Tech startups set to shake the traditional insurance market
The insurance industry has been around for over 300 years, but the rise of small, agile businesses employing new technology like AI is disrupting life for more established players.
A study from IT and consulting firm NTT DATA shows 'insurtech' startups have globally raised more than $11bn in the last three years, more than double previous years.
The fastest growing area of insurtech investment is AI-based startups, where $2.02 billion has been invested -- an increase of 665 percent. This is leading older companies to look at their use of technology too, with 93 percent of the London specialty insurance market saying that they're planning to increase their level of investment into technology in the near future.
The study of 100 leaders in the specialty insurance market finds 69 percent of respondents confirm that if they don't invest, they believe they'll be left behind in the technology stakes. Over half (53 percent) believe that their legacy systems are holding them back compared to legacy-free startups.
However, 66 percent of businesses report that they struggle with pushing ahead with modernization due to not being empowered to drive through change in these traditional companies. The biggest areas of investment by existing companies are in cloud at 64 percent, IoT at 53 percent, and AI at 51 percent.
The main challenges to execution include legacy technology (53 percent), inconsistent data (66 percent) and a lack of understanding on how to use that technology to advantage (48 percent).
"The research makes it clear that the London Markets understand the requirement of change and the majority have a vision and strategy in place to maximize on the opportunity the change agenda presents," says Kim Gray, head of insurance at NTT DATA UK. "However, having a strategy is one thing, but implementing it is quite another. The good news is, there are ways around these constraints, such as ensuring buy-in from all key stakeholders at all levels and managing for outcomes, not just activities. Moreover -- when it comes to executing to reach your vision -- rather than focusing on 'big concept' projects, The London Markets must focus on easy-to-implement solutions that target key business problems in an agile way. Continuous incremental change will get you where you need to be."
The full report is available from the NTT DATA site.