Insurers and reinsurers are increasingly influential in insurtech, making 120 private investments last year and 35 in the last quarter alone, according to Willis Towers Watson.

The global broker’s fourth quarterly insurtech briefing shows overall insurtech funding increased 36% last year to $US2.3 billion ($2.87 billion) – the second-highest annual total.

Willis Towers Watson Securities CEO Rafal Walkiewicz says the record number of investments show incumbents will not watch the insurtech juggernaut pass them by.

“Incumbents sent a clear message to potential disruptive outsiders: by investing heavily in start-ups and technology, (re)insurance companies appear to have assumed a semblance of control over the insurtech revolution,” he said.

About 65% of incumbents’ insurtech investments are in businesses focused on the value chain, as (re)insurers try to improve product delivery, underwriting, claims and administrative functions.

“During the year, conversations about disruption of the existing value chain evolved towards an efficiency-driven search for incremental innovation,” Mr Walkiewicz said.

“However, technology revolutions rarely result in redistribution of power among incumbents.

“It can be argued that incumbents’ collective response to insurtech hype has diminished their ability to recognise true disruption.”

A survey of 600 insurers and investment professionals shows 75% perceive their company as “moderately” to “extremely” at risk of disruption, while most of their innovation budgets (72%) go towards incremental rather than disruptive or radical technologies.

Nearly half describe their company’s innovation philosophy as “ad-hoc”.

Willis Towers Watson Global Head of Insurance Consulting and Technology Alice Underwood says (re)insurers are evaluating the costs associated with early adoption of new technology.

“This investment can yield great reputational and financial benefits if handled well, but companies that position themselves as fast followers can reap a fair amount of benefit with relatively less risk.

“However, companies that wait too long may find they can’t make up lost ground once anti-selection and other competitive pressures set in.”