It’s no secret that technology has revolutionised business, and the Insurance sector is no exception. When insurance policies became a roaring business at the start of the 20th Century, clerks or doctors would use huge forms to estimate a person’s risk.
We’ve come a long way since then. These days, data pools and sophisticated algorithms mean we can calculate data premiums with extreme accuracy and efficiency. The internet has transformed the industry, and the technology that assists insurers, also known as insurtech, continues to develop. Read on for a breakdown of the exciting field of insurtech in the UK.
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Growth in Insurtech
In 2023, the global insurtech market was valued at $8.24 billion. Fintech Global reported leading insurers are experiencing enhancements such as a three to five-point improvement in loss ratios, and a 10 to 15 percent increase in new business premiums that is attributed to digitised underwriting. That is a huge gain for insurance companies, and emphasises the pivotal role that advanced technology plays in Insurance. Take a look at the factors driving this growth of insurtech in the UK
Personalised products
With the help of insurtech, companies are offering usage-based insurance, allowing customers to pay for insurance based on how much they use their vehicle. In addition, insurers offer on-demand insurance, giving customers the option to purchase policies for a specific period, such as a vacation, through widely accessible apps.
Personalisation and AI
Personalised products have revolutionised the last decade of insurance, but AI is likely to characterise the next decade of commerce in insurance.
Insurers are using AI to automate the claims process and reduce the time it takes to onboard client or send payments. Here at Photocert, we’re using AI to provide insurers with an automated visual analysis, which, for example, allows companies to assess the condition of a car before it’s insured
With every insurance claim the data pool changes and becomes larger. AI is also extremely useful in interpreting this data that is constantly evolving. These predictive models can develop an accurate risk profile of a user and provide a policy that reflects their chances of making a claim.
Chatbot
AI and large language models are also being used to engage with and gather information from clients. Of course, these developments don’t come without teething issues, chatbots are not a seamless invention and often do not fulfill a client’s wishes in the way that a human being on the phone might. The objective of companies harnessing this kind of insurtech is balancing cost-cutting methods with the satisfaction it provides to their users.
Telematics
Telematics mean companies to track driver behaviour and identify high-risk drivers. This information can be used to price insurance more accurately and to offer discounts to safe drivers.
Drones
This is a smaller section of insurtech, but drones have become a part of risk analysis for some companies. There are various uses, some of which include the investigation and resolution of claims. By quickly attending the area with a drone that grants an aerial view, companies can understand the causes and the extent of the damage. Drones are even used in estimating insurance for houses and some companies are using drones to survey the property for possible risks. They also avoid the tricky process of image authentication.
Insurtech in the UK
Insurtech in the UK is a booming industry. This is partly down to London’s historic association with financial services, but also its flourishing start-up scene. There’s a lot funding available and a large recruitment pool to draw from. Lets take a look at the interesting insurtech companies that are making waves in the UK today:
KI Insurance
As one of the largest players in the game, they have a total funding valuation of £411 million. By harnessing AI and collaborating with Google, they were able to create a sophisticated algorithm that they use to underwrite financial institutions.
Bima
Bima is unique in that it’s objective is to offer affordable life insurance to disadvantaged families in countries in Asia, Africa, and Latin America. It does this by working with underwriting companies in those locations and currently has 31 million subscribers.
Yulife
Used by employers such as Tesco and Santander, Yulife provides health insurance policies for employees. This insurtech company’s objective is to change the conventional view of insurers by incentivising customers to live healthier lives. This is done with a gamified app that offers tokens that provide better access to health apps and products.
Photocert
Photocert is helping insurance companies to streamline their claim automation process with technology that assesses a digital asset’s authenticity with accuracy and efficiency. Most insurance claims processes are slowed by tampered photos and documents, i.e. altered pictures of car or domestic damage. Photocert’s technology ensures that the supporting digital documents in a claim are authentic. In the case of water damage, Photocert’s technology can even estimate the cost to repair that damage. Photocert is used by major companies such as AXA and Reale Group.
Boundaries to Insurtech
Naturally, the insurance industry is incredibly risk-averse, and this outlook has meant that some institutions have been slow to adopt helpful insurtech. We can see this in the relative size of fintech, which was estimated at $194 billion in 2023, compared to insurtech which was valued at $8.24 billion. However, the dial is shifting, and more companies are adopting these helpful technologies.
As AI and machine learning become commonplace, more regulation will arrive. It’s unclear how this regulation will look, but legal frameworks will likely become tighter around data privacy and transparency. It may become necessary for insurtech companies to invest in compliance roles and expertise that can guide them through new legislation. While it may sound like an obstruction to insurance technology, legislation that centres consumers is likely to ensure safety and thus the future of this exciting field.
Insurtech now and where it’s heading
Insurtech is an exciting area of technology that is transforming the insurance industry. The future of Insurtech will be shaped by the way that technologies already in use advance. For instance, the rapid development of drones and their widespread adoption may change insurance assessments indefinitely. Equally, the integration of wellness into insurance, particularly through health-based apps, may have a large impact on the culture of insurance. What’s certain is that Large Language Models and AI will change the way that customers not only interact with companies, but also the way that these policies are underwritten.
According to Global Newswire, the insurtech market was valued at 8.24 billion in 2023 but is projected to grow to USD 378.08 billion by 2032, meaning it would achieve a compound annual growth rate of 53%. While legislation may impact the industry, it’s clear insurtech will continue to grow and evolve.
