About 74% of insurers say the industry is most at risk over the next five years from fintech firms – financial technology players encroaching on their turf, according to a new PricewaterhouseCoopers report.

Fintech refers to financial services market entrants that offer innovative products and services. [They are more commonly referred to in Australia as disruptive innovators.]

“The pace of change in the global insurance industry is accelerating more quickly than could have been envisaged,” the Global FinTech report says.

“The industry is at a pivotal juncture as it grapples with changing consumer behaviour, new technologies and new distribution and business models.”

Fintech groups are enjoying significant growth and are rewriting the rules of business, according to the report.

Annual investment in fintech start-ups focused on insurance has increased sharply, with cumulative funding of $US3.4 billion ($4.4 billion) since 2010.

Overall fintech start-up funding more than doubled to $US12.2 billion ($15.9 billion) last year from $US5.6 billion ($7.3 billion) in 2014.

“Fintech is riding the waves of disruption, with solutions that can better address customer needs by offering enhanced accessibility, convenience and tailored products.

“In this context, the pursuit of customer-centricity has become a main priority and it will help to meet the needs of digital native clientele.”

Traditional financial services providers, including insurers, are under pressure to meet the expectations of consumers used to high levels of digital experience from groups such as Google and Amazon.

“While we should not underestimate the capacity of incumbents to assimilate innovative ideas, the disruption of the financial sector is clearly under way,” the report says.

“And consumer banking and payments, already on the disruption radar, will be the most exposed in the near future, followed by insurance and asset management.”

Insurers believe more self-directed services hold the key to meeting consumer expectations, improving operational efficiency and countering the fintech challenge.

The report questioned 544 respondents including CEOs and CIOs from financial services providers in 46 countries.

Insurance companies made up 14% of respondents, banks 30%, asset and wealth businesses 21% and fintech groups 20%. Other respondents included fund transfer and payment institutions, plus consultants and global financial institutions.