$1.7 billion invested in less than a year in startup of the insurance industry. Insurance Tech is no longer a subcategory of finance, indeed one of the fastest growing sectors in the technology market.
An example. Startup Bootcamp – one of the largest startup accelerators in Europe – in London, has a program entirely dedicated to Fintech where it deals with banks, insurance and investment. This year opened a second program, always in London, fully oriented to Insurtech.
The insurance technology market is so rich that Startup Bootcamp is willing to compete with itself to enter the industry with a specialized program.
Technologies are innovative, but the reason for the investments is as old as man. Money. Banks and insurance are the two main areas where money is “gathered”. Even just a limited technological innovation directly affects trillions of dollars and other currencies.
Insurance Tech means for example to make an immediate customer assessment to decide whether to insure it and under which conditions.
One of the tools of InsuranceTech is social media. Next time you complain about back pain or post photos of Saturday night binge drinking, be aware your insurance premium could increase. You may be less entitled to get a refund. Privacy may not be dead, certainly is not in perfect health.
Technology in the insurance industry has been growing exponentially for some years, but there are two reasons why this year could be remembered as “The Year of the Insurance Tech Booming”.
1. Trump administration effects.
Our trend topic is not politics, but economy. Without giving an assessment on Trump’s work, under its administration rights of large corporations to use citizen data will increase.
The websites you visit, how long, what you buy, are all data that so far big telco companies can neither use nor sell.
This is gonna change.
Greater access to your data means the ability to develop software and artificial intelligence that can decide what to insure and at what price. Your policy may exclude diseases for which you are considered at high risk.
Democratics have no charismatic leader, Republicans have no outstanding figures considering privacy a primary value, grass-root movements have limited and unstable grounds.
This generation has not fought World War II, has not suffered African-American minorities struggles. Protests like those of the past seem unlikely to happen. New protests on social media seem not to have the effectiveness of those in the past.
I would be very surprised if grass-root movements stopped the pro-business legislative reforms at the Congress. At least in 2017.
2. AI development
Artificial intelligence and automation are sufficient in quality to be scalable to the insurance industry.
The cost of staff and above all the cost of a wrong decision are the highest for insurance companies. A startup that can reduce these costs by a few percentage points saves billions of euros.
Greater innovation – the equivalent of PayPal or Amazon in the insurance industry – would allow an insurance carrier to become a market leader.
No innovation probably means “game over” for insurance carriers over the next five years, acquired by a greater competitor.
Facing these three alternatives – get rich, get rich even more or die – $ 1.7 billion investments in startup seem a small price.
In a view where insurances need more innovation than their customers, investment opportunities will be primarily in favor of B2B startups.
Italian mothers can proudly say “My son works in insurance.” In fact, the majority of jobs created by insurance industry will be innovative but very precarious.
