Legacy-free insurance markets can take up innovative technology more quickly than developed markets, potentially altering the balance of power between the two, according to the latest insurtech briefing from Willis Towers Watson.

The London-based company’s CEO of Securities Rafal Walkiewicz says it is “increasingly clear” that legacy-free markets are more accommodating to innovative start-ups, because they are less constrained by existing infrastructure.

“As the Chinese insurance revolution facilitates new mainstream products, such as pure protection and product return, the Chinese economy is simultaneously driving the creation of new distribution models,” he says.

Willis expects the Chinese insurance market, the third-largest domestic market in the world, will continue its rapid growth.

“Underpinning our analysis of insurance markets in China and emerging Asia is our fundamental expectation that as the insurance industry becomes increasingly globalised and the value chain is dissected into more specialised critical functions, underlying technology supporting these functions will become increasingly portable across geographic markets,” he says.

While the $US312 million ($407.84 million) insurtech funding volume in the third quarter was 68% lower than in the second quarter, interest in the sector remains strong.

The report also discusses the potential implications of “modularisation of the insurance value chain”, and how businesses in emerging markets are more able to attract intellectual and financial capital from partnerships than those in developed, heavily regulated countries.