At its beginning, the Fintech industry’s vision was to fundamentally transform traditional banking using advanced technologies. A decade later, this vision has yet to fully materialize. Despite the acceleration we’ve seen in tech-based financial solutions, it is generally agreed that financial institutions are not likely to disappear anytime soon.

As active Fintech investors who review hundreds of Fintech solutions annually, understanding the processes and challenges the industry faces constitutes a critical element when we consider investment in a potentially disruptive solution.

The following are specific challenges and shifting paradigms in the insurance industry – a traditional sector in which we believe there is opportunity to create large-scale companies and disruptive value.

Insurance

One of the pain points which constitutes a catalyst for innovation in the industry is the “loss ratio”: the difference between proceeds from insurance activity, and payment of claims. Among most insurers, this ratio is negative, with insurance fraud being a main cause. Insurance companies struggle to identify fraud for several reasons: