Investment in insurtech is booming globally, with the UK establishing itself as the European capital and the customer claims experience attracting significant innovation, Accenture has reported.
Accenture’s latest research into insurtech investment reported a 39% increase in deals globally last year, worth approximately £1.63 billion.
The UK is continuing its emergence as Europe’s insurtech capital, with 41 deals in 2017, representing total growth of 117% over the last two years. Deal values vastly increased in 2017, with around £257 million invested in UK-based insurtechs, up from £13.4 million the year before.
“The insurtech industry’s rapid growth reflects investors’ response to consumer appetite for change in an industry sitting on trapped value,” said Roy Jubraj, UK and Ireland insurance strategy and innovation lead at Accenture.
“At the same time, however, insurers must recognise that insurtech investments alone can’t deliver the levels of change and innovation the industry requires or that its customers expect. The key is having an enterprise-wide innovation strategy that transforms the core business and enables the company to drive growth.”
Marketing and distribution led all areas in terms of insurtech investment, accounting for more than half (53%) of deals globally. This is evident in the number of start-ups pitching slick, app-based sales and distribution experiences, according to Accenture, as well as those improving the customer claims journey through mobile photo-evidencing or chatbot first notification of loss.
Accenture’s research revealed that property and casualty was the most popular insurance segment for insurtech investments in 2017, accounting for 42% of global investments, with multiline (26%) and health (18%) rounding out the top three.
Personal lines accounted for more than two-thirds (68%) of insurtech investments, with commercial lines and mixed applications accounting for 26% and 6%, respectively.
Traditional insurers are quickly getting behind emerging technology companies, as the percentage of traditional insurers’ participating in venture capital investments was up 63 percent over the last five years. The most common areas for these investments were health and digital health (14 percent of such investments), the internet of things (13 percent), and big data and analytics (9 percent).
“Insurtech is no longer just a target for private equity and venture capital—it’s a global phenomenon,” said Michael Costonis, who leads Accenture’s insurance practice globally.
“Insurers are playing a big role in helping reshape the technology landscape across the industry, making investments beyond wearables and telematics to seize the opportunity that exists within distribution to strengthen the customer experience. The next step for insurers is to use insurtech as a springboard to innovate across their entire organisation. After all, $2.3 billion is a small slice of the pie when you consider that insurance is a $4.2 trillion industry.”