From Willis Towers Watston Quarterly Insurtech Briefing:

The Quarterly InsurTech Briefing Q1 2017 is out from Willis Towers Watson.  In the introduction, Rafal Walkiewicz, Chief Executive Officer of Willis Towers Watson Securities writes:

Many market participants want to embrace the InsurTech revolution but continue to struggle with determining how to successfully monetize industry changes, at least in the short term. Should they invest in their own research resources and fund development of new technologies in-house or with partners outside of the insurance industry?

I can appreciate this thought.  While its clear the digitization of insurance is underway and technology will revolutionize the industry – how best to approach the industry with novel technologies given the complexities of the business is a significant challenge.  Consider other large industries under technological threat – such as the automobile industry – and query if Tesla would have made it if it were funded by, or had existed in the General Motors ecosystem.  Tesla had to build it all, from scratch, from the ground up.

InsurTech is a burgeoning phenomenon that is modernizing the insurance industry. It is disrupting the traditional value chain whereby insurers offer loss protection, and shifting the emphasis to risk mitigation. Incumbents face disintermediation as investors in search of higher yields pour money into insurance-linked instruments in the capital markets. And entrepreneurial businesses are targeting friction costs and inefficiencies within every aspect of the traditional value chain.

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The report continues:

Arguably, insurers who stick too long with the old model will fade as premiums and their balance sheets shrink. Those who thrive will learn to ride the wave of disruption to capture new opportunities – although whether they will still be known as insurance companies remains to be seen; they might have to reinvent themselves entirely.

Thus the challenge – and there are no easy answer.  Ultimately, it will come down to big risk-takers, excellent operators, and big faith taking steps forward who stand to gain from what will inevitably happen to the industry.  In fact no industry is at a point of more risk to the incumbent, and more opportunity for the bold.  Technology   It was no surprise that again, while InsurTech continues to attract significant capital, there is no one going after the big opportunity of improving life insurance and annuity.  If Silicon Valley built a new life insurance company that offered annuities, what would it look like? What products could it offer? That is what I want to see happen, and be part of.