The industry that supplies insurers with the latest digital technology is attracting a lot of capital in Europe as investors back cloud, internet of things (IoT) and big data technologies.
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According to research from Accenture, suppliers providing these technologies attracted the most spending in the first half of this year, with $268m invested.
Roy Jubraj, digital and innovation lead, insurance, at Accenture, said deals involving cloud computing and the IoT are accelerating particularly rapidly.
“The explosion of data made available by an increasingly connected world is bringing unprecedented change and allowing modern insurers to understand customers and create personalised, dynamic relationships with consumers,” he said. “Investors can see the potential in this and are backing efforts to unlock the value of technologies. That is why we are seeing deals that range from an app for buying short-term car insurance to a connected home solution that complements home insurance policies.”
Jubraj said the life insurance segment is showing signs of getting in on the insurtech revolution. “Investors backing disruption in this space suggests life insurers are at a big turning point,” he said. “The challenge remains on how these technologies can make a real impact for consumers, and for insurers who need to keep pace with a rapidly changing world.”
According to recent research by Altus Consulting, disruption caused by new technology in the insurance sector is likely to mirror that in the travel sector. It said that in 2006, 57% of people in the UK booked their holidays on the high street. By 2016, this figure had dropped to 19%.
Now many brokers on the high street have been replaced by websites such as Expedia.com and Lastminute.com, which offer online and app-based travel booking services. There has been a similar transformation in the way insurance policies are bought, with the likes of Compare The Market, Go Compare, Confused.com and Money Supermarket becoming the go-to places for insurance – but more can be done.
The insurance industry is preparing itself for change. Research firm Pierre Audoin Consultants recently asked 200 large and medium-sized insurance companies in Europe about their innovation strategies. It found they are moving from having pockets of initiatives around digital to adopting formal enterprise-wide strategies.
A total of 70% of Europe’s largest insurance companies were found to have appointed a new CEO in the past 18 months, and it was these leaders who were implementing IT innovation strategies.