Insurtech is where the smart money is going. Headlines shout about it and the figures prove it. Among the latest announcements two stand out: Munich Re has agreed to pump $45million into a phone app that provides on-demand insurance, while QBE is to invest $50million in partnerships with insurtech companies in four countries.
In a report issued at the beginning of April, research consultancy Celent provides the backdrop to the global spend on insurtech projects. The report, IT Spending in Insurance: A Global Perspective 2017, analyses regional IT spending as a percentage of premium from a sample of 50 insurers worldwide. Celent estimates that global IT spending will reach US$185billion by the end of 2017, with insurers committing most of their budgets to data, analytics and cloud.
Taking a longer view, the global insurtech market is predicted to grow at a compound annual rate of more than 10 per cent between 2016 and 2020. This is the view of the global technology research and advisory company Technavio in their report Global Insurtech Market 2016-2020. And, according to research from Garner in 2016, almost two-thirds of the world's 25 largest insurance companies have already invested in insurtech, and by 2018 the majority of insurers will have done so.
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All of the above reflects the rise of insurtech and the imperative for insurers to invest in technology to remain competitive and be relevant to today’s consumers, particularly millennials, who expect digital solutions.