Insurance companies and startups together have grown the insurtech ecosystem by leaps and bounds over the past two years. And investments are paying off with more consumers transacting digitally with consumers than ever.

That's according to a worldwide survey of more than 22,000 adults by EY for its "Fintech Adoption Index 2017" report, released this week.

About a quarter of respondents to the survey reported using one or more digital channels to manage their insurance portfolio. The only category that was more widely used was money transfer and payments. Insurance outstripped financial planning, investments and borrowing for the first time in EY's survey, which was first conducted in 2015.

There are a couple key factors in explaining insurtech's rise, according to Nikhil Lele, principal, Americas strategic insights leader for EY. The first is increasing partnership with insurtechs by incumbent insurer.

"There's definitely been a lowering of barriers to entry that have stood in an insurtech's way," says Lele. "They're getting over the hurdle of poeple making a decision to engage with them. It's no longer an 'either/or,' it's mostly an 'and.'"

Regionally, consumers in India (47%), the UK (43%) and China (38%) were the most likely to report using an insurtech. Those companies tend to be at the top of all categories of fintech adoption, Lele says, because their governments are actively investing in mobile and digital identity management and interaction.

"The countries on top of this list are taking very advanced views that are driven by policy/regulatory drivers of those nations that are bearing fruit across all areas of fintech," Lele explains.

For example, he notes, India is in the midst of rolling out a nationwide biometric system that will give citizens a digital identity. That means they don't have to even fill out a form to transact with financial institutions, Lele explains.

Learning from history

Lele says that like the broader fintech category around banking, insurtech has leveled off from companies planning to disrupt the industry overall to simply finding a piece of the value chain in which they can apply their innovation and partnering with incumbents to do so.

"We see many of our insurance clients looking holistically across this innovation ecosystem, asking 'How can we make use of the best emerging tech that's available, bringing the power of the franchise to bear?'" he says. "The initial narrative was so centered around these companies coming to steal the incumbent's lunch, but more of the activity over time really hit the mark on how do large firms use a new capability to improve."

Now, incumbents are looking to identify winning technologies and firms to partner with or invest in, exploring advanced data and analytics, the Internet of Things or distribution alternatives. It's incremental in some mature insurance markets where agent relationships are entrenched and longstanding, but "There's a really major wave of innovation that the insurance industry is at the beginning stages of," Lele concludes.

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