New research from Accenture shows that £218 million has been invested in insurance technology startups in the first half of 2017 – up from £7.8 million the previous year. This represents an increase of over 2500% in year-over-year figures.
Investment in insurance technology startups, or insurtech, have been bolstered by some recent, extremely large investments including the £180 million invested in Gryphon, an insurtech startup focused on critical illness and income protection. Just last week, Coya, a Berlin-based digital insurance provider founded in 2016 managed to raise $10 million (approx £7.7 million) from a variety of investors from Silicon Valley and Europe.
Various new technologies are being applied to the insurance industry, which has historically been largely administrative and paper intensive. Artificial intelligence is being used for automated auditing and fraud detection, as well as predictive analysis. AI and big data are being combined to analyze risk on various levels, from corporation to government to individual assessments.
Another area in which technology is being applied to insurtech is in IoT. Auto, health, and home insurance providers are harnessing the power of data collected from IoT devices for use in big data and predictive analysis. The world’s largest auto insurers collect data directly from vehicles, using that information to establish rates for individual drivers. Home insurers often offer discounts on smart home devices, which can then be monitored for rate adjustments as well.
In Europe, London is the undisputed leader in the industry, with more than 30% of all European insurtech deals taking place in the city. Earlier this week, Forbes named New York City the U.S. center for insurtech, with many startups physically located in NYC. This may be due to proximity to major insurance players headquartered in NY, including MetLife, AIG and Travelers, as well as the city being home to many of the country’s largest venture capital, finance and investment firms.
A recent study by UBS shows that the insurtech revolution is set to disrupt the industry in Asia as well. With 43% of the world’s population, but only 13% of insurance premiums attributed to Asia, the area represents one of the most unpenetrated markets for insurance in the world. A combination of large populations and geographical disparity have made the large-scale adoption of insurance difficult.
However, a digitized product with customized assessments, created using machine learning and big data, may very well lead to lower premiums and better sales channels in the region. The UBS study estimates that the total cost savings for the insurance industry in Asia could reach 300B USD per year, with much of that attributed to the disruptive effect of advances in insurtech.