The emergence of new technologies in the insurance industry has had an uplifting effect on business. From claims processing to lead conversions, insurtech – the interfection of insurance and technology- has overhauled the traditional processes and legacy systems and transformed the lives of insurers for good.
The COVID-19 pandemic has accelerated the insurance tech market growth, highlighting the importance of innovative solutions while at the same time creating an environment wherein it is all the more challenging. This inconsistent dynamic boosted the position of insurtech companies, whose future-forward, digital-centric approach has enabled them to successfully steer through challenging times, while adapting to the new normal. Let’s explore the insurtech market trends and realities, before diving into the reasons behind the boom of the insurtech industry.
Insurance Tech: Market Reality
The global market size of insurance technology was valued at USD 2.72 billion in the year 2020. It is expected to grow gradually and reach a market value of USD 3.78 billion by 2021 and USD 60.98 billion by 2028, growing at a Compound Annual Growth Rate (CAGR) of 48.8 percent during the forecast period(2021-2028). With a high global adoption rate, the insurance technology market presents a number of growth opportunities for insurtech companies.
Reasons Why InsurTech is Thriving
Insurance technology is set to grow exponentially. As the industry grows, new insurtech companies are entering the marketplace. Let’s examine why insurtech is booming worldwide.
Stable Business Models
Insurtech promises to reshape the insurance sector by cutting costs, improving the quality of insurance services, and creating more stable business models. Technology enabled innovation in insurance has paved the way for new business models that offer clarity, stability, and predictability. Insurtech companies help insurers employ tech-driven business models for improved scalability. The high growth potential of these business models attracts new investment.
The growing maturity of technologies like artificial intelligence, machine learning, predictive analytics, etc is facilitating the insurance sector’s transformation from a protective model to a preventive one. Also, emerging technologies such as robotic process automation, intelligent process automation, blockchain, and distributed ledger technology are making a splash in the insurance sector. The innovative insurance technologies are causing an upswing in the investment in Insurtech companies.
Low-Cost High-Value Alternative
Insurtech companies are offering turnkey solutions that insurance agencies can deploy almost immediately. At the same time, these agencies do not have to indulge in maintaining the technology or workforce required to keep it operational. Most importantly, insurtech solutions run on the pay as you use model thereby, saving excessive upfront capital investment. The combination of instant value proposition, independence from staff, and minimal financial liability make insurance tech a low-cost, high-value option.
What Does the InsurTech Revolution Bring?
Historically, the insurance industry has been slow to embrace new and emerging technologies, mainly owing to the high costs associated with running legacy systems. However, in the backdrop of the global pandemic and volatile economy, insurance businesses have accepted that they need to adopt insurance technologies in order to thrive and prosper.
Insurance tech has brought about a radical shift in the insurance services sector and put customers back at insurance’s core. It is driving a paradigm shift in how insurance businesses engage with their customers. Insurtech companies are empowering insurers to create truly tailored customer journeys by harnessing the power of data. As technologies continue evolving, the insurance industry shall continue accelerating its investments in innovation and digital improvements.
Wrapping it Up
All in all, more and more insurance companies are recognizing the growth potential of insurtech. Insurtech companies are transforming the insurance industry by bringing up new innovations and insurance businesses will likely see more advancements in the coming future.