Insurtech is growing, in 2016-2018 investments reached 11.2 billion dollars, more than twice the amount for 2010-2015. The sector is appealing to investors and although most of the funds are still allocated over early stage startups, some important investments are now also being made in favour of more mature innovative companies.
Insurers have been closely involved in the start-up ecosystem 2010 to 2018, investing in nearly 270 tech companies.
The global consulting firm Everis, together with NTT DATA, has published the third edition of InsurTech Outlook 2019, examining the technological evolution of the insurance market in recent years.
What are the main findings of this report?
Which technologies are crucial
Cloud technologies (mobile and app) artificial intelligence, big data, blockchain, are deemed the drivers of the transformation well attracting investments. Startups based on Artificial Intelligence, for example, recorded the highest (investments) growth: +665% between the two periods compared (2010-2015 and 2016-2018). Mobile applications will also play a crucial role: these are expected to increase in the coming years as being geared towards customization and aggregation and comparison platforms.
Risks and opportunities for Companies
The importance of new technologies in the insurance industry led several companies in recent years to make a virtue out of necessity, partnering with insurtech startups to address technological challenges and leverage new opportunities. Clearly, there is still a far way to go for companies; the results of a survey among executives from 43 insurance companies in more than 10 countries in Europe, Asia Pacific and South America revealed an awareness that is also a fear: the overwhelming majority of those surveyed think that insurtech will disrupt both their companies and the insurance industry as a whole; in particular, 9 insurers in 10 consider a portion of their current business to be at risk due to insurance activities.
Specifically, 90% and 95% of surveyed think that the Health and Car segments, respectively, will be strongly disrupted in the coming years; 60% of surveyed perceive a high level of disruption in the Business segment..
Tech companies: the Big Threat
Among the main strengths of this report lies the focus on the role of tech companies in the insurance industry in the coming years. It’s a warning: be careful, dear Companies, since your greatest threat is the disruption brought by tech giants such as Amazon, Alibaba, Apple, Baidu, Facebook and Google.
These companies clearly have technology, large amounts of data, fast organizations, data-driven business models, confidence from billions of people, rather aggressive culture and business strategies, and a habit to intrude into new industries.
These tech giants are striving for innovation in the insurance industry by partnering with disruptive startups to get started in, for example, health or SMEs insurance. Their focus is in particular on insurance products tailored to new lifestyles (connected home, driverless cars) connecting them through their platforms and thus converting the insurance distribution model.
The current scenario is as heterogeneous as ever and the tech giants are carrying out their own efforts in sectors impacting on insurance (e.g. Waymo/Google driverless car); cross-industry partnerships involving tech giants and startups, techonological companies, insurance carriers. It is an entropic phase, to be carefully monitored, not least since the data of the users/customers are the very essence of this process.
As the report points out, currently insurers and tech giants are in the process of setting up major alliances. However, whether, in the long run, the above could take advantage of their users’ data and technological expertise to leverage them in the insurance industry is not yet clear (or has not been addressed by lawmakers yet).All rights reserved