SIX insurtech trends to disrupt the insurance market in 2023
As the year draws to a close, the level of disruption anticipated in the insurance industry is on the rise. What changes will take place in technology, investment, customer experiences, claims processing, MGAs, and more?
To understand the marketplace challenges, we spoke to David Connolly, EY Global Insurance Technology Leader, Isabelle Santenac – EY Global Insurance Leader, and Ian White, co-founder, and CEO of Koffie Financial, an insurtech focused on providing financial services to the trucking and transportation sector.
#6 Innovation that drives growth
“In 2023, we will see a growing focus on true innovation in insurance, and increased investment in horizon two and three to drive future growth. I believe that InsurTech will be a significant enabler of innovation across insurance next year.” David Connolly
#5 Increased resilience in the insurtech sector
"From war and natural catastrophes to volatile markets and broken supply chains, the insurance industry faces a unique and complex matrix of risks. While achieving business resilience will likely continue to be the first goal for insurers in 2023, advancing on their transformation journeys will help them navigate the economic downturn. Those firms that choose the right investments today will strengthen organisational resilience, improve agility and gain a sustainable competitive advantage as the economy inevitably returns to health.” Isabelle Santenac
#4 More digital transformation of legacy insuers
“While funding has slowed since the craze of 2021, insurtech continues to receive funding, indicating the clear promise of modern-day approaches applied to an antiquated industry. Companies will have to focus more on responsible growth, which recognizes the quality of underwriting, forced to pay more attention to their underlying business rather than solely meeting investors’ needs, allowing the “good” companies to be the ones that last.” Ian White
#3 Better investment in P&C insurance
“After six years of heavy financial investment into InsurTech firms, with a strong focus on P/C, we expect to see a tapering of that funding next year, and an increase in P/C InsurTechs failing as a result, as well as an increase of P/C InsurTech acquisitions by carriers. We also expect to see more relative growth across Life InsurTechs, given there has been a transformation need here for decades, and we have only recently seen the focus on this sector increase by technology providers and carriers alike. InsurTechs that are smart will try to seek and capture opportunities that support the launch of insurance capabilities on an embedded basis, that are outside of incumbent carriers.” David Connolly
#2 Bold moves to enhance customer experience through insurtech
“The operational agility and resilience insurers have shown during the last few years will serve them well in the turbulent market ahead. As ever, creative thinking and bold action will be richly rewarded. Forward-looking and confident firms will seek opportunities to improve the customer experience (from subscription, through to payment and claim), develop more sophisticated pricing models and increase their operational resilience. Firms that innovate with urgency, optimise operations across the value chain, and build new partnerships will make a meaningful impact for billions of people around the globe, as well as on their own bottom lines.” Isabelle Santenac
#1 A wave of insurtech company closures
It’s often during recessionary periods that enduring companies are born–scarce access to capital forces new players to identify meaningful opportunities with strong unit economics vs the spray-and-pray approach during a low-interest rate period and seemingly unlimited venture finding. In 2023, I anticipate a wave of companies ‘dying on the vine’ as they will lack sufficient runway to exploit product market fit, be consumed by regulatory compliance, or be unable to show a path to profitability. Ian White
