Insurtech Market

Market Overview

The global Insurtech market size is expected to reach a valuation of USD 114,489 million by 2030, growing at a CAGR of 46.10% during the forecast period (2022–2030).

Insurtech focuses on applying technological advancements to the existing insurance sector paradigm to extract cost advantages and efficiencies. Influenced by the phrase fintech, Insurtech is a portmanteau of the concept’s "insurance" and "technology."

The insurance organization's perception is ripe for growth, and upheaval drives Insurtech companies' and venture capitalists' investments in the space. Insurtech is pursuing opportunities that traditional insurance companies are less likely to follow, such as providing ultra-customized policies, social insurance, and dynamically pricing premiums based on observed behavior leveraging new data streams via Internet-enabled devices.

Utilizing digital technologies, businesses can better understand their customers' wants and adapt their offers to meet those demands. A software company, EIS Group poll, found that 59% of the questioned insurance businesses will boost their investment in digital infrastructure in 2021. The global demand for blockchain technology among insurance businesses is driven by its advantages, including cost reductions, quicker payments, and fraud mitigation. Insurers employ blockchain technology for processes including Know Your Customer (KYC), Anti-Money Laundering (AML), managing claims, and developing peer-to-peer models.

Market Dynamics

Drivers: Insurtech Growth Driven by Reinsurer Support

Reinsurers actively engage in two key roles: supporting Insurtech via funding and offering important underwriting capabilities. Reinsurers are designing digital technologies and putting capital into Insurtech.

For example, Munich Re-established Digital Partners, a digital technology provider with direct investments in certain Insurtech.

 - Ping A funded fin leap, a FinTech and Insurtech ecosystem incubator that Hannover Reinvested in.

 - Swiss Recreated a separate subsidiary for iptiQ, its white-labeling digital insurance platform. iptiQ is a digital B2B2C platform that offers digital processes to partners and protective goods to clients. It creates alliances to sell insurance through well-known brands.

Reinsurers are also partnering with full-carrier Insurtech to boost their underwriting capacity, allowing them to focus only on customer experience and adoption.

• Metromile, a pay-per-mile auto Insurtech based in the United States, works with a small panel of reinsurers and has spent roughly 14% of its net premiums on reinsurance commissions over the previous five years.
• Based in New York, Lemonade uses a panel of seven quota-share reinsurers to handle 75% of claims, with a ceding commission of 25%. According to the NYSE-listed Insurtech, Reinsurance helps cushion against loss variations and makes income and profits highly sustainable.

Reinsurers are turbocharging Insurtech development, especially for Insurtech full carriers, via these strategic bets while also maintaining their place as the custodian of asset allocations from across the insurance sector.

Drivers: Consumer Benefits

Insurtech is driven by consumers, who may assign value to every aspect of their life. It allows friends, family, and other community members to be included in comprehensive coverage. Consumers are involved in the entire process, from registration to claims, and they even have a say in who sits on the insurance claim jury panel during a hearing. This greater degree of knowledge and participation benefits customers.

Most individuals nowadays do all of their work on their smartphones. When it comes to insurance, customers expect the same mobile convenience. Consumers may research, confirm, and make decisions using Insurtech from the comforts of home. Insurers and Consumers will save time by being able to verify the status of claims from their mobile devices.

Organizations that use Insurtech have strict anti-spam and security standards to ensure that consumers have confidence during online transactions. It also allows the insurance firm to collect and analyze consumer data, enabling personalized services and solutions. Thus, benefits for consumers like empowering the consumer, ease of access, convenience, enhanced security, and personalization are driving the growth of the Insurtech market across the globe.

Restraints: Privacy Concerns

The most significant barrier to Insurtech is the question of privacy. Credit scores are tracked using distributed ledger technology, a shared database shared across different companies and sites. It is constantly changing, posing problems for data protection legislation. Regulators with diverse distributed ledger technology management methods face privacy issues from international jurisdictions. Distributed ledger technology may be decentralized owing to its collaborative nature, which means that no single organization can be held accountable in the event of a dispute. This makes fully integrating into Insurtech problematic.

Thus, the privacy concerns linked to Insurtech are expected to impede the Insurtech market growth during the forecast period. Those interested in this technology should look into the strategic legal implications for their jurisdiction and firm. Another option is regularly keeping in touch with regulators to stay current on international legislation. Insurtech is transforming the insurance sector by allowing customers and service providers to conduct business seamlessly, error-free, and secure. Insurance corporations must invest in new technologies and tailor solutions to specific needs to best serve customers.

What Are Future Growth Opportunities in Insurtech Market?

Innovation

The demand for insurtech solutions is growing as it raises buying amounts, improves direction and protection planning, and uses artificial intelligence, artificial intelligence, and distributed computing. With the aid of various hearty innovations like distributed computing, blockchain, and distributed AI that provide ongoing reconnaissance and monitoring of safe action for some organizations, the deals of insurtech arrangements are growing.

Burgeoning Opportunities in Insurtech Market

The CAGR for the market of Insurtech is expected to be more than 46% over the forecast period. Surprisingly, major full-service carriers Lemonade, Root, and Metromile and a slew of smaller businesses are driving growth. This unique occurrence demonstrates how Insurtech is growing and gaining traction with customers. The rising digital environment has aided this expansion by boosting mobility, travel, health, and home coverage options. As a result, many industry organizations enthusiastically collaborate with Insurtech to capitalize on this mutually advantageous potential.

Insurtech enablers are launching new initiatives and cooperating with major software companies to get into the market.

 - Upptec, a Swedish vendor of content-based automated claim technologies for home and travel insurance, has joined Guidewire PartnerConnect as a Solution Partner to assist underwriters with claim content automation.

 - Zurich-based A new health and wellness administration cloud solution has been developed by dacadoo, a digital health engagement platform, in collaboration with Oracle.

 - Philadelphia-based Life.io, a customer engagement platform, teamed up with Unqork, an enterprise no-code platform, to offer insurers an easy-to-use digital purchase tool.

Regional Analysis

The global Insurtech market share has been segregated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

Why is North America a Lucrative Market for Insurtech?

With a market value of USD 47,643 million by 2030, registering a CAGR of 48.10%, North America is expected to be the most prominent Insurtech market. Since customers are spending more money on insurance-related products, Insurtech solutions are becoming more popular in the region. Secondly, these solutions provide customizable and adaptable property and health insurance options. The expanding number of Insurtech startups also fuels the region's market expansion.

Europe is expected to be the second-largest Insurtech market with a value of USD 34,182 million by 2030, registering a CAGR of 47.10% during the forecast period. Due to multiple rising economies and financial hubs in Germany, France, and the United Kingdom, the region is likely to grow significantly. Insurers in the area are attempting to provide inexpensive insurance premium options. The regional market is expected to rise as smartphone adoption increases across Europe.

Over the forecast period, Asia Pacific is expected to become the region with the quickest growth. Due to the multiple rising economies and financial centers in Singapore, India, and Hong Kong, the region is anticipated to grow tremendously. The region's insurance service providers strive to provide premium plans at competitive prices. The expansion of the regional market is anticipated to be fueled by the rising smartphone penetration in the nations of the Asia-Pacific.

Segmental Analysis

The global Insurtech market share has been classified based on type, service, technology, end-user, and regions.

The Insurtech market has been segmented into auto, business, health, home, specialty, travel, and others based on the type. The health type segment is expected to dominate the global market. It is projected to reach USD 31,944 million by 2030, registering a CAGR of 48.10% during the forecast period. The growing need for digital platforms that connect health insurance carriers, providers, brokers, and exchanges is expected to drive demand for the health sector. Advanced analytics are being used by life and health insurers to represent the best and comprehend their consumers. Many health insurance firms are using Insurtech solutions to expedite claim processing. For increased convenience, insurers aim to merge their healthcare insurance solutions with mobility features. Over the projected period, the home segment is anticipated to increase the fastest. Several house insurance firms are working to provide cutting-edge products for commercial and residential real estate professionals and their respective renters and inhabitants. Insurtech solutions are being adopted by these businesses to reduce the time from list to lease. Without the aid of insurance brokers, these solutions leverage AI technology to develop and provide customized insurance policies and effectively handle claims for clients. For instance, Farmers Insurance incorporated the wildfire risk rating model from Zesty.ai into its homeowner insurance underwriting procedures in June 2021. By assessing each homeowner's unique wildfire risk through this relationship, the former corporation hopes to adopt a creative strategy for minimizing its wildfire exposure.

The Insurtech market has been segmented into consulting, support and maintenance, and managed services based on service. The support and maintenance service segment is expected to dominate the global market during the forecast period. The increased adoption of modern technologies and distribution channels by insurance firms can be ascribed to the evolution of the support and maintenance segment. Many insurance businesses worldwide are working on installing sophisticated technologies and adapting legacy software packages to meet unique requirements. This is likely to grow the global demand for support and maintenance services.

By fusing skill and ability with new technologies, managed services providers may provide insurers a measured doorway to transformation. Managed services providers to insurers also provide the best procedures, techniques, and legal concerns. In addition, managed services help insurers take advantage of possibilities and difficulties in the operations and IT of insurance. The value of enhanced business models is now being recognized and embraced by insurers, opening up new growth potential for the managed services market.

The Insurtech market has been segmented into the blockchain, cloud computing, IoT, machine learning, Robo advisory, and others based on technology. The cloud computing technology segment is expected to dominate the global market, and it is projected to reach USD 28,052 million by 2030, registering a CAGR of 46.10% during the forecast period. Cloud computing has revolutionized the insurance sector with its inventiveness, simplicity of implementation, and adaptability. The expansion is projected to be fueled by the universal popularity of Bring Your Own Device (BYOD) rules and the enormous amount of data that insurance carriers collect. Benefits such as quick deployment, cost-effectiveness, and sustainability drive insurance businesses to use cloud computing technologies.

Over the projected period, the blockchain segment is expected to increase the fastest. Blockchain technology allows insurance firms to reduce operating expenses and increase operational efficiencies. This technology can promote growth, combine various insurtech platforms, and enable the launch of new services, especially for people who previously could not obtain insurance. Due to its advantages over other technologies, including smart contracts, sophisticated automation, and robust cybersecurity, insurtech companies are predicted to embrace blockchain technology aggressively.

What is the Contribution of the End User Segment in Driving the Global Insurtech Market?

The Insurtech market has been segmented into automotive, BFSI, government, healthcare, manufacturing, retail, transportation, and others based on end-user. The healthcare segment is expected to dominate the global market, and it is projected to reach USD 12,890 million by 2030, registering a CAGR of 49.10% during the forecast period.

The uptake of Insurtech solutions in the healthcare business is likely to be driven by increased digitalization in the insurance market. The increasing number of devices has necessitated data monitoring, management, and maintenance across healthcare institutions. Customers' increasing digitalization has increased demands for better and easier access to insurance technologies and services. In addition, the increased usage of blockchain-based technologies by health and life insurance businesses is likely to propel the industry forward.

BFSI firms are increasingly adopting insurtech solutions to increase operational effectiveness. The rise of connected devices in the BFSI industry generates a significant amount of data. Additionally, insurers have come to understand that they can use such data to provide better services, save costs, acquire insights, and increase profits. The need for insurtech solutions across the BFSI industry is also anticipated to increase concurrently with smartphone penetration worldwide.

Recent Developments

• In December 2022, Five Ways the Metaverse will Change Lives and Business in the Next Five Years, According to DXC Technology.
• In December 2022, The first user of the new DXC Assure Broking solution will be Lockton UK, according to DXC Technology.
• In October 2022, DXC Technology Strengthened its Global Partnership with Dynatrace, Speeding Up Client Business Transformation.
• In November 2022, Majesco, a leader in cloud insurance software solutions for the transformation of the insurance industry, today announced the launch of its new and entirely redesigned website, which will provide visitors with a superior online experience.
• In November 2022, A top provider of technology services and consulting, Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO), recently introduced new financial services advising capacity in India.