A freshly minted Accenture Research has revealed that Artificial intelligence (AI) and the internet of things (IoT) now account for almost half of total investment in insurance technology (insurtech) startups all over the globe.
The report, which includes the new analysis of CB Insights data on 450 insurtech deals over the last three years, brings to attention that the combined number of deals across AI (including automation) and the IoT (including connected insurance) has increased by a whopping 79% in the year 2016. This exponential increase happened even though the two technologies represented only one-quarter (24%) of the 216 insurtech deals that took place globally last year and accounted for about 44 per cent or US$711 million of total insurtech investment — compared with just 10 per cent of global insurtech investment that took place in 2015.
The research appeared in a new Accenture report titled “The Rise of InsurTech,” which was released yesterday along with Accenture’s Fintech Innovation Lab in London, which for the very first time includes a dedicated insurtech stream comprising leading industry startups.
The report written by the Irish consultancy firm notes that the insurance industry considers IoT and AI as critical technologies required for delivering increased levels of personalization and better real-world outcomes to its customers. While the AI has the capability of transforming the insurance industry from an industry that simply assesses risk based on past experience to the one that monitors risks in real-time and mitigates, or even prevents, losses for its customers. On the other hand, IoT will allow the insurance industry to provide its customers with real-time, more-personalized service, price their products with a greater precision; and boost their operational efficiency.
Despite the Brexit cloud over the UK insurance industry, the country’s InsurTech industry kept swelling up a marvellous pace and doubled its investments to almost $19m (£15.2m).
Even Germany and France saw strong InsurTech investment last year. Although United States’ share of total InsurTech deals saw a 7 per cent drop from 63 to 56 per cent. However, the percentage of insurtech investment for the rest of the world (deals outside the traditional hubs) more than doubled, from 11 per cent in 2015 to 23 per cent in 2016.
According to a statement given by Julian Skan, senior managing director at Accenture’s Financial Services practice, which oversees the FinTech Innovation Lab, the expansion of InsurTech funding can be seen as a “further evidence of the growing role that new technologies are playing in shaping innovation across financial services”.