InsurTech Growth: Exploring the Next Wave of Innovation

The insurance industry is experiencing a tech-driven shift. Every aspect of the insurance ecosystem is being transformed by emerging technologies to create a seamless customer experience with the increased capital flow into the insurance sector. Venture capitalists, private equity investors, tech companies, and known insurers are keen to invest in the InsurTech business to explore the InsurTech growth. Alma Mundi Ventures, Tencent, Aflac Ventures, and MS&AD Insurance Group are some of the top investors in the InsurTech business in 2023.

The surge in capital flow to the industry can accelerate the growth of InsurTech companies that are in their exploratory stage by creating more opportunities. As per Gallagher Re Global InsurTech Report for the first quarter of 2023, there is a 37.6% quarter-on-quarter rise in global funding for InsurTech with an increase in funding value from $1.01 billion in Q4 2022 to $1.39 billion in Q1,2023.

A highly competitive market calls for the quick scale-up of insurance fintech startups. Along with the capital flow, emerging technologies are going to be the game changers for the insurance company’s growth. These new innovations and technologies have the potential to create a lot of opportunities for industry growth. Let us explore the opportunities that lie ahead for InsurTech companies with the new technologies. 

Let us look at some of the future InsurTech trends that can stimulate the next wave of growth.

• Artificial Intelligence-related trends 

Artificial intelligence is at the top of the tech trends in transforming the insurance industry. It has already impacted almost every area of insurance. 

However, the impact of AI is not the same across every section of the insurance value chain. The impact is significant in some sections like market research, data analysis, product pricing, claim assessment, etc. In areas like product branding, product testing, loss control, costing, taxation, etc., the impact can vary from low to medium, providing many opportunities for insurance companies in the future. 

Here are some top AI trends reshaping the insurance industry:

• Large-scale data generation from connected consumer devices

Connected consumer devices or the Internet of Things are already reshaping the insurance industry with newer business models. Some of the devices already being used in insurance are smartwatches, fitness trackers, medical devices, home assistance, and more. Attractive opportunities and the growth forecast for the global Internet of Things (IoT) market by Markets and Markets report estimates it to grow at a CAGR of 16.7%. This would create lucrative opportunities in the insurance market.

• Cognitive and deep learning technology

In the insurance industry, cognitive technologies are currently used for voice, audio, and image processing. As deep learning technologies are neural networks that can process data by stimulating the actions of the human brain, it has the potential to take automation to the next level. Large-scale adoption of these technologies across various insurance applications can affect the entire insurance industry landscape.

However, the incorporation of AI in the insurance industry has just begun and has a long way to go. As per the market report by Data Bridge Market Research, global artificial intelligence in the insurance market is expected to grow at a CAGR of 33.06% to reach the value of $35.77 billion by 2030.

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• Robotic process automation for business processes and operations

The insurance industry is process-driven. The InsurTechs need to streamline the process, make it more effective along with saving cost and time. This is where robotic process automation technology plays a key role. Here are a few benefits of robotic process automation in insurance:

• Automation of an extensive data collection process can streamline the underwriting process
• Integration of claims data from various sources and automation of the entire claim process will improve customer experience.
• RPA can automate compliance reporting, data security operations, and data validation processes. It can also help InsurTech companies to ensure error-free data and mitigate the risk related to compliance breaches. 
• Support new product innovations and services like apps and web portals to boost efficiency. 
• RPA can automate highly manual areas of insurance- sales and distribution., etc.

Here are some examples of Insurance companies leveraging the benefit of RPA:

• Zurich Insurance Group is one of the early adopters of robotic process automation for policy administration and many other areas of their operations. 
• Guardian Group, a leading Caribbean insurance and financial services company has lowered the burden of legacy systems by adopting a robotic automation process.

The booming RPA market has the potential to create huge opportunities for fintech insurance companies by saving cost and time, and by boosting productivity to thrive in a competitive environment. As per the market report of Acumen Research and Consulting, the global robotic process automation market is expected to grow at a CAGR of 35.9% to reach $25.1 billion by 2023. Here is an overview of the report:

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• Predictive analytics

In recent years, predictive analytics has helped the insurance industry to move away from repetitive manual analytical techniques in many areas such as identifying the claims that can be cost-high, identifying the potential market, analyzing consumer behaviour trends, identifying the fraud risk, and many more. Prediction of various events can help insure tech companies improve risk assessment, transform the claim process and get a 360-degree view of their consumers. Rapid growth in the predictive analytics industry can open various opportunities for fintech insurance startups.

As per the report of Precedence Research, the global predictive analytics market is expected to grow at a CAGR of 19.27% to hit a value of $56.11 billion by 2030.

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• Self-service portals

Self-service portals are also a rapidly growing trend in the insurance industry. As self-reliant and digitally savvy customers are growing in numbers, this software solution can be the future of insurance for enhanced customer experience. It also gives insurtech companies to analyze customer actions and optimize sales. 

When fintech insurance companies start exploiting emerging technologies like artificial intelligence, deep learning techniques, robotic process automation, etc. to their fullest potential, the growth opportunities in the industry will also increase. With the InsurTech growth the fintech insurance companies can leverage the opportunities using increased capital flow and deep integration of technologies to grow exponentially.