The global InsurTech market revenue was valued at $532.7 billion in 2018 and is expected to reach $ 3.4 trillion by 2023, growing at a CAGR of 45.6% during the forecast period 2019–2023.

• Definition / Scope
• Market Overview
• Top Market Opportunities
• Market Drivers
• Market Restraints
• Industry Challenges
• Technology Trends
• Pricing Trends
• Market Size and Forecast
• Market Outlook
• Technology Roadmap
• Competitive Landscape
• Competitive Factors
• Key Market Players
• Strategic Conclusion
• References

Definition / Scope

InsurTech term means “technologies that have potential to bring innovation to insurance industry and create impact in value chain of insurance market and its practices.”

Insurtech similar to Fintech is however, more service based and are focused on service improvements rather than businesses themselves. The players in the Insurtech sector incorporate application or technology in all stages of insurance supply chain.

These insurtech models/businesses are enabling insurers product ranges to be expanded, creating alternative sales channels and reaching to new group of clients through various evolving technologies.

The Insurtech market can simply be segmented on the basis of component, type and application.

Based on component it can be segmented into software and services.

By type into retail and commercial and by application into health, Property& Casualty (P&C), Life and others.

On the application segment front, P&C segment was ruling however since 2018, the growth is expected to divert to the health segment with more insurtech applications being developed in this segment.

The insurtech market attributed to healthcare insurance basically caters healthcare experience for customers with custom insurance offerings and easy claim processes. 

According to region, North America is witnessing accelerated growth in insurtech. There is high rate of adoption in countries such as Canada and US whereas Mexico is a bit slow to adopt, in addition, the insurtech in these countries is also further driven by high consumer spending in insurance.

Similarly, the market in APAC region is also expected to grow significantly since 2019 especially in economies such as China, India, Singapore and Japan. In addition, these countries are also increasing adoption of mobile and cloud technologies which in turn is encouraging insurtech companies to adopt digital insurance platforms. 

Market Overview

• Among the top 100 Insurtech ventures around the world, 43 was in general insurance, 16 in health, 12 in P&C, 4 in Life, 7 in commercial, 9 in Motor Insurance, 5 in P&C Motor, 2 in cyber insurance, 1 each in pet and travel respectively. 
• The top three growing regions in the insurtech are North America, Asia and Europe. Due to the strong health sector and established ecosystem, 43% of the companies among top 100 global insurtech firms are based in the US. In addition, 18% of the Asian Insurtech firms are disruptive and are on rise as innovative startups as growing online community. Whereas 25% of the European insurtech disruption is driven by accelerator and growing Venture capital market in the region. 
• Besides these three regions, other regions such as Latin America, North Africa and Middle East have low insurance penetration rate ranging between 0.7% to 4.9% across several countries due to which InsurTech market is not able to flourish quite well with low penetration in insurance sector. 
• Within APAC region, in China, the online insurance sales account very small proportion of the market only limited to motor and travel policies. In Philippines, technology has high impact on retail and high-volume insurance products such as life and consumer insurance. However, commercial segments is backward and lags investments in ICT or digitally enabled capabilities. *Besides Philippines, Thiland is the most developed insurance markets in South-east Asia with penetration rate of 5.3% and Insurtech could definitely play a big role in the country in near future. 
• Within Latin America and Caribbean region, one notable success was found in Brazil, with an Insurtech established in 2011 called Bidu, a tech-savvy, online insurance platform selling insurance to consumers in non-life segment. Brazil is the second most insurance penetrated market after Chile in Latin America. The Insurtech is however recessive in Mexico as it is still far from core business systems such as CRM and data analytics. 
• In the Middle East & North African region, the insurance and penetration rates of insurtech vary with high growth in gulf countries and lesser in North African region. However, in North Africa, countries such as Morroco that has the highest insurance penetration in the region (3.5%) is tapping onto Insurtech to drive growth in premium. Whereas, technology usage in countries such as Algeria and Egypt is much low despite of which in Algeria, a non-life insurer has recently introduced e-payments, bank card payments for insurance and also subscription service for some types of insurance. 
• Finally, the South Africa &Sub-Saharan is one of the saturated market in insurance with penetration rate of 13.8% higher than most advanced countries. Within the region, Nambia and Kenya are two evolving countries in Insurtech due to high tech-driven infrastructure in the West and East Africa. In addition, countries such as Ghana has potential to flourish due to high premium growth as in some remote parts of the country, mobile money is already helping to collect insurance premiums. One of the lowest penetration rates i.e. 0.3%, Nigeria has a high potential to catch-up premium growth in coming years. In Nigeria, Whatsapp Insure is a platform that is providing a great opportunity to distribute insurance online. It is also effective in dealing with queries, license information, certificates and e-payment links. In addition the platform is introducing AI in near future to handle enquires, claims and build better risk profiles. The entire South African region is focuses on increasing insurance penetration by focusing on remote areas through established communication and mobile payment infrastructure. 

Top Market Opportunities

Developing micropayment systems especially in developing or growing markets where insurance penetration is low is definitely a great opportunity for Insurtech companies to venture into. Some of the companies such as Zhong An in China and Millicom’s Tigo in Africa are operating in this space.

As the technology is expensive and there is lack of standardization, the insurance companies in general are reluctant to invest but these companies have had success in their respective regions ad leading to effective management of millions of tiny payments that is creating development of new markets.

For instance, Millicom’s Tigo platform after initially succeeding in Africa is now focused on Latin America region.

Market Drivers

• Rise in ecosystems & platforms :

At present, customers are looking for solution rather than services. A lot of e-commerce solutions are popping up in the market that have an extended ecosystem model and these platform integrate several services to best address customers’ needs under a common umbrella.

The examples of such platform are: Rakuten in Japan and ZhongAn in China; they are selling insurance policies in their platforms. Thus, participating in such collaboration also adds value to insurance players through network effects such as, opportunity to integrate insurance into products sold on the platform.

Thus, insurers around the world have stated to tie up with these platforms to open a new stream of revenue and also drive their profitability further. Some other examples include, third-party insurance platforms such as Element, Outsystems, and Socotra that are helping non- insurers inside the ecosystem to build insurance products/services easily. 

• Insurance as a service:

The ideas of providing transparent coverage and flexibility on insurance product is another trend that is appealing customers as they can easily decide on what to insure, how often and when.

Thus, policies are increasingly being tailored to the customer. Insurtechs such as buzzvault, Slice and Valoo operating in this space are offering such policies.

For instance, Slice allows owners renting out their homes to pay for coverage only for the time they are renting them—not a minute or a penny more while buzzvault allows customers to have an overview of their property and gives the permit to add or remove item from the policy according to their convenience.

Thus, this new evolved service is definitely driving a new business model in the insurance industry. 

• Increasing customer engagement:

Present day customers are tech-savvy and they need digital experience as per their need. A number of Insurtech are relying on gamification to improve customer experience. For instance, a chatbot or mobile AI is setting up policy or filing claim, thus, more burdensome tasks are being integrated to AI to engage customers well.

An application called Wrisk helps the connected generation to interact in the same way they would do in a human contact through its AI chatbot. Another insurtech, Bought By Many, also has a personalized approach in pet insurance line where they send gifts on pets birthday and also personally addressing letters in response to claims. 

Market Restraints

• In next few years, life insurers that fail to secure a place in the modern health ecosystem will find their business models challenged. Without access to datasets being acquired today by a number of insurers, they may not be able to manage their risks or engage with their customers well. In addition, a number of insurers are adopting wearables technology and further increased use of genomic and epigenetic technology to determine a customer’s biological age above their chronological one; this trend is also on rise. As a result, it is a great opportunity for insurtech companies to offer such digital technologies in form of application or platform that can allow insurance companies to prevent and manage risks well. A high opportunity also lies in country such as Estonia that is leading the charge with all health records stored in blockchain. These digitized health records of patients can be utilized through data analytics which can help remove friction in customers buying policies, such as a lengthy series of medical consultations before a policy is agreed upon.
• A high number of Insurtech companies are creating huge impact upon the global insurance market and the central idea is data. No matter what segment they operate in, these companies are utilizing the big data to understand the behavioral data which in turn is helping them to design their product/services. Previously, through people shared data freely, data breaches and fake news have led to mistrust upon governments and corporations. Despite of adoption of technologies such as wearables customers are reluctant on sharing personal and behavioral data from connected devices. Thus, it is a huge obstacle for insurtech companies to address and tackle ethical questions on how, where and why they will use the data and make customers understand that it is for their tangible benefit. Moreover, those companies based in UK and US are likely to be affected with such data issues as the regulatory bodies in these countries have come up with regulations that govern data but in countries such as China, the insurtech companies are likely to become contenders in this space, with fewer restrictions. 

Industry Challenges

• The Asia, the Indian sub-continent and Africa are some regions growing rapidly however, these regions are new to insurance sector and different from mature and developed societies. More than 60% people operate in informal sector having considerable pressure upon their income. These people if insured, generally postpone their installment payments without the policy being cancelled and such features are generally appealing to them. In line with that, access is another problem; many potential customers for insurers are remote people and contacting and marketing to them can be a challenging task. Though, micropayment has allowed some ease in payment process across Africa but insurance penetration remains as low as 1%. Even data analytics cannot be applied effectively as building profiles from phone use and payment data, simply don’t function as that in mature markets. As the presence of insurance and technology is so low in these regions, the western approach of launching digital businesses in these emerging markets will unlikely succeed. As insurtech companies operate in several technologies, the need for cultural change and awareness and adoption of technologies among people is essential to capture the market or else investment in these regions generally lead to unprofitable outcomes for such businesses. 
• Like wearables, telematics technology is widespread in auto insurance and is used to understand behavioral insights of car owners. However, more mature markets may face a difficult future, in this space such as Australia and possibly the UK where the technology has reached a saturation point. Although, telematics is not mandatory in these markets, a number of insurtech platforms have evolved and insurers are using it in their own will. In addition, in the western countries the trend has shifted towards leasing, renting or even ride-sharing that has created a big question upon whether auto insurance has scope and further, if telematics is viable. More recently, automated vehicles is the hot topic in the world and these driverless vehicles if fall into accident, who receives the claim- the owner, the operator or the vehicle itself? Thus, the entire auto insurance is likely to evolve and so the insurtech operating in telematics space have to evolve to the rising mobility as a service trend that is occurring in order to survive in future. 

Technology Trends

• Telemedicine in Insurtech: 

As lack of access to doctors is an increasing problem in healthcare, a lot of Insurtech companies are venturing into rapidly growing insurtech market. In the US, a number of states are bringing changes in laws to promote telemedicine.

Across Europe, remote consultation with a doctor is common in France and is growing in the UK. Although, not currently allowed in Germany, the insurtech is likely to adopt into the segment in the country soon.

With the data gathered, the carriers mitigate and reduce risk while maintaining positive behavior with customer. As data leads to insight which in turn enables early intervention that prevents customers from getting diagnosed with chronic conditions and as a result leads to substantial savings in claims for insurers.

With data, Insurtech companies are utilizing the patient’s records and settling claims easily.

Some of the players operating in this technology are: Ping An’s Good Doctor, Wealthy Therapeutics, which is AI-powered digital therapeutics, Muang Thai developed BaoWan product to monitor diabetes and reward condition management among others. 

• AI: 

With technologies such as Machine learning and AI, claim settlements in particular are being handled most efficiently. With the technology as platform, many insurtech companies are making claim process simpler, cheaper to process and being settled quicker which is benefiting both insurer and customer.

Besides claim settlement, AI is also set to revolutionize other areas such as fraud prevention, anti-money laundering through to underwriting and pricing.

Besides, the technology is also helping companies to enhance customer experience through engagement, it is also generating data for Insurtechs’ which they are utilizing to make their AI more intelligent and further engaging customers through meaningful human-like conversations. 

Some examples include, Pixoneye, a data analytics SaaS company that is providing a vision technology that can analyze consumers public online photo galleries to build a risk profile. Another example is an insurtech named Enterprise Bot that builds chatbots on ML algorithms that can act on customer enquiries and further measure the customer satisfaction and sentiment of their query. 

• Automated claims processing: 

A number of insurance customers, particularly in developed markets are moving away from the traditional claims processes and heading towards digital-self-service channels.

For the same, insurtech companies are utilizing technology called digital first notification of loss (FNOL) via live video or images from the scene of an accident to an automated settlement. An Insurtech company called Carpe Data provides solutions for insurers to identify fraud claims easily and lead quick settlements for valid cases.

Another insurtech Xtract that operates in auto-industry provides a claims tool that visualizes crash data for auto industry and captures generic crash data at FNOL and delivers insights to claim handlers so that they can make decisions efficiently. 

Pricing Trends

Since its commencement, Insurtech has its origins in pricing and underwriting segments of insurance. Internet price (of insurance) comparison websites were the initial or first insurtech in personal line insurance enabling customers to compare prices of similar policy covers instantaneously.

Thus, their effect on some markets has been drastic. For instance, in UK these aggregator insurtech platforms are firmly established and account for more than 75% of new personal motor policy sales. As these platforms have strong technology strategy along with cheapest prices which makes them successful among customers.

In addition, the pricing sophistication comes with Insurtech boost as they have edge on technology. Thus, forward looking insurers are utilizing data sources, more advanced data analytics and agile processes through insurtech companies to maintain their pricing structures.

Process improvements: As the legacy systems and processes are dissolving everywhere in the industry, a number of insurtech companies are focused on developing technologies that are focused on process improvements across underwriting, sales and claims, and customer engagement in the spaces between the points of transaction.

Two technologies that is enabling change in processes are data and blockchain. With data, insurtech companies are allowing on-demand coverage, improving access and reducing complexity, and creating abilities to segment customers largely on their behavior understanding how they interact with the insurer and influence the risk within their policy.

Similarly, blockchain is being deployed across several areas such as flight delay and lost baggage claims systems and has scope to flourish in highly complex risks such as shipping. Finally, claims settlement processes are likely to transform the most as they are highly associated with consumer satisfaction and engagement. 

Market Size and Forecast

The global InsurTech market revenue was valued at $532.7 billion in 2018 and is expected to reach $ 3.4 trillion by 2023, growing at a CAGR of 45.6% during the forecast period 2019–2023. 

Market Outlook

• The Insurtech market worldwide is set to grow at a CAGR of more than 45.66% in 2019-2023 period. In addition, during the same period, the market size is expected to reach $3.4 trillion by 2023. 
• During the 2018-2023 period, European region is expected to contribute 51% of the growth becoming the major contributing region. As European region has high adoption of technology, the region is higher when compared to rest of the geographies in the world. 
• China’s insurtech on other hand is evolving in digital insurance as the technology is advancing at a massive scale across all industries and even among consumers in their daily lives. China has highly automated insurance platforms that has digitized some main functions across the insurance such as underwriting, pricing and claims handling. In near future, mature insurance markets such as UK and US are likely to compete with these innovators on the same front. In addition, possible partnerships between such insurtech companies in China and traditional incumbents in developed regions are also expected to occur. 
• One of the key future trend for the market will be integration of AI and big data. With big data, the companies will be able to draw insights at every stage across the insurance life cycle such as consumer targeting, pricing, product designing, claims processing, and reporting to create tailored insurance products.

Technology Roadmap

• Big Data and AI will be key technologies that will be leveraged by the insurtech sector as these technologies are being adapted more rapidly than any other. In addition, new opportunities can be identified in robotics to automate processes. 
• The connected insurance is also in rise, as this technology may not yet come to maturity by 2019, however, insurance industry expects to witness continuous growth in this segment. The connected insurance relies on range of connected devices from wearables to IoT enabled appliances to telematics. To achieve a vision in this segment, the players must also focus on leveraging the tons of data received from the connected devices and create better customer, risk profiles. 
• Another technology solution such as point solution or online insurance which is currently provided by two major player worldwide namely, Zhong An and Lemonade are already becoming full stack insurers although they initially started off as Insurtech providing a channel of sales. However, the failure of Guevara in 2017 suggests that breaking into insurance market in large scale through an online platform and becoming supplier is definitely not a good idea in all markets. As regulatory authorizations are required for the same, the insurtech may be able to become more of an enabler rather than supplier and through their innovation they can integrate their technology into insurers business rather than becoming an insurance distributor themselves. 

Competitive Landscape

• In an international competitive context, a growing number of countries are developing insurtech capabilities, attracting foreign players and becoming insurtech hubs, these countries are established markets such as Singapore, China, US, UK, Australia, Japan among others. Similarly, the new contenders in the scene are countries as diverse as Belgium, Bermuda and India. And from the perspective of a city, big cities will grow in insurtech such as Paris, that is set to lure away companies from London whose fintech position is bit hampered after Brexit. 
• A number of insurtechs are also depending on investment and as a result the corporate investment into the sector is also likely to rampup in 2019 and beyond. In 2018, the bulk of insurtech deals have made it to developed markets with US alone accounting 58% of the total deals in comparison to leading markets such as China and India that were able to secure only 13% and 10% respectively. Some other notable regions include, Israel (6%), and South Africa (4%). 
• Since 2012, more than $8 billion has been invested into insurtech worldwide. In addition, $202 alone was invested in 2018 where 83% of the deals involved a major traditional insurer as an investor. Within fintech, Insurtech continues to grab a prominent position as the sector has potential is growing at an y-o-y rate of 32%. In 2018, the majority of investments in insurtech worldwide i.e. (61%) were aimed at “enabling the insurance value chain” rather than “disrupting or disintermediating (9%) only respectively. 
• Athough a chunck of deals were mostly meant to be harmonizing and not disruptive, large corporations are entering into Insurtech market particularly in China. For instance, Alibaba (the Chinese Amazon) recently teamed up with Tencent and Ping An (China’s Insurance Giant) to launch China’s first online only insurer Zhong An. Similarly, the biggest global technology firms such as Amazon and Google are also entering the insurance markets in developed nations either through JV’s with established insurers or coming up with their own venture which is likely to disrupt the Insurtech market. Thus more M&A activities could follow after the market landscape gets filled with these big players. 
• Among the top 100 ventures in Insurtech around the world, 43 lied in US, 12 in UK, 8 in China, 5 in India, 4 in Israel, 3 each in Singapore, Australia and Germany, 2 each in Sweden, Hongkong, South Africa and Canada and 1 each in Mexico, Netherlands, Switzerland, Malta, Spain and Guatamala respectively. 

Competitive Factors

• An Insurtech company, Cover Genius’s product XCover permits insurance carriers to transport products across borders by undertaking tailored product across 20 languages in more than 70 countries. 
• Flamingo is another insurtech company that leverages AI to improve customer experiences, to lead efficiency and growth. 
• Pega, an US based Insurtech company develops software exclusively in areas such as, CRM, digital process automation and business process management for businesses. 
• Founded in 2013 in China, Zhong is an online insurance company. Since beginning, it has acquired 460 million users and sold more than 5.8 billion policies. 
• Based in China, Ping An is the world’s largest and most valued insurer, worth US$217 billion as of 2018. 
• China has developed an entirely new model that integrates social media and payment platforms. A model for instance, payments+social+mobile+data. For instance, Tencent’s ‘Wechat that has the combination of all three. And thus, the platform generates 38 billion messages each day producing rich source of feedback into insurers’ engines. 
• Several Insurtech firms are also leading to better customer experiences through their product and services. For instance, Munich Re recently partnered with an insurtech called *SimpleInsurance that offers point-of-sale insurance policies for e-commerce customers.
• Recently one of the world’s largest insurer partnered with an insurtech operating in niche segment to launch first pay as you fly drone insurance in the world. As drone insurance is a segment likely to grow in near future, venturing into the segment can lead intelligent market choices for future drone insurance market. 
• In US, in 2018, AXA invested in 20 insurtech startups to drive innovation around areas such as connected health, AI and big data. 

Key Market Players

• According to a report called ” Top 100 Insurtech Firms in 2018″ published in association of Tllt , top 100 players in the Insurtech market globally, were identified on the basis of their unique brand positioning. As per the report the top 10 players worldwide are follows: 
• Zhong An – First online insurance in China with en-to-end insurance capabilities
• Acko General Insurance- An independent digital platform providing general insurance in India. As of 2018, it received investment from company Amazon.
• Oscar- A health insurance carrier that employs technology and data to drive consumer experience end-to-end.
• Lemonade- An insurance carrier that utilizes AI and behavioral economics to improve insurance value chain.
• Shift Technology- SaaS solution for insurers that leverages big data and machine learning to detect fraud.
• Neos- a home insurance offering that uses technology to mitigate situations that otherwise lead to claims.
• Trov- An on demand insurance platform that provides cover for items of importance through mobile app.
• Slice – An insurtech startup providing insurance specially to support the on-demand economy.
• Quantemplate- A startup using data analytics to help insurance companies/clients to draw meaningful information into actionable insights.
• BIMA- A Swedish mobile tech venture that provides health insurance to low-income class and emerging markets.

Strategic Conclusion

In 2019 and beyond, Insutech sector will most likely continue to attract attention from established insurance companies and new entrants as the industry is still in an infant stage. At present, US is the single dominating economy in the space, the China is likely to emerge as a global player in near future.

In addition, insurtech innovation will continue to be devoted to incremental technologies in short to medium term, however, in long term, the entry of big tech gaints such as Amazon or google may drastically change operating business models of insurance.

As of now, insurtech will continue to drive premium growth in insurance and therefore leading to rising penetration in emerging markets in next few years.

References

1. https://oxfordbusinessgroup.com/overview/digital-disruption-insurtech-taps-premium-growth-potential-emerging-markets-3
2. https://www.alltheresearch.com/report/41/insurtech-market
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5. https://www.reuters.com/brandfeatures/venture-capital/article?id=68055
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7. https://home.kpmg/xx/en/home/insights/2017/12/2018-insurtech-hits-its-stride.html
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