Five InsurTech trends to watch next year
InsurTech goes Cyber
As the threat of cyberattacks increases every year, the cost of data breaches until 2022 is estimated to reach $8 trillion, according to Juniper research. At the same time, cyber insurance will become more important. Given that there’s still not a large amount of data available, pricing cyber risks remains challenging. Furthermore, once priced, the exposure is still very much dependent on an organisations’ employees. Sander Verloop, Risk Engineer at HDI Risk Consulting, figures that “60 to 90 per cent of the incidents are based on human error,” which makes prevention and employee training a key component of cyber cover. Hence, we believe that start-ups which focus on the cyber threat will move into the limelight in 2019.
The key areas are:
- cyber risk modelling
- corporate cyber threat detection
- mitigation strategies
- specialised SME offerings
If you want to stay up to date on cybersecurity in general, follow Troels Oerting, who is the Head of the Global Centre for Cybersecurity, at the World Economic Forum.
5G is just around the bend
The 5th generation wireless (5G) network is probably one of the most underrated technological advances when it comes to its potential effect on the insurance industry. 5G implementation is supposed to start in 2019, but will very likely extend well into 2020 and beyond. Why should you care? The increase in data transmission speed will be incredible, with some estimating a 10 to 20+ fold increase. This will have a massive impact on IoT applications across all industries, as devices will be able to communicate in real time and concepts like autonomous driving and telematics motor insurance will be enabled to reach their full potential.
Check out this primer by PCMag to dive deeper on 5G technology.
Robotic process automation (RPA) in insurance
Insurance is a business which depends on efficient processes. Automating processes by implementing an RPA-based approach can have a huge effect on organizations. The big difference between traditional workflow optimisation and RPA lies in the way these improvements are implemented. In essence, RPA is based on machine learning concepts, whereby improvements in workflows are developed by a machine, which initially learns from a human performing the particular task. RPA has the potential to increase the overall operational effectiveness of a company and decrease error sources in workflows by a large margin – PwC estimates that “45 per cent of work activities can be automated,” and efficiency gains can reach 60 percent or more.
To find out more about the impact of RPA, check out this interview with Leslie Willcocks, who is a professor of technology, work, and globalisation at the London School of Economics.
Cooperation between incumbents and InsurTechs
As start-ups struggle to leverage their innovations due to limited access to distribution networks, insurance know-how and resources, partnerships will continue to be the norm. To that end, start-up accelerator programmes can prove to be an excellent breeding ground for successful cooperations. One of the most successful ones is InsurTech London by startupbootcamp, which is supported by 26 insurers, including HDI and Talanx, as well as large players from the tech field, such as Amazon Web Services and Cisco. The accelerator programme has brought together a total of 607 start-ups across many sectors and has raised a total of €424 million. We are looking forward to more successful deals and cooperations in 2019.
Check out the startupbootcamp blog, which has many excellent articles about the newest developments in its InsurTech ecosystem.
Insurance moves to the cloud
In order to fully utilise big data, A.I. and machine learning technologies, insurers require a lot of server space and an agile IT framework which allows for speedy execution. However, this can be limited by organisations’ not being able to move workflows (especially regulated ones) into the cloud. As more and more insurers are starting to drive back their legacy mainframe systems and increasingly opt for cloud-based solutions, the big question will be how regulatory obstacles can be overcome. It’s a big challenge (think GDPR and data security). Hence, how technology start-ups, big tech, insurers and regulators will tackle this issue, will become a key development to watch for in 2019.
If you need a primer on cloud computing, check out this extensive eBook by Talanx on the subject or, if you want to understand the potential effect of cloud computing on the insurance industry, check out this report by Accenture.