COVID-19 has given direction to insurtech trends to lean towards digital solutions. If the pandemic has taught us anything, it is that we cannot really make accurate predictions about the future. However, it has also been a major catalyst of change as several industries underwent rapid and rampant transformations. These changes have now translated into the ‘new normal.’
And while there is no concrete understanding of which way the industry may swing, one thing is for sure – insurtech would be a clinching factor in the future of insurance. On that note, let us take a comprehensive look at a few insurance technology trends that govern the industry.
State of Insurance Technology Today
The global insurtech market was valued at USD 5.48B in 2019 and was expected to touch USD 10.14B by 2025. The growth of this sub-industry can be quantified at a CARG of 10.80%. The key drivers of the growth are digitalization of business processes, need for automation in operations, setting up of customer communication channels, demand for claim process simplification, and maintenance of agility.
In the first half of 2020, insurtech registered investments touching nearly USD 2.2B, which speaks volumes about its resilience. Despite occasional hiccups, the sector has managed to jump back into action.
Is There a Need for Insurtech and Insurance Partnerships?
As we may gauge from the current state of insurance technology, it is set to become the highlight of the insurance sector in the future. Apart from the potential, here are a few compelling reasons in favor of an insurance-insurtech partnership:
Legacy systems, outdated underwriting methodologies, and questionable risk profiling are killing efficiency and profitability. Insurance technology can address such pressing issues and enhance the bottom line.
About 51% of policies in the US alone are a product of direct underwriting, leaving the market highly saturated. As such, businesses will have to innovate to reinvent themselves.
End-users expect more from their insurers and are willing to cooperate to derive the associated benefits. A staggering 69% of consumers are ready to share personal information in lieu of affordable insurance rates.
Future Insurance Technology Trends That Will Reshape the Industry
Here are 5 insurtech trends that are set to make a huge impact on the insurance industry:
Greater Customer-Centricity
As a service-based sector, insurance focuses greatly on its customer. As a result, it must factor in everything, ranging from customer requirements, perception, expectations, and more.
In recent times, customer expectations have been expanding in standards and volumes, with more demands flooding the market. For instance, according to a Deloitte survey, 62% of consumers believed that non-insurance products that add value or serve as an extension to the primary offerings could be the determining factor while choosing an insurer. As a result, insurance agencies have had to get creative while diversifying their offerings to cater to such requirements.
This trend has also triggered the large-scale adoption of insurance technology solutions as they help companies by elongating the customer lifetime value through retention. Insurance technology also helps in identifying potential hotspots that could translate into viable business opportunities. Moreover, it could be the differentiating factor that grants one company a competitive edge above the rest.
Data Explosion From Connected Devices
As cliche as it may sound, data is the fuel driving the growth of the insurance technology industry.
Previously, the use of sensors to remotely manage industrial equipment was a common practice. However, with the penetration of the Internet of Things (IoT), this phenomenon has also passed on to consumer devices.
Experts believe that about 55.7B devices will be globally connected by 2025 out of which 75% will be connected to an IoT platform, which could potentially generate USD 3.9T to USD 11.1T per year! Such an elevation in number can be attributed to the integration of IoT with existing terminals. Plus, the trend also offers scope for IoT integration with new outlets like eyewear, clothing, shoes, medical equipment, etc.
The interconnection of such sources will bring about volumes of customer structured and unstructured data. This will allow companies to see the benefactors in a whole new light. Accordingly, carriers can utilize this intimate knowledge to take proactive measures, like developing products, personalizing pricing, and improving services.
Prevalence of Drones, CoBots, and Autonomous Vehicles
Since we are on the subject of drones, it is worth mentioning that the future of insurance technology also offers a sneak peek into the world of unmanned aerial vehicles (UAVs), bots, and autonomous vehicles.
Insurance accounts for nearly 17% of commercial drone activities. Insurance carriers have been putting them to use for various pre- and post-loss assessments. For instance, it can come in handy for risk engineering, pricing, natural disaster monitoring, damage inspection, risk assessment, preventive maintenance, claims adjudication, and even fraud prevention.
On the other hand, collaborative bots (CoBots), in the form of AI-driven chatbots have also proven their mettle, especially in enhancing customer experience. Chatbots are one of the most viable and cost-effective tools that can help with customer awareness generation, lead profiling, claims to process, gathering feedback, and introducing automation.
The insurance technology industry is also playing around with the idea of offering services that complement autonomous vehicles. Even though fully automated, self-driven cars are yet to become common, they will be changing the face of the auto insurance industry. As a result, insurance agencies can leverage technology to scale in accordance with the changes.
Seamless Claims Processing
Managing claims has been a major pain point for businesses regardless of their size. It is the most time-consuming and labor-intensive segment of operating an insurance business, not to mention that it is also highly susceptible to errors and subsequent litigation. Fortunately, insurance technology has been introducing small but impactful changes within this vertical through automation.
A combination of data-capturing technologies and mobility solutions has simplified time-consuming processes. Based on the data produced by such elements, AI-powered systems can automatically trigger claims triaging and repair requests in response to the incident. From the very moment that customers open claims, artificial intelligence can streamline the claims process. The end-to-end functionalities can then guide the policyholder into the next stages of the claims settlement process.
Moreover, claim support systems powered by artificial intelligence can identify data patterns in claims reports. This can protect insurance businesses from costly fraudulent claims, human errors, and resultant inaccuracies. In some instances, AI-powered tools empower insurers to follow a preventive route rather than a reactive one by intervening at the right moment to perform risk mitigation.
Data Privacy and Security Takes Center Stage
Working with data is no less than a double-edged sword.
On the one hand, companies have to store vast reserves of sensitive data and personal identifiers of their customers – a matter of grave responsibility. Apart from keeping this data safe and secure, insurers are also entrusted with the responsibility of maintaining the sanctity of the data and customer trust.
And on the other hand, data, as a critical resource, needs a high level of protection that insurance agencies typically offer. Businesses that can face significant losses due to cyberattacks can avail of insurance services to keep it protected.
While the former is a concern, the latter is a ripe opportunity for insurers to include data protection within the value chain. Such an offering can cover everything – from preventive maintenance to diagnostics to post-attack support to data recovery.
As only 32-37% of CEOs feel fully prepared to deal with ransomware or DDoS attacks, insurance technology can improve cybersecurity.
Concluding Thoughts
Insurtech is the new Fintech, and it is set to revolutionize the insurance industry.
The rapid rate of advancements in insurance technology is set to bring several disruptive changes in the sector. Carriers who can leverage such opportunities will emerge victorious in the aftermath of this transformation. It will help them harness new technologies, reduce costs, streamline operations, exceed customer expectations, and adapt dynamically.
In essence, a tech-focused mindset will keep your insurance agency on the path of unmitigated growth!
Shaista Haque
Shaista Haque is a Marketing Leader at Damco Solutions (https://www.damcogroup.com/Insurance/). She is extremely passionate about B2B marketing strategies for products that harness the web and social media as customer channels. Armed with this information, she writes about the latest industry technologies and how it benefits organizations from small scale to global enterprises.
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Radek Zielinski
Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
Deanna Ritchie
Managing Editor at ReadWrite
Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!
Deanna Ritchie
Managing Editor at ReadWrite
Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.
