A Literature Review on Digital Disruption in the Context of the Insurance Industry

Multiple industries, such as retail, transportation, telecommunication, information or hospitality, are disrupted by tech-savvy new entrants that modernize the way consumers and suppliers interact.
The insurance industry resists to such transformation despite the emergence of Insurtechs that attempt to change the traditional operating model.
This paper evaluates through a literature review the context of the insurance market and the essence of the industry to explain the difficulties of an effective disruption of the insurance paradigm by new entrants. The review shows that insurance is complex and requires expertise and experience beyond digital know-how.
The paper shows also the barriers to entry (e.g., regulation, capital, compliance), the difficulties to respond to a passive demand (e.g., poor value perception, no willingness to pay), and the necessity to provide a well-processed supply (e.g., technical nature of insurance, underwriting, after-sale and claims management) which all favor the position of incumbents and challenge the fragile ambition of digital entrants – insurtechs. This review is used as preliminary research to write a thesis on the impact of digital entrants in the insurance industry.

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