components related to competitive advantage, customer centricity and operational efficiency. The gaps identified in existing insurance business models are related to the current target market, revenue model and customer value propositions. The capabilities that existing insurers need to build to close those gaps identified include human capital, leadership and corporate innovation. This study contributes to the literature by identifying business model innovation as an influence InsurTech will have on existing insurance business models. A framework is presented that can be used to understand the influence of external, technologically driven market pressures on an existing insurance business models with low rates of technological adoption.