Digital insurance technology companies or 'insurtechs' are failing to exploit opportunities in the industry, a new study found.
Joint research conducted by global consulting firm Oliver Wyman and German insurance startup Policen Direkt shows the second wave of insurance technology disruption will have the potential to "truly change the way insurers cover risk."
The research, which included more than 1000 global participants, analysed different business models ranging from insurtechs and traditional insurance companies to the pure technology players across three segments; the first being the companies' proposition or development of insurance-based products and services.
This is the smallest and "most troubled" segment because there is little activity to date, presenting untapped investment opportunities for insurtechs, the report said.
Companies positioned as risk partners for instance, are likely to attract interest from established insurers; insurtechs focused on new digital risks such as cyber insurance will face strong competition from established insurers.
In terms of the distribution segment, innovating the insurance sales process has attracted the highest number of startups around the globe, but it is also experiencing an activity and attractiveness mismatch in some areas.
Business-to-customer online brokers for example, face strong competition and have little opportunity for differentiation, while "promising" business models for startups in this space exist, such as corporate platforms designed to sell insurance products via HR functions and financial partners.
In terms of operations, this is where insurtechs are most likely to dominate, the report said, particularly in the Americas, Europe, Middle East and Africa.
Claims and underwriting continue to be an attractive area for insurtech companies - which have the highest market potential and chances of success, the report said.
Oliver Wyman partner Dietmar Kottmann said insurtechs have already triggered a lot of change mainly to the advantage of the consumer and are "here to stay."