What is an InsurTech? A scientific approach for defining the term

Insurtech is closely associated with digital transformation by new entrants that seek to disrupt insurance markets. However, the insurtech concept also includes its use by incumbent insurance companies, which are actively deploying a wide variety of insurtech applications to protect their market positions through innovation of their existing business models, e.g. through improved business processes or new insurance services. A theoretical insurtech business innovation model is developed that captures the effects of digital technology in insurance markets by considering innovation as a multi-dimensional concept that encompasses business processes, novel insurance products and changes to the insurance value chain. This framework is applied to an empirical sample of digital leaders: three incumbents and four new entrants. The results illustrate a variety of insurtech applications that include the transformation of business processes, products and new types of value chain configuration, as well as relatively minor enhancements to existing systems and business practices. It is shown that all the new entrants exploit artificial intelligence, big data and digital technology to build brand-new insurance services that emphasise innovative product features, high customer value and a delightful customer experience. In contrast, the legacy insurance firms tend to use digital technology in a defensive manner, e.g. the enhancement of existing insurance services, distribution channels and market positions. The exception is the launch of a telematics insurance service by an incumbent firm, where the telematics insurance effectively operates as a standalone business within a legacy insurance firm. The theory model is effective at analysing and evaluating both the type and magnitude of innovation. The case studies make an empirical contribution by illustrating state-of-the-art innovation by insurance disruptors and contrasts this with the defensive and sometimes novel digital strategies of incumbent firms. Future trends and research opportunities are outlined.

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Uncovering the Impact of Digitalization on the Performance of Insurance Distribution

Köhne,

Köhne

2024

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This study explores the impact of digitalization on the performance of insurance intermediaries, who still play a key role in the revenue generation of insurance companies. By using an interdisciplinary approach, this study is the first to examine the extent and type of digital technologies used by intermediaries, their impact on performance with respect to revenue, productivity, and interaction with clients, and the role of digital stress in this context. The research is exploratory, which is why a research model with many variables and relationships between them was built. The quantitative multivariate method of Partial Least Squares Structural Equation Modeling (PLS-SEM) was applied as it allows the simultaneous estimation of models with multiple dependent variables and their interconnections. In this context, data collected in 2022 from 671 insurance intermediaries from Germany, whose demographic distribution in the sample is representative of the German insurance market, were analyzed. The findings show that insurance intermediaries use many digital technologies compared to other industries, particularly those that create added value in their daily work. Empirical evidence also showed that using digital technologies positively affects performance but induces perceived digital stress. As this study reveals, the latter diminishes the positive effects on performance. Technology optimism, technological skills, and organizational support reduce the severity of stress. This means that insurers can start here to support intermediaries to mitigate the performance-limiting effects. This study adds to the insurance literature by providing a broader understanding of how insurance intermediaries deal with digitalization and what it means for their performance.

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What is an InsurTech? A scientific approach for defining the term

Abstract: Customer value, value creation, artificial intelligence, service logic; insurance, chatbot, reverse use of customer data 12 When customers are willing to disclose information in the insurance industry: a multi-group analysis comparing ten countries

Cited by 4 publications

References 16 publications

Redefining insurance through technology: Achievements and perspectives in Insurtech

Redefining insurance through technology: Achievements and perspectives in Insurtech

Insurtech strategies: a comparison of incumbent insurance firms with new entrants

Uncovering the Impact of Digitalization on the Performance of Insurance Distribution

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