Tech spending in the insurance industry has always been relatively high. But as the technology we have access to grows and evolves, insurance companies are looking to expand their IT budgets for more effective research and services.
High-level insurtech means more accurate risk predictions, better customer service, and more innovative, intuitive tech systems. In 2022, the global insurtech market size was valued at $10.44 billion. However, this figure has since jumped up to $13.49 in 2023, at a CAGR rate of 29.3%.
This rapid growth rate is not expected to slow down any time soon. In fact, the insurtech market size is projected to leap to $39.44 billion by 2027, with an impressive 30.7% CAGR growth rate.
Considering how expeditiously the demand for insurtech is growing, we can expect to see a lot more from this industry in the coming years. Today, we’ll define what insurtech is, as well as expand on why it’s going to be so important for the future of insurance, consumer protection, and other related areas.
The Role Of Insurtech
Simply put, insurtech is insurance technology. The term encompasses a wide variety of different digital tools, systems, and inputs. All of which are designed to streamline technological processes and create more efficient and organized systems.
The rise of insurtech has had a powerful impact on the insurance industry, and the potential for continued transformation is still growing. Some of the current case uses include the following items:
- Disruptive business models – tech systems that bring new, fresh ideas to an existing industry
- Telematics – to assist with usage-based auto insurance models (such as “pay as you drive” models)
- Internal workflow optimization – introduction of robotic process automation (RPA)
- Machine learning – used in order to automate and streamline claims processing
- AI-assisted services and fraud detection – detect false claims more accurately
The ultimate goal of insurtech is to make it as easy and simple as possible for consumers to obtain fair, accurate insurance for themselves and their livelihoods.
For instance, this kind of technology can be used to provide customers with the option to buy their insurance online without the need for going through an agent or broker. It also improves the speed and accuracy with which insurance companies function, streamlining all other processes.
All in all, insurtech is a powerful, constantly evolving industry that can elevate a variety of different internal and external components of the insurance sector.
4 Reasons Why Insurtech Is Instrumental To The Future
Insurtech is undoubtedly going to play a key role in the future of insurance policy development and customer experience. From enhanced data analytics capabilities to systemic automation, there are a number of ways that insurtech will drive this unique industry forward.
1) Offers advanced data analytics capacities
Just like so many other industries, the insurtech industry is undergoing a pinnacle phase of the digital revolution. Legacy systems are getting remodeled and refined to accommodate the many other digital advancements being made across the globe.
Contemporary insurtech offers the opportunity to take a more penetrative look at customer data and gauge risk parameters in ways we never could before.
Big data makes it easier to understand customer needs, risk assertions, and anticipate patterns of behavior in different customers. This ultimately helps insurance companies deliver higher quality insurance packages to clients and keep up to pace with other data analytics models.
2) Implementation of app-based consumer products
Since the year 2021, mobile app usage has increased by a staggering 63%. As more and more consumers show interest in the use of high functioning apps, the demand for intuitive, agent-free insurance apps grows too.
With the rise of insurtech and customer-related big data, it will become a lot easier for insurance companies to create mobile apps that their audiences actually respond to. Cutting out the need for manual agency contact saves everyone time and money, making it a very beneficial move.
Via an insurtech app, customers would gain access to easily comprehensive package overviews and different insurance policies, as well as pay for insurance directly through the app.
3) Gives insurance companies access to customer-specific information
Developing comprehensive, fair insurance packages requires a lot of information around individual customers. The more access to information insurance companies have, the easier it becomes for them to create policies and options that are accurate, profitable, and fair.
With the help of big data, machine learning, and various automatic processes, insurance companies can leverage technology to produce more optimized results.
This section also ties into the implementation of apps, because apps themselves play a huge role in the process of gathering data and redirecting it back into insurance policy systems. This data could relate to health, lifestyle, income bracket, the filing of taxes, and general risk assessment.
4) Helps identify fraudulent insurance claims
Finally, one of the most important features of insurtech is its potential for detecting fraudulent insurance claims. Insurance scams cost insurance companies as much as $29 billion per year—and that’s just in the auto insurance industry.
Being able to identify the difference between a real and false insurance claim is one of the biggest battles insurance companies face. But with insurtech, that fight becomes a lot easier.
Once again, big data and automatic processing are behind this powerful development. By recognizing key fallibilities and discrepancies in insurance claims, insurtech systems can help prevent false claims from being supported, thus generating more profit.
Insurtech Is Accelerating The Next Wave Of Tech Growth
Over the next few years, we will get to see which aspects of insurtech gain the most traction with insurance companies. However, one thing is for sure, this branch of technology isn’t going anywhere. In fact, it’s more than likely going to mold the entire future of insurance technology.
From machine learning to telematics, insurtech has quickly evolved into an indispensable tool for insurance companies that make life easier for everyone—from everyday customers in need of quality insurance packages to the highest-level CEO looking to run their company efficiently.