As of November 2018, insurtech startups have seen their global fundraising reach an all-time high in terms of volumes. While 2017 saw 202 deals done, the total number of deals in 2018 has so far surpassed 214, with an estimated worth of $2.6 billion.
Innovative companies in the industry are challenging the popularity of their more traditional counterparts, something that can be attributed to the application of newer technologies that are quickly making them capture a growing value pool.
A good example of an insurance colossus that is ahead in the use of technology to innovate its products is the Zurich International which has so far made the acquisitions of Bright Box and its vehicle AI technology subsidiary, Remoto. The Zurich insurance company aims to use the data gathered from all the AI technology infused into their cars to develop more personalized insurance products to its customers.
With continued advancements in Artificial Intelligence (AI), improved machine learning and the continued uptake of robotic advisory in the insurance world, some traditional insurance companies have been taking advantage while some still opt to stick to their older routines. It is a usual case of opting to keep things traditional and familiar until someone else tries and truly succeeds. A lot of the activity seems to be coming from newer insurance models such as the micro-insurance and the peer-to-peer insurance services. These later models thrive on technology innovation that has so far been seen to lower the costs of doing their business.
Mutual benefits between traditional and tech-savvy startups
As much as it is easy to argue that some of these advancements in insurance technology are long overdue, there are good reasons why some of the traditional companies have been reluctant to adapt. One apparent reason is that the industry is a highly regulated one; meaning that there is still a lot of red tape to go through especially where operational jurisdiction is concerned. The larger, more established companies in that sense shy away from shifting their models to collaborate with most of these fintech startups. After all, insurance is an industry that has thrived for centuries, with many incumbents looking to keep things as they are.
Many insurtech startups depend on traditional insurers in order to handle most of the underwriting to help mitigate catastrophic risk. There is an ecosystem of traditional insurance companies and newer insurtech startups that are capturing the interest of the consumers due to their more user-friendly and personalized approach to doing business. This ends up benefiting the traditional insurer too as people who were previously uninsured will make more signups.
The incumbents also prefer to invest in the startups and cash in on the trends instead of simply altering their existing stable environment.
Expect more entrants into the insurtech ecosystem Across the globe, many countries, both in the developed and developing worlds, are warming up to many of these emerging tech trends, with countries like Japan, US, and Australia emerging as global leaders in AI, blockchain, and insurtech. In Australia, for instance, this analytical report gives an in-depth analysis of how the country is embracing blockchain, with IBM’s recent $1 billion AUD award for blockchain-based projects showing the commitment from most of these countries.
And in the US, The Neluns Company announced earlier this month that it is launching a coin offering to capture the market segment that wants an all-in-one product that acts as a bank, insurance and crypto exchange. It aims to combine fiat, cryptocurrency and insurance thereby creating that environment that allows a constant inflow of new capital and more coin adoption. Many people had been avoiding cryptocurrencies for the fear that their money may “vanish” where complications arise.
Neluns (NLS) will operate a crypto-trading platform that can allow people to buy and sell using the bank-guarantee principle. Furthermore, the exchange will ensure that popular platforms like Metatrader 4, which is in use by over 750 institutions are incorporated through their APIs to ease buying and selling.
The new age insurance players take advantage of insurance technology to ensure that new subscribers get usage-based, personalized and readily available solutions to the insurance that they already are familiar with.
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