In this part, our authors are tackling business models, an important topic to determine the future sustainability of InsurTech startups. The authors have reviewed patterns that have emerged during the course of the past four years and looked through their crystal balls to define or identify the most relevant business models of the future.

The business of insurance has not actually changed for many years. From core, adjacent business models to transformative options, InsurTechs are dabbling across the range to exploit the growing imbalance between customer expectations and the service offered by insurers. Their intent is to deliver relevant quality alternatives to cater for new generations and evolving customers’ needs.

At its most conceptual level, a business model is no more than the strategic configuration of components that makes a business whole and able to make money. And while emerging business models may list smart or connected, peer-to-peer, credit-based, preventative, or sharing economy approaches as the new ways of doing business, each of these models resides at the intersection of a few major fundamental changes.

Change number 1 includes the use of unique data sets pushed through highly sophisticated models to deliver competitive insights relevant to better acquire, retain, and service customers as well as deliver unique experiences.

Change number 2 relates to being digital-first or able to automate and provide online, social, and secure interactions to address a variety of lifestyle choices, making offline propositions more difficult to sustain without a digital presence. It is also about making trust and transparency essential parts of the transaction model.

Change number 3 focuses on the development and acceptance of new partnership and alliance models, which involve many new parties formerly non-existent across the insurance value chain. They often reposition the role of the insurer as white-label insurance enabler, underwriter, or claims handler depending on the context of the new propositions. The new business models that are emerging are more data-driven and collaborative-focused. They are built on an ecosystem of relevant partners and services that are willing and keen to adopt more preventative behavioural approaches.

It is recognized that while innovation opportunities will come from shaping and remodelling the value chain, disruption opportunities will come from identifying truly revolutionary business models.