Market research report distributor Reportstack has released a new report detailing the scene of start-ups in insurance technology. Compared with FinTech, ‘InsureTech’ has not progressed as far or benefitted as much from the disruption and possibilities provided by new technology developments although progress has started to be made recently as funding to insurtech start-ups was repored to have surpassed US$1.0 billion this year.
Blockchain and the Internet of Things have the potential to revolutionize the insurance industry which has not yet caught on to the latest progress in technology, whilst even commonplace developments in other areas, such as mobile websites and apps, have yet to be fully realised in the insurance scene.
The report states that, unlike start-ups in some areas, the majority of insurance start-ups aim to partner with insurers, as opposed to replace them, due to the large barriers to entry associated with cost. Accordingly, start-ups are devising solutions based on weaknesses they can identify in insurance. The main areas in which start-ups have found success include increasing efficiency and reducing administration costs, helping with regulation and customer engagement,.
Global insurance companies such as Axa, Allianz, Munich Re and Swiss Re have been identified as having established their own capital venture funds, identifying the need for technology investment and budgeting to capitalise in new technologies and start-ups. This is highlighted by an expected increase in start-up investments of over 40% for the year at current rates.
Areas of particular growth were noted as the motor, home and health insurance sectors. Conversely, the life market is described as not generally being optimised for innovation, with huge capital requirements, very little customer engagement and heavy regulation. The influx of data available to insurance companies, particularly as blockchain and internet of things becomes more widespread, will provide greater opportunities to provide tailored policies and possibly even preventative measures with increased customer interactivity possible.