Insurtech looks set to gather serious momentum over the next year, as proof of concepts are scaled to production.
Insurers move up a gear
We predict that 2018 will be the year when insurers move from proof of concept to production. That means taking the much anticipated minimum viable products and scaling them for wider launch throughout the market. Many insurtechs have enjoyed success with their proof of concepts over the last couple of years, with emerging technologies helping to boost customer engagement. Automation has already brought improvements around risk and quality – and we can expect to see even greater focus on fully realising the related benefits and cost savings.
Blockchain continues to hot up
Blockchain consortia such as B3i gained real momentum over 2017. The next twelve months will see consortia continuing to expand, as a growing number of firms decide to become involved and put in further use cases for development. We’ll also see more entities making independent progress under their own steam.
Venture capital flowing in
Insurtechs depend on investment – and we’ve already seen plenty flowing in from corporate venture capital funds backed by insurers. This will ramp up in 2018 as more firms jostle to get involved: a hugely positive development for Insurtech firms, for whom insurer backing provides a route to market and places insurance expertise at their disposal.
Segments in the spotlight
Several segments are becoming increasingly attractive for investment and development, with three in particular likely to be in the limelight.
Point solutions will stay as the default mode
Insurtechs tend to be about bringing specific point solutions to certain parts of the insurance chain – and this is unlikely to change. In core markets, we may see one or two becoming full stack insurers – such as Lemonade and Zhong An – but the failure of Guevara earlier this year shows how hard the insurance market is to break into on a large scale. Insurtechs will remain an important part of the ecosystem as both suppliers and enablers: a situation with which most are comfortable, given their choice to stay just below the level at which increased regulatory authorisations are required.
International competition on the rise
We predict that in 2018, a growing number of countries will ramp up their efforts to develop insurtech hubs and attract external players. The established markets won’t have it all their own way: some countries, such as Singapore, have already made huge progress in the last couple of years alone. Amongst the best new pretenders are likely to be countries as diverse as Belgium, Bermuda and India. Meanwhile, big city wars will intensify, with Paris particularly keen to attract insurtechs away from London, whose position is potentially undermined by Brexit uncertainty.
The power of combining technologies
We’re often asked which new technology is the ‘hot’ one where insurtechs will train their sights. Blockchain is definitely right up there, but the real answer here is in fact ‘all of them’. It’s that potential created by combining the power of each new technology that makes insurtech so compelling. Telematics, robotics, virtual reality, machine learning and AI, internet of things, drone tech: all are going to be part of the mix. As we look forward to 2018, the whole really is greater than the sum of the parts.