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Insurtech, the slow revolution without digital samples

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Up until now we have seen only a few glimpses of the much announced and promised disruption of insurtech on the insurance sector. Despite sustained growth, digital insurance queens are still struggling to scale the market and gain considerable stakes, also because in the meantime the more traditional companies have certainly not been standing by. This does not mean however that the hi-tech street is not tracked, as demonstrated by exceeding pre-Covid 19 levels in terms of investment in insurtech.

The latest edition ofInsurtech Global Outlook 2021 elaborated by Ntt Data it seems to dilute the euphoria that in recent years has accompanied the advance of the so-called “insurtech”, ie the integration of technology in insurance processes. At the same time, the surveys of investments in startups and digital scaleups of the insurance sector, and in particular the focus on the more mature and consolidated realities, reinforce the idea that the dam that so far has prevented the avalanche is increasingly creaking, if not close. to the collapse. In any case, the fact is that between artificial intelligence, the Internet of Things, the cloud and big data, the insurance sector as a whole is changing its skin and becoming more and more data-driven, that is, driven by data.

“We are witnessing an increasing attention to Insurtech as a push towards an increasingly strong digitalization of the processes and services of insurance companies, also and especially from an ecosystem perspective by innovating the proposal of products and services to its customer base . A direction that is undergoing a further acceleration due to the current health emergency linked to the spread of Covid 19 ”, he underlines Sergio Dizza, head of Insurance at Ntt Data Italia.

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Insurtech companies have experienced yet another record year, despite the direct and indirect effects of the pandemic. Not only were they able to overcome the uncertainty generated by the economic-health emergency, but they also managed to pass pre-Covid 19 levels. In fact, in 2020, insurtech attracted investments globally for 7 billion dollars (The calculation also includes companies listed on the stock exchange during the year such as Lemonade and Root, valued at 1 billion dollars). Yet, at least so far, digital pioneers have failed to increase their market share more than a paltry 0.1-0.2%. In any case, Ntt Data analysts note, this is a key moment to establish itself on the market and demonstrate the famous potential for disruptive business models.

Meanwhile, the pandemic has changed consumption patterns, shifting the balance also in the insurance sector. Under the pressure of the growing demand for customization, there has been an acceleration of new models: the models of pay-per-use, telemedicine, diagnostic tools and the digitalization of distribution. And in the same period, with investments and new market entries, brokerage platforms and cyber-insurance have taken hold. The pandemic crisis has not prevented insurance companies from continuing their digitization path, confirming that the companies’ vision on the value of digital transformation and on innovation in general remains more than valid.

The same companies have been drivers of investments in startups and insurtech: in fact, almost 1.6 billion dollars have reached the start-up coffers paid out by companies (+ 61% compared to 2019), with 445 million dollars directed to startups specialized in insurtech. It is interesting to note that insurance companies have concentrated most of their capitalisations in startups in the growth phase, with an average of 23 million per round in 2020. Therefore already solid and mature enough companies that in most cases are pushing the transition of the insurance sector from protection to prevention.

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“Our research highlights the start of a new phase in investment strategies in the insurtech sector – he highlights Stefano D’Ellena, head of Insurance of Everis Italia, the company of the Japanese group that deals with consulting and outsourcing – In particular, insurers, venture capitalists and Big Tech have concentrated their capital in mature startups, more suitable to complement and immediately push the insurance business in high potential areas, such as ‘health and wellness area. Companies see insurtech as a concrete way to start exponential growth, typical of digital disruption. It is therefore essential to define a synergistic strategy between ordinary growth and innovation and digital transformation programs “.

In this phase of general transition, technology is naturally the master. Insurance companies and startups are taking advantage the integration between big data and artificial intelligence to reduce and manage claims costs, helping customers to prevent unwanted events. And they are also riding the growth of connected devices, from car black boxes to wearables for health, passing through leak and flood detectors at home, or even parametric policies for transport and special risks in the commercial segment.

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