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When it comes to insurtech, companies are starting to invest huge sums of money into two technologies: AI and IoT.
The world of insurance – and insurance technology (insurtech) specifically – is about to change fundamentally, with the advent of new artificial intelligence (AI) and internet of things (IoT) technologies.
In the coming years, the policies a person, group or individual will receive could be determined by a highly advanced AI rather than a human actuary.
Growth of almost 80pc
According to a new report from Accenture, the true extent of the funding going towards new technologies in the sector has been revealed.
Based on its findings, it is clear that AI and IoT dominate, with nearly half of all funding in insurtech start-ups distributed to the two fields in 2016 alone.
The combined number of deals across AI (including automation) and IoT increased by as much as 79pc last year.
This is despite the fact that the two technologies represented only 24pc of the 216 insurtech deals globally in 2016.
This accounted for 44pc, or $711m, of total insurtech investment, whereas in 2015, the total sum invested amounted to only 10pc.
Findings among insurance companies. Infographic: Accenture
Uses of AI and IoT
Speaking with those at the coalface of insurtech investment, Accenture found that the insurance industry views AI and the IoT as critical to delivering increased levels of personalisation and better real-world outcomes for customers.
For example, AI and IoT could monitor risks in real time, mitigating (or even preventing) losses for customers rather than relying on past experiences.
Interestingly, despite its recent divorce from the EU, the UK is seen as one of the world leaders in this area of investment.
While the number of insurtech deals in the UK remained flat, the value of the investments there more than doubled last year, to almost $19m.
Europe still behind Asia
While Germany and France follow closely after the UK in Europe, the continent still falls behind the Asia Pacific region, where global investment in fintech ventures grew 10pc in 2016 to $23.2bn.
“The rise in insurtech is further evidence of the growing role that new technologies are playing in shaping innovation across financial services,” said Julian Skan, senior managing director at Accenture’s financial services practice.
“The next challenge for insurtech start-ups is the same as what the more mature fintechs are now facing: being able to translate that investment into growth and customer acquisition.”
