A new study and whitepaper contends that Insurtech will represent 7% of the Global Insurance Market by 2023
Insurtech premiums will rise exponentially over the next five years from the estimated $187 billion generated in 2018 to more than $400 billion by 2023. That is the main prediction made in a new whitepaper from Juniper Research entitled: “Why Insurers Must Invest in Insurtech.”
According to an excerpted portion of the report, insurtech platforms will be the ones to equip insurers to meet the challenges of diminishing margins and increased competition, rather than disrupting or replacing them. The main problem with this development, however, is not the rapid transformation of traditional insurance models by insurtechs, but rather the overall slow rates of innovation by insurers and the industry as a whole. As a result, the survey projects that the insurtech sector will represent just under 10% of the global insurance market by 2023.
However, while insurtech enables rapid transformation of traditional insurance business models, the adoption of these platforms by incumbents has been limited due to relatively slow rates of innovation within the industry. Consequently, Juniper forecasts that this new sector will represent under 10% of the global insurance market by 2023, compared to approximately 4% in 2018.
AI Claims Management to Drive Cost Savings
As for the importance of AI, Juniper Research says that while still in early days, AI has the capability to bring the most change within the insurance sphere. In particular, AI’s introduction into the claims process will ultimately generate significant cost savings for all major lines of insurance with the research firm forecasting that across property, health, life and motor insurance, the annual cost savings will see a five-fold increase from 2018 to exceed $1.2 billion by 2023.