Oliver Wyman Data Cited In Wall Street Journal Heard On The Street Column
May 16, 2018
The insurance industry is facing growing threats from startups at a time when profits are already a struggle.
The profits available from simply supplying funds to underwrite risks have been squeezed because capital is plentiful in insurance markets. As a group insurers have failed to earn their cost of capital for years, according to Prashanth Gangu at Oliver Wyman.
About 60 cents of every dollar of premiums gets paid directly or indirectly to a network of companies that help insurers deal with clients and claims. Many of these companies make better profits than insurers do.
Smaller, smarter challengers that can manage customers and the claims process at lower cost will find ways to take industry profits, sell more competitive policies, or both.
Insurers should try to recapture some of their lost value by building their own technology, or buying a company that can cut their costs significantly.
The column, titled “Startups Show Car and Home Insurers They Need to Get Smarter” explores how the insurance industry is being impacted by smaller, smarter challengers.
To read the entire column, please click here.
To learn more about Oliver Wyman’s work in insurtech, please click here.