The total value of insurance premiums generated by InsurTech platforms will have more than doubled within five years worldwide, forecasts by Juniper Research suggest.
In a report published yesterday, the researchers predict that the value of premiums from InsurTech – which apply new technology to boost savings, efficiency and customer experience – will grow from $250bn (£180bn) in 2020 to $556bn in 2025.
They are forecast to represent 8% of total global insurance premiums within five years, driven by weakened customer loyalty, increased competition and the shift to digital.
The report also warns that insurers in the motor, life, home and health industries risk becoming less attractive to potential customers if they fail to capitalise on the benefits that artificial intelligence (AI) underwriting systems bring.
“This is an industry with well-established traditional providers, who will have to acclimatise to quickly-shifting familiar landscapes,” Juniper Research said in an accompanying white paper.
“Whilst InsurTech in itself is not a new occurrence, with technology being present in the insurance space for years, the new technologies being employed now can be revolutionary.”
The researchers explained how the success of these platforms is due to customer experience emerging as the single biggest factor that determines which provider a customer chooses, as cost differences become less glaring.
Ping An, Axa, Munich Re, Humana and Allianz are identified as the top five traditional insurance providers when it comes to InsurTech innovation, investment and adoption.
Unless other large insurers focus on using InsurTech solutions to improve customer interactions by creating data-driven models, the researchers warned that they could lose market share to newer, digitally-native vendors.
“There will be multiple aftershocks caused by the InsurTech earthquake, as basic business practices will be forced to evolve, and the nature in which providers approach the market will need to adapt with the implications InsurTech brings.”
Image credit: iStock
Author: Chris Seekings