NEW YORK, Nov. 23, 2016 /PRNewswire/ -- SynopsisInsurtech start-ups are emerging as the insurance industry is waking up to the technological advancements customers have come to expect from other industries. The banking sector has been transformed and disrupted greatly by financial technology (fintech), but insurance technology (insurtech) remains a long way behind and a very different proposition, despite recent progress. Funding to insurtech start-ups surpassed US$1.0 billion halfway through 2016, highlighting the progress made. However, substantial improvements remain essential in basic areas such as mobile websites and apps, while more innovative areas such as blockchain and the Internet of things (IoT) have the capacity to revolutionize the industry.The vast majority of insurance start-ups are looking to partner with current insurers, as opposed to challenging them. Areas such as customer engagement - particularly improving processes and platforms, increasing efficiency and reducing administration costs - or helping with regulation are the main areas where start-ups are having success.Looking to challenge the incumbents is extremely difficult, predominantly due to the capital required to underwrite insurance. The most successful start-ups have been identifying insurers' weaknesses, and working alongside them to make improvements.Technology investment is a major priority for global insurers, Axa, Allianz, Munich Re and Swiss Re have established their own capital venture funds, with a ringfenced budget to invest in new technologies and start-ups. There have been over 80 separate investments in start-ups already as of July 2016, with the year on course to finish with a 42% increase in the number of deals compared to 2015. Partnering with insurtech start-ups is ideal for large companies which do not have to take on the risk of development. It is also easier for an incumbent to drop a start-up after outsourcing if it does not work out, or if regulations change, than to get rid of a whole department. These companies often struggle with creating the right atmosphere for true innovation, largely due to in-built processes and a reluctance to tolerate failure.Almost all start-up activity is occurring in the non-life sector, and particularly in motor, home and health insurance. The life market is not exactly primed for innovation, with huge capital requirements, very little customer engagement and heavy regulation, although quantified self is an area to watch.Non-life, on the other hand, is a much more active segment, with the increased use of data, in particular, starting to have an impact in terms of both tailored policies and even preventative measures. The switch from insurance companies offering financial cover following a claim, to a valuable service, that customers interact with regularly and benefit from greatly, is already happening to an extent, but is set to become mainstream. Examples include telematics as a way to reward good driving, while both health wearables and connected homes look to identify problems before they occur.