Digital transformation is changing the world and has also reached the insurance sector: Insurtech (insurance & technology) is revolutionizing the world of insurance with a focus on technological innovation, digital insurance and user-centric experiences. With customized solutions and efficient risk protection, this industry is experiencing rapid growth and a promising future for the insurance industry.
In 2020, insurers invested almost $1.6 billion in startups, increasing 61% from 2019 to 2020, according to the Insurtech Global Outlook 2021 Report by NTT DATA, a consultancy that analyzed trends, challenges, and opportunities in the insurance industry. By the end of 2022, the Insurtech market suffered a decline and reached 8,000 million dollars of investment through 470 agreements, according to the same report but from 2023.
Currently North America leads the adoption of Fintec in insurance. For market research and strategic consulting firm, BlueWeave Consulting, the global Insurtech market will grow at a CAGR (compound annual growth rate) of 10.6% (2021-2027), earning revenue of around $10.7 billion for financial purposes. of 2027 (as opposed to the 5,300 million dollars that it was worth in 2020).
According to an Accenture report, the trends that mark this 2023 in the sector are focused on: 1) Evolving cognitive technologies will help insurers to capture opportunities from more discrete market segments, that is, technological advances in AI and data analysis. Data is helping insurers further refine market segments, allowing them to grow new product and service offerings. 2) Customer experience will continue to drive innovation in underwriting. And if insurers want to attract and retain customers, a digital customer experience is what is at stake, not only for millennials but for those over 55 who are increasingly comfortable with digital interactions (Consumer Study of Accenture Insurance). 3) Human + Machine operating models will help alleviate the shortage of underwriting skills. Digital technologies such as AI and automation will be even more necessary as insurers face a continuing shortage of skilled labor to streamline the insurers’ role.
The global Insurtech market is driven by rapid digitization and increasing adoption of advanced technologies such as machine learning, Internet of Things (IoT), cloud computing. These technologies generate large volumes of data that insurance companies use to track and analyze consumer behavior to reshape the insurance industry model and search for areas of opportunity.
The implementation of artificial intelligence and machine learning in this segment has enabled the development of sophisticated algorithms to more accurately assess risk and price insurance policies. This has led to a greater customization of rates and a better adaptation to the needs and profiles of users.
The Insurtech merger has led to a number of unprecedented benefits for users. Through the combination of technology and financial services, it has made it possible to offer personalized digital insurance, streamlining the contracting process and eliminating bureaucratic procedures. In addition, the solutions give them greater control over their policies and the ability to access insurance services quickly and conveniently through digital platforms and devices. This translates into a user-centric experience, where risk protection is tailored to your specific needs, giving you peace of mind and security.
By 2027, digitally-engineered underwriting will have achieved widespread adoption in the life insurance industry, resulting in significantly increased underwriting revenue and profitability, and an improved customer experience (Gartner® Richard Natale report , Kimberly Harris-Ferrante, 2022), an unflattering estimate for companies that provide traditional services, which have not incorporated technology into their service offerings.
The insurance sector is undergoing an unprecedented evolution and the acceptance of users is advancing in the use of innovative technologies.