What is Insurtech? All You Need to Know About This Emerging Industry

by Raj Vardhman

Insurtech Definition:

From the moment it emerged, the insurance industry has rapidly experienced a great number of disruptions across every one of its areas. Insurtech is its latest evolutionary phase, as it includes the use of technology to better enhance the efficiency of the insurance industry. In other words, insurtech is the union between insurance and technology.

For this special reason, many companies working in this niche have been established. They all provide various innovations and techniques that are designed to explore and improve on the present avenues by which insurance processes are carried out.

Below, we will consider information and facts that will greatly enhance whatever knowledge you have about insurtech, and open your eyes to new realms of possibilities.

A Quick Overview of Insurtech: Trends and Innovations

For a very long time, technology has been making a great impact on the processes involved in insurance. Through unique innovations and technologies such as AI, machine learning, virtual reality, and advanced analysis, various trends are being introduced that will effectively further disrupt this industry.

Here’s a sneak peek at some top facts regarding insurtech.

  • As of 2018, there were approximately 1,500 insurance technology startups around the world
  • As of 2017, around 247 deals were made in the global insurtech industry
  • In 2016, 33% of insurance technology companies had between 11 and 50 employees
  • Between 2015 and 2016, insurance tech companies from the United States spiked up by about 22%
  • In 2014, insurance technology startup funding activity had reached about $6.9 billion in total funding
  • Insurance tech firms employ 58% of their AI power to leverage customer experience
  • Global insurance technology investment in Q3 of 2018 was 4.6 times higher than the investment of the same quarter in 2017
  • The United States accounts for a total of 310 insurance tech startups.

Insurtech Today

Since its arrival, insurtech has grown far beyond what many had anticipated. Today, statistics show its market is expected to experience a 41% annual growth rate between 2019 and 2023.

During its starting phase, the industry had to use low-level interfaces and optimized presentations of data. Today, technology such as data analysis and AI, are speeding up the insurance business.

Understanding Insurtech

Basically, anything related to using digital analytics in insurance is labeled as insurance technology. With so many startups being established, it is easy to see that insurance technology and fintech are rapidly growing.

Here is a look at some facts to help you better understand its progress.

1. Insurtech emerged in 2010

Insurance technology has been around for some time now. With its amazing innovative technologies, the entire insurance industry has experienced huge boosts across its different sectors.

2. As of 2018, there were approximately 1,500 insurance technology startups around the world

Various companies are now being created to distribute and better enhance the insurance technology. According to Insurtech statistics by Venture Scanner, there are more than 1,500 startups around the world, most of which are located in the United States.

3. Today, insurance technology provides technology innovations including avenues for the collection of driving data and insurance rates

As many people would say, the future of the insurance industry lies in the hands of technology-driven processes. This is something that insurance technology aims to provide to boost market efficiency and bring a whole new level of savings to the insurance industry.

Insurance tech companies have been bringing various forms of technology since their establishments. One of them includes special devices that enable collecting the driving data to better enhance the whole process of insurance. In other words, the entire insurance process is optimized, and this is what matters most.

Business Activity of Insurtech

Insurance technology is well-known for its involvement whenever it comes to the insurance business. This entails an increase in the revenue generation, social integration, speed, as well as enhancement of data analysis.

For a better comprehension of the above, we will take a brief look at some of the top insurtech facts and the industry’s business activities.

4. 96% of insurers believe digitization is fast becoming an integral part of the insurance industry

Digital ecosystems are beginning to have large impact on insurance. This is due to the many innovations fintech revolution has provided. Hence, about 96% of insurers believe that digital ecosystems will eventually become the backbone of the insurance industry.

5. As of 2017, around 247 deals were made in the global insurtech industry

Every year, several deals are made across the world concerning insurance technology. According to Statista, 247 deals were made in the global insurance technology industry by 2017. This shows that the industry is rapidly growing, hence providing various innovative technologies for insurance. Today, it is more than ready to reach twice as more deals.

6. Insurtech had made sure 11% of business was generated via mobile channels by 2017

The 2017 was a fruitful year for the insurance business. Reports show that 11% of business had been generated via mobile channels that year. Undoubtedly, this shows the level of tech innovations the insurance industry has been receiving.

7. The largest insurtech deal involved a tech-enabled health insurance carrier

The insurance technology niche has been known to make deals with various insurance companies and carriers. However, one of the many which caught the eyes of the public was the deal with a tech health insurance carrier.

Known as Oscar Health, it was the largest insurtech deal made globally by deal value. The deal took place in New York back in 2016. Considering this event took place three years ago, there is a high chance that more and better deals will be made in the near future.

Future of Insurtech

Opportunities offered by insurance technology today have changed the way we see the insurance industry. Since its inception, many insurance companies have always looked forward to seeing its next moves. Luckily, case studies suggest various patterns as regards how it might make better use of advanced analytics, artificial intelligence, and most especially ledger technology.

How insurtech is transforming the insurance industry

Insurance technology has been changing the way insurance is working ever since the former was born. Today, with the advance of contemporary technological achievements, insurtech is set to continue its rapid development and reach new heights.

Let’s take a glance at two of the latest tech contributions to the insurance industry.

8. Advanced analysis has become a major strategy of almost every insurance company

Through the use of advanced analytics, insurance companies can find a way to avoid fraudulent activities and get the best insights into what their customers prefer.

9. Ledger technology has reduced document processing time by a large percentage

Through the use of distributed ledger technology, insurers can save time and efficiently reduce data processing time.

Investments in Insurtech

10. Acko, one of the top insurance technology companies, has raised over $42 million in funding from investors

The rate at which individuals and institutions are investing in insurance technology is generating more and more funds. One of the largest insurtech startups known as Acko has raised over $42 million in funding from investors. This has made a great impact on the industry as a whole.

11. In 2017, approximately $2.13 billion was invested in global insurtech companies

Investments are now becoming very common whenever it comes to insurance. But with technology innovation added to it, the rate at which investors flood the market is only expected to grow. To be more precise, approximately $2.13 billion was invested globally in 2017.

Top Insurtech Companies & Startups

12. In 2016, 33% of insurance tech companies had between 11 and 50 employees

According to stats showing the distribution of insurtech companies in 2016, 33% of them had between 11 and 50 employees.

13. In 2016, Lemonade announced it had secured $13 million in seed funding from Sequoia Capital and Aleph

Another company which has caught the eye of the public is Lemonade. It is well-known for securing $13 million in seed funding from Sequoia Capital and Aleph. This is regarded as a big hit in fundraising amongst many insurtech firms.

14. The United States accounts for a total of 310 insurance tech startups

As of 2018, the industry had about 1,500 startups. Today, a whopping 310 of them are based in the US, most of which have a spot on the list of top insurance technology startups.

15. Between 2015 and 2016, US-based insurtech firms spiked up by about 22%

The United States is well-known for having a lot of establishments that are top-ranked in their industries. Luckily, the field of insurance is not left behind.

According to top insurtech facts, founded insurtech companies from the United States spiked up by about 22% of the coverage universe between 2015 and 2016. This has left a great impact on the economy.

16. In 2014, insurance technology startup funding activity had reached about $6.9 billion in total funding

Looking at the funding activity of an industry is a great way to understand its progress with investors and the public. Case studies report that insurance technology startup funding activity had reached about $6.9 billion in total funding. And this was in 2014 alone.

17. In 2016, 18% of startups from this industry were focused on global health and wellness

Healthcare is an important sector of almost every economy in the world, and the insurtech industry has not been left out of this trend. Stats show that 18% of insurtech startups are focused on global health and wellness.

Emerging Technologies in Insurtech

18. Insurance tech firms employ 58% of their AI power to leverage customer experience

Artificial intelligence (AI) has been the main insurtech trend for some time now. As a matter of fact, various firms in the industry make sure they use AI technology to enhance their insurance services. Today, 58% of AI resources are focused on delivering a better customer experience.

Global Usage of Insurtech

19. In 2016, South Africa accounted for 10% of the global usage-based insurance (UBI) penetration rate

According to reports on UBI penetration rate worldwide, South Africa was leading the pack with 10%  penetration rate in 2016.

20. Global insurance technology investment in Q3 of 2018 was 4.6 times higher than Q3 of the previous year

In 2018, the rate of insurtech investments was higher by about 4.6 times than the 2017 rate. Today, billions of dollars are being invested in the industry. This has gone a long way in proving that insurtech niche is rapidly developing.

21. Millennials are most likely to share their recent driving data for personalized quotes

When driving data is shared with an insurance company, the driver will be evaluated by her driving habits. This would help the company in setting up proper insurance quotes and premiums.

However, not everyone would want to have their driving habits exposed. Reports show that millennials are the age group that is most likely to share their recent driving data.

22. According to studies carried out in Mexico, about 61% of respondents said that they would use a device, tracker, or app as part of their treatment plan if recommended by their health insurer

Usage of any device, tracker, or app as part of a treatment plan can offer huge benefits. Statistics show that not all would prefer this method, but a large portion of people worldwide still see its benefits.

Insurance Disruption in Car Insurance Industry

23. The Internet-of-Things is regarded as one of the top disruptions in insurtech

Thanks to the connected devices and sensors installed in vehicles, insurers can effectively figure out what kind of driving habits and behavior a driver exhibits. This would greatly help provide enough insights to determine insurance rates and premiums.

Luckily for the insurtech industry, this process has been significantly improved by introducing IoT technology. These tracking devices can now communicate with each other without human interference, and with the help of AI, insurance companies get precise and relevant driver’s data.

Conclusion

Insurance technology emerged a decade ago and brought lots of technological innovations to the insurance industry. These all contributed to greater efficiency, more investments, and, of course, new companies and work opportunities.

If you find yourself asking, “what is Insurtech,” the above facts and stats should serve as a perfect guide towards understanding all there is to it. With its current fame across the entire world, it is pretty much obvious that it won’t be dwindling anytime soon.

Sources:

https://www.investopedia.com/terms/i/insurtech.asp

https://www.statista.com/statistics/719372/favored-ways-for-collecting-driving-data-usa/

https://www.accenture.com/ng-en/insights/insurance/rise-insurtech

https://www.statista.com/statistics/719693/number-of-deals-made-in-global-insurance-tech-industry/

https://en.wikipedia.org/wiki/Acko_General_Insurance

https://www.statista.com/statistics/719700/leading-innovations-in-insurtech-globally

https://www.statista.com/statistics/687683/size-of-insurtech-companies-by-number-of-employees/

https://en.wikipedia.org/wiki/Lemonade_(insurance)

https://www.statista.com/topics/4116/insurtech/

https://www.spglobal.com/marketintelligence/en/news-insights/blog/2018-us-insurtech-report

https://www.venturescanner.com/insurance-technology

https://www.statista.com/statistics/753205/share-of-insurtech-startups-worldwide-by-segment/

https://www.raconteur.net/risk-management/ai-insurance

https://www.statista.com/statistics/888297/global-usage-based-insurance-penetration-rate-by-key-country/

https://www.statista.com/statistics/719039/willingness-to-share-driving-data-for-personalized-insurance-quotes-usa-by-age/

https://www.statista.com/statistics/724624/health-insurance-consumers-using-connected-device-globally/

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