What is your prediction for the InsurTech space in 2030?

October 11, 2021

Change has accelerated after the pandemic, and we are seeing an interest in insurance technology like never before. Data from Willis Towers Watson shows that investment in InsurTech is increasing at pace. Total investment hit record highs in 2020 at US$7.1bn raised in 377 deals. It is clear that insurers are continuing to push digitisation and innovation and are working closely with InsurTechs. With this in mind, we asked our network of vendors, What is your prediction for the InsurTech space in 2030?

Three themes emerged.

Increased maturity of AI-driven propositions

Unsurprisingly, the most common prediction was that digital insurance technology – especially AI/ML tech and Big Data – will reach maturity. Somewhat more surprising was the extent of change predicted, with some InsurTechs predicting “wholesale adoption” (Reask) or even “front and centre” (Akur8). Almost all respondents mentioned AI.

Several vendors also pointed to emerging technologies such as augmented reality and blockchain as contenders that will ‘survive’ to become building blocks in future value chains.

“We believe that advanced analytics and AI will be front and center of the InsurTech scene in 2030.” – Akur8

“These insights [AI] will enable the industry to respond faster, and with greater confidence, to provide better risk transfer products adapted to individual needs within the market.” – Reask

“From machine-vision to extract information from satellite imagery to AI to create, assess, and understand massive datasets, today’s innovations will be tomorrow’s ‘table stakes’.” – Concirrus

“It is essential that the insurance industry makes a greater commitment to the latest technologies, with Artificial Intelligence at their core, as well as blockchain and augmented reality, to make the insured’s experience much more efficient and optimal.” – Bdeo

“We believe blockchain will become the foundation of all these interconnected systems, as a cryptographically-secured form of shared record-keeping, increasing cooperation between different data lakes – all of which we believe will cause positive industry-wide distribution.”  – Cooper Rose Digital

“This data [from IoT sources] would form part of a multifaceted live stream feed for insurers as a catastrophic event is unfolding – allowing them to update their exposure and claims systems as it happens.” – McKenzie Intelligence Services

Digital D2C

Secondly, there was a focus on what could broadly be categorised under ‘digital customer ecosystems’, although there was more divergence on how customers will be served, from embedded insurance, more digital D2C journeys, and ‘convergent dashboards’ (FintechOS). Only one respondent directly suggested that there would be further disintermediation (Getsafe).

“We believe that more insurance will be sold directly to consumers. Why? Because it has become easier for brands to connect directly with their customers…

Today’s consumers expect to be able to buy pretty much everything online, directly from the source. In insurance, this means cutting out the middleman – i.e., the agent or broker – and purchasing coverage directly from the insurance company.” – Getsafe

“Policyholders demand immediacy, direct treatment and a great deal of transparency. And to achieve this, insurers rely on InsurTechs that provide the latest tools and technologies that make this possible.” – Bdeo

“The buyers of insurance will expect a seamless, immediate and digital experience with their broker/insurer.” – Concirrus

“True collaborations will become more common, with an API driven approach, allowing a business to choose the best of breed in their eco-system architecture, to seamlessly integrate all the systems together.” – Cooper Rose Digital

“Perhaps with the help of open finance based identity providers, consumers will start to look for “convergent dashboards” where they can manage multiple insurance policies across more than one provider, and for multiple family members, securely in a single app…

By 2030 we would expect all of these areas to be strongly covered by both direct-to-consumer digital challengers and increasingly by the fintech/InsurTech ecosystem that makes such innovative areas more easily available…” – FintechOS

“New start-ups will increasingly take advantage of emerging open data standards to plug in across the ecosystem to offer new specific services across the market.” – DQPro

“Total market system integration and interoperability, allowing straight through processing for insurers, and that all of the above will ultimately lead to further improved accuracy and speed when it comes to assessing exposure and paying claims.” – McKenzie Intelligence Services

Changing market landscape

Several respondents pointed to macro environmental, generational and political changes. Their responses highlight how much can happen in only nine years. These macro trends can put technology changes in a new perspective. We have seen the impact of climate change this year in a series of global catastrophes, for example. If this is a taste of what is to come, it is easy to imagine climate change becoming the single biggest issue of the day by 2030. Similarly, generational change feels unerringly fast when one considers that current Gen Zs will be buying their first home, life and other insurance policies en masse by 2030.

“Overall, the biggest macro trend over the next eight years is that customers’ lifestyles and life circumstances will be more subject to change, changing many aspects about home, possessions, mobility, health, and expectations of financial services…

All incumbent financial brands should be examining how they remain not just competitive, but relevant in the face of multi-layered global change that goes beyond any one sector but affects everything.” – FintechOS

“There is also likely to be a favourable regulatory tailwind as the UK recovers from the self-inflicted impact of Brexit and creates a regulatory environment of its own for the benefit of its long-standing financial services markets.” – DQPro

“Regulatory themes of “treating customers fairly” and paying attention to “vulnerable customers” are merging with a broad realisation that digital design must be fit for purpose for all demographics and needs, not just rapid-adopters.” – FintechOS

“By 2030 InsurTech will make it possible for every insured property and business to protect their losses driven by climate change.” – Demex

But change in insurance is slow. Even Lemonade – the posterchild InsurTech – had only US$213m of in-force premiums at the end of 2020 despite having raised US$480m of investment. This should worry shareholders and management teams with a 5+ year horizon: change will creep up on the industry.  As the Covid crisis passes into history, the imperative for change might become weaker, but preparing for the future of insurance has never been more important.

Thank you to the above vendors for providing commentary for this article. Please see their full answers below.

Full vendor answers

“By 2030 the digitisation of the incumbent insurance sector will be at a mature level, including some use of AI/ML across the value chain which leads back to what the differentiator will be for companies and ultimately who succeeds. When insurance product, pricing and technology stop being that differentiator, brand will be the deciding factor. But you can’t switch that on overnight like a chatbot so investment needs to be made now, and many insurtechs are always way ahead in that space.”

– Bikmo

“Technology is evolving at such a rapid pace that for insurance what is either ‘unknown or unknowable’ about the risks that are written will become ‘known’. From machine-vision to extract information from satellite imagery to AI to create, assess, and understand massive datasets, today’s innovations will be tomorrow’s ‘table stakes’. The buyers of insurance will expect a seamless, immediate and digital experience with their broker / insurer. The InsurTech space will be continually creating new products and companies while at the same time we expect that today’s leaders will begin to consolidate a fragmented market”

– Andy Yeoman, Chief Executive and Co-founder of Concirrus

“One insurance trend for 2030 is the rise of direct to consumer insurance. We believe that more insurance will be sold directly to consumers. Why? Because it has become easier for brands to connect directly with their customers. We see this trend in travel, in retail, in finance and in many other areas. Today’s consumers expect to be able to buy pretty much everything online, directly from the source. In insurance, this means cutting out the middleman – i.e., the agent or broker – and purchasing coverage directly from the insurance company.”

– Christian Wiens, CEO and Co-Founder of Getsafe

“Policyholders demand immediacy, direct treatment and a great deal of transparency. And to achieve this, insurers rely on InsurTechs that provide the latest tools and technologies that make this possible in an agile way and contribute enormously to the digitisation of the sector. It is therefore essential that the insurance industry makes a greater commitment to the latest technologies, with Artificial Intelligence at their core, as well as blockchain and augmented reality, to make the insured’s experience much more efficient and optimal.”

– Ana Sánchez, Innovation Manager at Bdeo

“At Akur8, we believe that advanced analytics and AI will be front and center of the InsurTech scene in 2030. Many insurers and neo-insurers are already exploring the benefits of advanced analytics to improve their underwriting and rate making capabilities, yet we expect this trend to become mainstream.

Insurers that will create the most value are those that can scale the adoption of advanced analytics and AI across all underwriting and rate making processes and turn it into a sustainable competitive advantage against the rise of new competitors, such as the GAFAs looking to enter the insurance space.”

– Samuel Falmagne, Co-Founder and CEO at Akur8

“By 2030, we envisage the transfer of immense volumes of information, from constellations of autonomous sensors – both here on earth and in space – directly to the insurance industry. The natural conduit for this data will be via the wholesale adoption of artificial intelligence. These insights will enable the industry to respond faster, and with greater confidence, to provide better risk transfer products adapted to individual needs within the market.

With an endless supply of data, and cheap and abundant computational power, the restrictions on consuming this information will be the ability for organisations to extract value using artificial intelligence. The future leaders in the InsurTech space will be those organisations who can facilitate this transformation of raw data into insight using machines, a process which is already well underway today.”

– Nick Hassam, Chief Commercial Officer and Co-Founder of Reask

“The InsurTech sector is always evolving, and a core system needs the ability to be stable and agile, offering the business a value led approach to enhancements.

Our predictions are that ‘out-of-the-box’ systems will become obsolete, with the true value coming from bespoke, fully configurable software, which are built around the business, leveraging their USP and differentiators. Bespoke security, matching the organisations risk appetite will become an even more important element to systems builds, but to the regulatory, data protection and compliance become more robust.

True collaborations will become more common, with an API driven approach, allowing a business to choose the best of breed in their eco-system architecture, to seamlessly integrate all the systems together. We are also firm believer that machine learning and artificial intelligence driven underwriting, will become more and more prominent, and a sector we are actively working on.

Our final 2030 future InsurTech claim is we believe blockchain will become the foundation of all these interconnected systems, as cryptographically-secured form of shared record-keeping, increasing cooperation between different data lakes, all of which we believe will cause positive industry wide distribution, will ultimately benefit the end customers as well as the capacity providers, offering them better performing books of business, correct risk coverage and simple policy management.”

– Daniel Longhi, Managing Director at Cooper Rose Digital

“Specialty insurance is one of the last markets to fully embrace digitisation as a key business enabler but that will undoubtedly have changed by 2030. Stubborn pockets are likely to remain but I predict that much of the core placing process will finally be digital in the not too distant future.

New start-ups will increasingly take advantage of emerging open data standards to plug in across the ecosystem to offer new specific services across the market. Increasingly, these specialist vendors will be acquired as large software providers look to increase their ownership share of the new digital value chain.

The London market will continue to adapt and evolve but private enterprise will start to drive – rather than lag – change because of the potential prize ahead. As always, change will not be uniform – a small but powerful group of early adopters will lead the charge and when a tipping point is reached, laggard carriers who have underinvested for years will struggle to catch up.

Furthermore, there is also likely to be a favourable regulatory tail wind as the UK recovers from the self-inflicted impact of Brexit and creates a regulatory environment of its own for the benefit of its long-standing financial services markets.”

– Nick Mair, Co-Founder of DQPro

“By 2030 … InsurTech will make it possible for every insured property and business protect their losses driven by climate change.”

– Demex 

“InsurTech will continue to offer more established players in the insurance industry an advance look at emerging themes which will become mainstream faster than many expect. We have already seen this happening with digital distribution and apps in general, as well as the ongoing mainstreaming of once-speculative ideas such as wearables feeding into personal health data, and advanced sensors in cars (and company fleets) making possible more cost-effective levels of cover for safe drivers.

Rapidly emerging tech themes of particular interest in the near term include:

• Embedded finance: not only “when and where” can insurance be most relevantly added to ecommerce and other digital journeys but “what” cover can be offered that is more personalised to the buyer based on secure access to data to enhance the context of automated offers.
• Accessibility: regulatory themes of “treating customers fairly” and paying attention to “vulnerable customers” are merging with a broad realisation that digital design must be fit for purpose for all demographics and needs, not just rapid-adopters.
• Digital identity: both insurer and consumer stand to gain from faster and more trustworthy registration and onboarding, and as this area gains traction – perhaps with the help of open finance based identity providers – consumers will start to look for “convergent dashboards” where they can manage multiple insurance policies across more than one provider, and for multiple family members, securely in a single app.

By 2030 we would expect all of these areas to be strongly covered by both direct-to-consumer digital challengers and increasingly by the fintech/insurtech ecosystem that makes such innovative areas more easily available as readymade software and tooling for larger and more established providers to work with.

Overall, the biggest macro trend over the next eight years is that customers’ lifestyles and life circumstances will be more subject to change, changing many aspects about home, possessions, mobility, health, and expectations of financial services. The pandemic’s effects will be lasting but could be small in comparison to impact on people’s lives from climate change, disrupted global politics, and economic inequalities. Just as an unexpected 2+ years of primarily home-located “lockdown” work forced most industries to make rapid changes in digital service delivery and altered consumer spending patterns overnight, longer term shifts in generational outlook and society – while slower-acting – will create just as dramatic shifts in the market. All incumbent financial brands should be examining how they remain not just competitive, but relevant in the face of multi-layered global change that goes beyond any one sector but affects everything.”

– FintechOS

“To my mind we will continue to see an exponential increase in the use of smart technology in exposure and claims management – data from IoT sources like sensors in homes will feed directly into insurers’ systems, augmented with global event observer data from geospatial sources like satellites and drones. Ideally this data would form part of a multifaceted live stream feed for insurers as a catastrophic event is unfolding – allowing them to update their exposure and claims systems as it happens.

I also think we will see a much more nuanced use of parametric insurance products in line with these increased data sources. So I can imagine an instance where if an IoT product senses a certain level of water in the basement of a property, for instance, it automatically notifies the policyholder and triggers a claims payout – even before the property owner is aware there has been a breach.

I’m hoping that this will go hand in hand with total market system integration and interoperability, allowing straight through processing for insurers, and that all of the above will ultimately lead to further improved accuracy and speed when it comes to assessing exposure and paying claims.”

– Forbes McKenzie, Founder of McKenzie Intelligence Services