The term “insurtech” refers to the use of technological advancements intended to squeeze more efficiency and cost savings out of the existing insurance business paradigm.
Inspired by the phrase “fintech,” the name “insurtech” combines the terms “insurance” and “technology.”
New Trends in Insurtech
The market’s expanding set of options and business models reflect the insurtech sector’s continued rapid climb, and experts predict that insurance businesses and investors with a thorough awareness of “new technology and commercial trends” will gain the most.
By looking for answers to the technology and business problems the insurance industry is facing, investors can prosper despite the increasing change. Major insurtech businesses’ widespread use of new technologies could put insurance providers at risk of fierce competition from “a new wave of digital attackers”; this trend is seen in the significant number of greenfield insurers that have been founded in recent years.
Insurtech closes record-breaking financing arrangements
According to statistics compiled by marketing research platform CB Insights and insurance giant Gallagher, insurtech firms globally broke records in terms of deals and funding last year, with funding reaching an all-time high of $15.4 billion. This amount roughly doubled the total raised in 2020, and Q4 2021 saw the largest quarterly investment in insurtech ever.
In terms of the deals, 564 were successfully concluded in 202. Additionally, new records were set for unicorn formation, global involvement, and IPOs.
The research states that $6.4 billion, or around 40.5% of the total, was invested in life and health (L&H) businesses, with the remaining $9.4 billion going to property and casualty (P&C) insurtech.
What are the main insurtech trends that are changing the US insurance market?
Insurance Business consulted market intelligence and fintech specialists to learn how insurtech is altering the insurance landscape. Here are the five insurtech trends that these experts predict will have the greatest influence on the sector.
1. More collaborations between insurance companies and insurtech startups
Spit anticipates that the market will be “ripe for partnerships” as the insurtech industry continues to be well-positioned for significant expansion in the coming years.
Embedded insurance is an excellent illustration of a solution that is emerging as a catalyst for collaboration, with traditional carriers and non-insurers alike making “strategic bets” to acquire insurtech that can aid in the integration of insurance products that generate revenue into their ecosystems.
2. Using digital technologies, businesses may increase efficiency and provide better consumer experiences
Numerous insurance providers are utilizing platform-based business models and data-driven insights to support their clients’ digital journeys.
In addition to embedded insurance, he continued, other “technology themes” that are altering the sector include the use of:
Platforms powered by AI boost the efficiency and effectiveness of key operations big data to enhance consumer personalization, reduce losses, and improve underwriting procedures from carriers’ own systems and those of third parties Artificial intelligence, big data, and open APIs are integrated into cloud-based applications and as-a-service business models in an effort to increase speed and efficiency throughout their value chains.
3. Carriers will be able to better comprehend clients thanks to the “avalanche” of data coming from linked gadgets
By 2025, there will likely be one trillion linked devices worldwide, which will produce a “avalanche of new data” that will help insurance companies better understand their customers.
Additionally, according to the leading management consulting organization, the explosion of information will lead to “new product categories, more individualized pricing, and growing real-time service delivery.”
4. Increased cooperation between insurers and insurtech companies to improve cybersecurity and compliance
Spit claims that more insurance carriers are “embracing extremely sophisticated security and compliance solutions” due to the rising frequency and excessive costs of security lapses as well as increased regulatory scrutiny. As a result, more insurers are collaborating with insurtech companies to safeguard their platforms and identify cyber vulnerability across business lines.
The McKinsey partners stated that carriers may build resilient networks that can fend off cyber assaults by adopting zero-trust security and related strategies.
5. The market will be fuelled by carriers’ growing migration to digital infrastructure.
Insurance providers, according to the McKinsey partners, have “substantial technological debt,” which means many of their key operations are hampered by “large on-premise legacy technologies.” However, they anticipate a swift switch to the cloud for all essential systems as cloud technology develops. Insurers will be able to launch new products with greater flexibility and provide better customer service as a result.
Conclusion
Due to the insurance sector’s readiness to benefit from disruptive and new technology, venture investors are interested in insurtech. Large insurance businesses can now explore new possibilities without relying solely on manual labor thanks to insurtech.
Today’s consumers use smart gadgets to access their insurance needs. The efficient and convenient insurtech, which enables consumers to obtain insurance in a matter of minutes, includes wearable technology, auto-monitoring devices, and phone apps.
Additionally, insurtech has improved the efficiency of underwriting, claims to process, and asset management for insurance businesses. Big data, AI, and IoT devices are currently the main areas of concentration for insurtech capital investment.
