Over the last year, we saw a greater shift towards automation and AI applications to streamline insurance, including increased usage of augmented reality to support activities ranging from warning of risks, explaining insurance plans, estimating damages and increasing brand awareness. We also saw insurers starting to explore greater use of blockchain, the tech behind cryptocurrencies, to better support operations.
With this came a greater emphasis on cybersecurity, with the expectation for more proactive and preventative measures.
As we enter the next decade, we’ll continue to see unprecedented growth in innovation in the Insurtech space, which has set up the industry for more market advancements in an increasingly complex environment.
The Canadian insurance industry has been largely inert and less agile in the past, and it’s this environment where Insurtech has made its mark. A recent LIMRA report highlights that about a third of Canadians remain uninsured – but Insurtech is quickly changing this, while institutional providers are catching on and innovating.
In Global IQX’s Eight Top Insurtech Trends for 2019, we outlined some of the developments where the industry is heading. In this increasingly innovate-or-go-belly-up environment, it’s important to get ahead of the curve and keep tabs on what’s changing. Here are six of the top Insurtech trends of 2020:
Data analytics and AI will lead innovation
Data analytics and artificial intelligence are disrupting every industry today, including insurance. In fact, most of the top Insurtech startups like PolicyAdvisor and ProNavigator rely on leveraging data to provide their customers with data-driven solutions. This comes as no surprise as Maryville University data scientists predict a burgeoning 2020 for the business analytics market: an 11.7 per cent compound annual growth rate through the year, a revenue of more than $95 billion (CAD$125 billion) in the U.S., and possibly $203 billion (CAD$267 billion) worldwide. In 2019, Global IQX implemented new AI technology to help clients streamline and automate business processes and retain and go after profitable business. These kinds of implementations are at the forefront of digital transformation that will particularly empower employee benefits sales and underwriting for insurers. This is the tip of the iceberg for industry innovation.
Increased customization and personalization
Providing convenience and security have long been pillars of customer values. As expectations and interactions evolve, customization is quickly becoming another critical value. Leveraging analytics, Insurtech will provide insurance leaders with the capability to create targeted ecosystems for their clients. Insurance companies are also partnering with wearables and tech companies for wellness programs and to increase the personalization of rendered services. Indeed, Insurtech and Fintech stars including Koho and Borrowell leverage personalization in specific segments of the industry like savings, investing and borrowing.
Greater stress on cybersecurity
With the amount of data being handled and as the industry continues to digitize the economy, especially as organizations and governments increasingly move to the cloud, cybersecurity will remain top of mind. Especially in the wake of major data breaches to companies like Life Labs, which resulted in 15 million counts of personal data, risk mitigation will be a priority for Insurtech companies. Data verification technologies and predictive analytics are set to be adopted by vendors and insurers to increase cyber resilience in the Fintech sector.
Regtech and compliance
The changing regulatory environment and internal cost challenges will foster the growth of regulation technology (Regtech) in the Insurtech industry. Regulatory compliance will be pivotal next year as slews of legislation on consumer and enterprise data policies are in the queue. Indeed, Global News Canada reports that Canada’s privacy commissioner recently urged lawmakers to adopt more stringent data privacy regulations, especially in finance. This is expected to prompt a new wave of compliance duties for Insurtech companies next year – giving more space for Regtech integration.
Reorganization and federal involvement
While Insurtech is driving the growth in the insurance industry, it’s also creating a more competitive environment. University of Calgary’s Haskayne School of Business professor Anne Kleffner notes in a study that Canada should have federal involvement to help the insurance industry mitigate systemic risks. Disruptive technologies have always made ripples of uncertainty in markets, and insurance isn’t an exception. Calls for greater protection are expected to increase next year as the industry continues to grow.
The rise of Insurtech continues to spur consolidation in the industry. A Clyde and Co report on the industry consolidation notes that mergers and acquisitions (M&A) activity in Canada has reached record levels and will continue to increase next year. Behind this is the voracious adoption of larger insurance providers of emerging technologies by acquiring promising Insurtech firms. However, M&A activities next year are expected to be more strategic and customer-focused.
By guest writer Jaja Brazil