Abstract
Insurtech is closely associated with digital transformation by new entrants that seek to disrupt insurance markets. However, the insurtech concept also includes its use by incumbent insurance companies, which are actively deploying a wide variety of insurtech applications to protect their market positions through innovation of their existing business models, e.g. through improved business processes or new insurance services. A theoretical insurtech business innovation model is developed that captures the effects of digital technology in insurance markets by considering innovation as a multi-dimensional concept that encompasses business processes, novel insurance products and changes to the insurance value chain. This framework is applied to an empirical sample of digital leaders: three incumbents and four new entrants. The results illustrate a variety of insurtech applications that include the transformation of business processes, products and new types of value chain configuration, as well as relatively minor enhancements to existing systems and business practices. It is shown that all the new entrants exploit artificial intelligence, big data and digital technology to build brand-new insurance services that emphasise innovative product features, high customer value and a delightful customer experience. In contrast, the legacy insurance firms tend to use digital technology in a defensive manner, e.g. the enhancement of existing insurance services, distribution channels and market positions. The exception is the launch of a telematics insurance service by an incumbent firm, where the telematics insurance effectively operates as a standalone business within a legacy insurance firm. The theory model is effective at analysing and evaluating both the type and magnitude of innovation. The case studies make an empirical contribution by illustrating state-of-the-art innovation by insurance disruptors and contrasts this with the defensive and sometimes novel digital strategies of incumbent firms. Future trends and research opportunities are outlined.