InsurTech is expected to help generate over $400bn (£312bn) worth of premiums worldwide by 2023, more than double the estimated $187bn today.
That is according to new forecasts from Juniper Research, which said InsurTech platforms would be an “opportunity insurers cannot ignore” amid diminishing margins and increased competition.
It is also predicted that artificial intelligence (AI) in the claims process will lead to a five-fold increase in annual cost savings, exceeding $1.2bn across property, health, life and motor insurance.
“AI vendors such as Tractable are revolutionising claims, demonstrating the potential of AI in claims management,” research author, Nick Maynard, said.
“In a time of stagnating combined ratios, AI has the potential to make a tremendous difference to insurer’s margins.”
Based on several key metrics, Juniper Research identified AXA, Allianz, Ping An, Aviva and UnitedHealth as the top five players “leading the InsurTech transformation”.
AXA was found to be the clear leader after using insurance technology to transform its operating model at all levels, with its financial resources likely to ensure it remains on top in the years ahead.
Despite some firms pushing ahead with InsurTech platforms, it was found that adoption by incumbents remains limited due to relatively slow innovation within the industry.
As a result, InsurTech-based premiums are predicted to still account for less than 10% of the global insurance market by 2023, compared with approximately 4% today.
This comes after research from Accenture found that InsurTech investment increased by 39% across the world over 2017, with the value of deals rising 32% to $2.3bn.
“Insurers are making investments beyond wearables and telematics to seize the opportunity that exists within distribution to strengthen the customer experience,” said Accenture’s global insurance lead, Michael Costonis.
“The next step is to use InsurTech as a springboard to innovate across their entire organisation. After all, $2.3bn is a small slice of the pie when you consider that insurance is a $4.2trn industry.”
Financial services companies are looking to digital transformation at a greater rate than most vertical market businesses, and are facing an “acute shortage” of skills as a consequence.
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