Fintech innovations are creating “seemingly contradictory” challenges for insurers, according to a report from the World Economic Forum and Deloitte.

“On the one hand, they must develop complex and highly personalised products to meet customers’ needs,” it says. “On the other, they will need to significantly simplify the origination process, enabling even highly complex products to be sold directly through online and mobile channels.”

The Beyond Fintech report warns intermediaries will feel the pinch from both sides, while insurers and reinsurers may increasingly partner with insurtechs and large tech groups to gain expertise and hedge against disruption.

Consumer demand for coverage for specific locations, uses and timeframes is driving companies to collect more data that can help them tailor products.

Deloitte says major tech companies have so far shown little interest in offering financial services.

But financial institutions increasingly depend on cloud-based infrastructure and online utilities, and are following the tech companies’ approach to customers in their data use.

“Financial institutions will need to find ways to partner with technology companies without losing their core value proposition, and accept some loss of control over their costs and data.”

The report, which follows a 2014 study on the potential for disruption, says fintechs have not established themselves as dominant industry players, but have had a transformative impact.

“While they may not dominate the industry today, fintechs have succeeded as both standalone businesses and vital links in the financial services value chain,” Deloitte says. “Accelerating change is a serious threat.

“It means an incumbent’s success is predicated on business model agility and the ability to rapidly deploy partnerships. Neither of these is a mainstay of established financial institutions.”