Over time, established insurers excel in meeting the demands of their mainstream and most profitable higher tier customers. Often going beyond that, they toil to raise the levels of performance and quality to enhance profitability. That driving force to improve and exceed customer expectation leads many insurers to pay little attention to the lower tier, less profitable end of the market. This leaves a window open to the disruptor.

The disruptor, rising to exploit that lower tier, can do so without needing to meet the qualitive standards of the established player. Operating with scant resources, the disruptor can cheaply bring new insurance products to the marketplace. Even if noticed, the established player tends not to react, happy to relinquish the less profitable lower tier. Once the lower tier is captured, the disruptor will begin to raise quality and product features, gradually eroding the established player’s mainstream customer base.