The insurance business is the one with the longest experience in the market. As a result of rapidly developing technology, it has started its transformation into the digital age. Many traditional insurance companies start investing in cutting-edge technologies and become partners of InsurTech development vendors. In the last few years, InsurTech startups have experienced a sharp increase in fundraising. Solely in the UK, it received 1,7 billion investment.
What are the factors that have driven InsurTech to such a surge in activity?
With the evolving FinTech industry, customers started expecting to experience a bigger degree of innovations and the use of modern technology in the one of the most conservative sectors of economy insurance. They strived for tech-friendly features like mobile apps, multichannel, and customer-focused service. That is when the first innovative startups hit the market and caused competition for market shares. The competition very soon was converted into mutually beneficial cooperation: technology companies benefited from insurance companies’ capital, needed for commercializing innovations, and insurance companies received ideas and expertise in technologically advanced products.
Simultaneously, as the result of common cases of personal data thefts, customers lost their trust in most of the insurance companies. And the need for insurance companies to embrace the latest technological innovations in the security sphere has arisen.
Some of the InsurTech Startup Samples
ZhongAn is the behemoth of InsurTech applications. This Chinese company offers online services in five areas: health, lifestyle consumption, consumer finance, auto, and travel. According to estimations, at the beginning of 2019, ZhongAn’s total market capitalization was 38.5 billion.
One more innovative InsurTech example is Tractable, British app which shook up Insurance industry in 2014. Tractable is used by the biggest insurance companies in the world to capture photos at the moment of an accident and receive the approximate cost of the damage. The investments reckon up around 30 million dollars.
InsurTech application Lemonade offers insurance for renters and homeowners, using AI in the form of chatbots and machine learning. In 2016 Lemonade’s bot set a world record by processing customer’s request in 3 seconds.
According to the w/gb-en/_acnmedia/pdf-50/accenture-insurtech-pov.pdf>survey held by Accenture, 86% of questioned insurers are deeply convinced that they must be innovative to remain competitive.
So, what are the emerging InsurTech Trends that will reshape the industry?
With the development of AI, the software has become able to exhibit human-like intelligence. Identifying speech, recognizing images, or using unlabeled data can help insurers to increase productivity, enhance automation, reduce possible risks and enable faster decision-making, especially in such fields as transportation and medicine. In 2013 Deloitte predicted the cognitive computing market’s expansion from 1 billion to 50 billion by 2018, solely in the USA. And according to the forecasts, we will see more impact of cognitive computing and machine learning in the next five years.
Blockchain is a system for quick validation and secure maintenance of transactions through cryptography, first used in Bitcoin. Because of its ability to record and audit trail of transactions that are reproduced on computers all over the world, elimination of a single point of error and detection of frauds, its potential to impact InsurTech is significant. According to the estimations, near 65% of fraudulent claims in Europe and in the USA go unnoticed which results in 60 billion annual losses for insurers and blockchain can play a crucial role in changing the situation.
Internet of Things
The Internet of Things is a network of devices that collect and manage the data through the Internet. The examples of such devices range from automobiles, kitchen appliances, home security systems to wearable health monitoring units and energy infrastructure. Through analyzing data from sensors, cloud computing, and microchips, the insurers are given the ability to more efficiently model risks and finance policies. By 2020, the number of IoT devices is expected to reach 20.8 billion.
With the advanced development of technologies and changing InsurTech trends, Insurance institutions should leverage the dynamic digital world to remain competitive on the market. The first step to becoming successfully adapted to it is to contact a competent guide. Don’t hesitate to reach us!