Levels of insurtech activity reached a record high during the second quarter of 2017 with a growing focus on claims management technology, according to a report.
The Quarterly Insurtech Briefing by Willis Towers Watson Securities, Willis Re and CB Insights reveals that insurtech funding was close to $1b in the second quarter, compared to $398m in the same period of last year.
Projects and partners
The rise is due to a growing number of insurtech deals and a global move towards research and development across all parts of the insurance chain. The report notes that well-established insurers and reinsurers are increasingly investing in technology partners.
Targeting claims management
The report identifies claims management as an area of growing interest, adding that one of the most disruptive scenarios of the insurtech revolution could be ‘a change in underlying function of the insurance value chain, from volatility management (paying claims) to risk mitigation (making losses smaller)’.
The rising number and growing importance of chief digital officers (CDOs) is a sign of how high up digital change is on the business agenda. And as a study by PwC reveals, insurance is leading the field.
PwC strategic consulting group Strategy& has released the findings of its 2016 chief digital officer study of the world’s largest 2,500 public companies. The study showed that 19 per cent of companies have a CDO, up from 6 per cent in 2015.
Meanwhile 35 per cent of insurers have appointed a CDO, putting insurance ahead of all the industries examined in the study. In second place is communications, media and entertainment (28 per cent), followed by banking (27 per cent) and consumer products and retail (27 per cent).
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.
Choose your partner carefully
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.