Businessman holding a smartphone with inscription word INSURTECH.

Finding technologically innovative partners will be crucial for insurance companies in the years ahead, says Fitch Ratings.

In a research note, the rating agency said that it expects to see an increase in partnerships between traditional insurers and so-called “insurtechs” that will help shape the industry’s competitive landscape.

For traditional insurers, successful collaborations with insurtechs could enable them to, “adopt the latest technology more quickly, reduce operating expenses, improve their distribution reach and enhance customer retention.”

Indeed, Fitch said that the these arrangements will play an important role in determining the market position of insurance companies in the future.

Additionally, it suggested that growing importance of innovation and digitization in the insurance sector will intensify the competition from tech companies, “especially in sectors where tech companies have access to concentrated market shares.”

Branding is also expected to become less important in the sector, as technology and innovation becomes a greater differentiator.

“We expect market demand to shift towards the quality of the product rather than the familiarity of well-known insurance brands,” it said. “This poses a threat to traditional insurance companies that rely heavily on brand loyalty and heritage to maintain their competitive edge.”