Disruption is bringing ever-fiercer competition for the insurance sector. With nearly half of respondents to our survey saying that their business models are already being disrupted by new, more nimble competitors we see some are concerned innovation may bring more disruption than value.
For now, it seems unlikely that Apple or Google will make a dramatic entry into the insurance game in a significant way. But – equally nimble - FinTech competitors are trying to undermine and disrupt the status quo. Increased competition from these new entrants and more agile incumbents will continue to create challenges for insurers around the world. And it’s not just start-ups that are creating innovation challenges, four-in-ten respondents to our survey say that increased competition from their existing competitors would create significant challenge over the next 2 years.
While not surprising, 65 percent of respondents cited regulation as their organizations greatest challenge. Many of the clients we interviewed feel the overly arduous regulatory requirements are narrowing the room for innovation in the sector, and indeed they may lead to unintended consequences. Additional challenges over the next two years include high cost and margin erosion (45%) and growing business and organizational complexity (37%).
Interestingly, respondents from North America were significantly more likely to say they had experienced disruption than their European peers and somewhat more likely to do so than their Asian peers. Similarly, respondents from the Property and Casualty (P&C) sector were more than twice as likely as their Life and Health peers to suggest they would face disruption from new competitors.