It’s 2020 and you can chat with Amazon Alexa to get status updates on your insurance claims, insure your floating dairy farm in Rotterdam, get real time benefits for healthy lifestyle choices, or use pay-as-you-drive auto insurance where the less you drive, the less you pay. You can even get some insurance in as little as 90 seconds. The era of GEICO’s “15 minutes or less” is over.
CIC has formed a strategic partnership with Innovation Underwriters to convene the future of insurance and risk. Our ecosystem includes InsurTech specialists, startups, corporations, governments, academia, and other stakeholders that are coming together to amplify and accelerate insurance and risk management innovation.
InsurTech trends in the new decade
InsurTech, short for “insurance technology,” is a term used to describe companies that are applying new technologies to the insurance industry, including artificial intelligence, blockchain, and Internet of Things, among other buzzwords. And emerging tech itself is creating new insurance demands. Micro-moblity scooters, self driving cars, electric helicopters, autonomous oil tankers — they all need to be insured before we can use them.
InsurTech is powerful for several reasons. It can drive customer acquisition and engagement for the carriers, improve retention rates, and more effectively evaluate and mitigate risk. The advent of wearables, sensors, connected autos, and smart homes allows companies to collect more data; this data can be used to better understand consumer needs and behavior, leading to better model forecasting, lower premiums, and a reduced risk.
Evolution of the industry
But the insurance industry is 400+ years old. How can a new startup or entrepreneur make an impact?
Insurance is a trillion dollar industry, and all fintech articles point to it being prime for disruption. However, disruption is short-sighted and insurance is complex. Innovation Underwriters in aiding in that transformation for the long term.
Insurance has millions of products, is regulated differently in each state, and has an abundance of legal and operational hurdles to overcome. By partnering and collaborating with each other, we can tackle these complex problems.
We need to also evolve as challenges threaten our physical ecosystem. Climate change is forcing us to rethink how we look at historical data on flooding, wildfires, and earthquakes. Each natural disaster becomes more devastating. This means that each claim gets more expensive and insurance policies get riskier to insure. Some carriers have even stopped selling flood or earthquake insurance, it isn’t scalable or sustainable.
The global InsurTech market is anticipated to grow at a growth rate of over 43% from now until 2025. In 2019, property and casualty investment totals rose 283% while life and health insurance investments rose 259%. To contrast, investment in the InsurTech space in 2011 was $140 million. In 2019, US InsurTech companies secured over $4.75 billion in seed through late stage funding compared to the $3.4 billion in 2018.
However, companies are searching for ways to retain customers and reinvigorate a new generation who expect more from them. Life insurance alone is a $130 billion business that has experienced a 45% decline in policyholders in the past 20 years. Insurance companies are losing customers because they are less relevant to their constituents.
To all emerging technology companies, insurance corporations, carriers, InsurTechs, and foreign entities making a US presence in the insurance market, get engaged with Innovation Underwriters and CIC to be a part of the conversation. For more information about the InsurTech Innovation Hub, InsurTech working groups, or Innovation Underwriters professional development opportunities, reach out to David at email@example.com.