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InsurTech
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InsurTech is composed of the words “insurance” and “technology”. It is used as a collective term for the application of modern technologies in the domain of insurance services.

Digital and mobile brokers: FinTechs belonging to this category mostly act as digital insurance brokers and provide users with an overview of their insurance contracts with their respective conditions. Some FinTechs offer very short-term insurance contracts to cover specific cases which can be concluded often spontaneously via mobile devices. Oftentimes additional consulting services are offered.

Internet of things: FinTechs belonging to this category collect data by measuring for example the driving style of the customers or through wearables the customers wear to consult on, offer and/or manage the customer’s insurances.

Introduction

Attitude of the country towards InsurTech-services

In the context of the emergence of InsurTech, the competitive landscape of insurance sector has remained mostly unchanged: the main competitors of long-standing insurers are still banking-insurance businesses that benefit from the implementation of their group’s digitisation strategies. “BigTechs” have not entered the market, and insurers believe their entry to be unlikely in the short-term; InsurTech are seen as partners or niche competitors rather than as threats able to bring out major changes (ACPR, Digital transformation in the French insurance sector, n°132, April 2022).

In the short-term, InsurTech players, that is to say start-ups using new technologies to conduct insurance business, are viewed as the most likely to shake up the industry. The insurers surveyed do not credit them only with advantages, though. Traditional insurers recognise the pioneering role banking-insurance actors played in terms of customer relationship, simplicity, and agility, especially thanks to the use of artificial intelligence. They also consider banking-insurers’ management costs can be more competitive due to the conjugated effects of their specialisation and their information systems that are better suited to new digital uses without any outdated systems to maintain. However, they point out that these new players are positioned on specific parts of the value chain (mainly distribution and customer relations) and reach a highly targeted share of customers with specific products and uncomplicated risks, in a typically small number of business lines. Moreover, few of these InsurTech companies carry the risk directly, adopting the status of intermediary instead, which leads them to entering into partnerships with traditional players. 

Three scenarios for the evolution of the financial sector are envisaged by insurance bodies:

  • Continued digital transformation of traditional players with integration of innovative start-ups;
  • Development of partnerships and distribution agreements with operators that integrate insurance as a component of a more global offer to the customer (platformisation scenario);
  • Rise of industrial and technological players, notably through partnerships with traditional, well-established insurers.

Traditional insurers point out the risk of losing customer relationships and degraded quality of service due to a fast pursuit of profitability by these new entrants in the insurance market. However, they are relatively unconcerned about the regulatory and technical barriers to entry which constitute a real obstacle to the fast and massive capture of market shares by InsurTech or Big Tech companies.

Legal affairs

Obligations and requirements to provide InsurTech-services

Institutions wishing to conduct insurance or reinsurance business must be licensed. The institutions in question are

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