InsurTech premiums to exceed $400bn by 2023
Written by Peter Walker
Insurance premiums generated by emerging InsurTech services will exceed $400 billion by 2023, up from an estimated $187 billion in 2018, according to Juniper Research.
The consultancy’s analysis found that InsurTech platforms will equip insurers to meet the challenges of diminishing margins and increased competition. However, while tech firms enable rapid transformation of traditional insurance business models, the adoption of these platforms by incumbents has been limited due to relatively slow rates of innovation within the industry.
Consequently, Juniper forecasts that this new sector will represent under 10 per cent of the global insurance market by 2023, compared to approximately four per cent in 2018.
Despite still being in early deployment stage, the introduction of artificial intelligence (AI) in the claims process will generate significant cost savings, stated Juniper, forecasting that across property, health, life and motor insurance, the annual cost savings will exceed $1.2 billion by 2023, a five-fold increase from this year.
Research author Nick Maynard explained that AI vendors such as Tractable are revolutionising claims, demonstrating the potential of AI in claims management. “In a time of stagnating combined ratios, AI has the potential to make a tremendous difference to insurer’s margins.”
Juniper’s InsurTech Readiness Index analysed leading insurers to evaluate their readiness scores and ranked the top 20 based on several metrics, including tech offerings, investment and future potential. The top five players leading InsurTech transformation were:
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AXA was found to be the clear leader, using InsurTech to transform its operating model at all levels of operations. While its transformation programme is not yet complete, the financial resources at its disposal should ensure it remains a leader in the space, added Juniper.
The Association of British Insurers’ assistant director and head of strategy, data and analytics Matt Cullen recently told FStech that a combination of incumbent insurers wanting to update their propositions, and startups realising they require help scaling up, means the InsurTech space is ripe for partnership.