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InsurTech—Promise, threat or hype? Insights from stock market reaction to InsurTech innovation

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  • Ma, Yu Luen
  • Ren, Yayuan

Abstract

This study assesses the impact of InsurTech innovations on incumbent insurers, their competitors and the insurance industry as a whole using a unique dataset of global InsurTech start-up companies funding events from 2017 to 2019. We conduct an event study on insurers' stock returns and find mixed results on investors' reaction to insurers' investment in InsurTech innovations. Our results show that the stock market reacts positively to blockchain, peer-to-peer and on-demand digital insurance but negatively to digital analytics, digital distribution, cross-selling and cyber security innovations. We also find that the insurance industry is adversely affected by disruptive innovations brought in by competitors outside of the industry while disruptive innovations from incumbents do not have such a negative impact. These results are discussed and interpreted.

Suggested Citation

  • Ma, Yu Luen & Ren, Yayuan, 2023. "InsurTech—Promise, threat or hype? Insights from stock market reaction to InsurTech innovation," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:pacfin:v:80:y:2023:i:c:s0927538x23001257
    DOI: 10.1016/j.pacfin.2023.102059
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    Cited by:

    1. Chang, Vincent Y.L., 2023. "Do InsurTech startups disrupt the insurance industry?," Finance Research Letters, Elsevier, vol. 57(C).

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    More about this item

    Keywords

    InsurTech; Disruptive innovation; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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