Insurtech premiums to exceed $566bn in 2025, claims Juniper
This would represent a 123% increase on 2020’s figure ($250bn) and subsequently mean that the sector would account for 8% of insurance premiums globally.
As such, the indicates that motor, life, home and health coverage providers are unlikely to remain competitive if they do not leverage digital innovations, such as artificial intelligence-based underwriting systems.
Preparing insurtech ‘readiness’
Juniper identifies some troubling factors for insurance incumbents that indicate consumer loyalty may be flagging, not least of which are generally inferior customer interactions and non data-driven models.
However, the report also notes that several high-profile, high-worth incumbents are poised for a digital transformation that could put them on an even keel. The top five are:
Chinese insurance giant Ping An alone is set to invest $1bn annually into insurtech. Others will need to follow suit if they’re to stay ahead of trends.
Chubb goes digital
“Consumers will have the ability to select coverage options they need now, at their current stage of life, through brands they already love and trust,” said Laura Bennett, Senior VP of eConsumer for Chubb in North America.
“Blink will appeal to consumer-savvy companies looking to create added value and increase customer loyalty through an insurance offering backed and sold by an industry leader like Chubb. Whether it’s an offer made alongside a purchase, or an integrated experience using Blink APIs, Blink reimagines how customers experience insurance in the digital world.”
Global investment in insurtech reaches all-time high
Global investment in the InsurTech sector reached an emphatic record during H1, 2021, as half-year funding of US$7.4 billion exceeded full-year investment in 2020, and in every other year, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.
It was found that the latest quarter saw 162 deals yield more than $4,824 million in investment, a 210% increase over Q2, 2020. The enormous quarterly total, itself more than any annual total before 2019, was driven largely by 15 mega-rounds of $100 million or more. Collectively, these deals reached $3.3 billion, or two-thirds of total funding during the quarter. The money was raised predominantly by later-stage players seeking expansion.
A need for the insurance community to reflect digital changes
Series B and C fundraisings drove a large number of deals in the second quarter, but the number of early-stage deals also increased. They were up by more than 9% from the previous quarter, and 200% from pandemic-stricken Q2, 2020. As a percentage of overall deals, early-stage activity held roughly steady, at 57%.
InsurTechs focused on distribution accounted for 55% of start-up deals, and for 10 of the 15 mega-rounds. Most of the distribution InsurTechs target reduced dependence on agent channels. Of all Q2 deals, 73% were for P&C-related InsurTechs, while 43 companies raised funds for L&H technology. Funds were raised by companies from 35 countries, including new entrants Botswana, Mali, Romania, Saudi Arabia, and Turkey.
Dr. Andrew Johnston, global head of InsurTech at Willis Re, said: “As technology changes our lives, society will demand an insurance community that reflects and supports our changing, digitally empowered behaviours. Consumers and businesses increasingly expect insurance to be delivered when and how they want it, and risk carriers that fail to respond will fall away over time. To embrace technology is a minimum survival condition. Those that use it to redefine service in the insurance world will thrive. That means a positive future for InsurTechs that bring a truly differentiated business approach to our industry. Some of them will create untold long-term opportunities for themselves and the insurance sector.”