The fourth industrial revolution is data driven and is here affecting our daily lives and inevitably the insurance industry.
Indicatively and according to the latest KPMG Venture Pulse report, total venture capital investment in the insurance industry is expected to exceed US$ 1,5 billion in 2018, compared with US$ 0,4 billion invested in 2014, marking the biggest percentage increase compared to other fintech industries. It is important to note that venture capital investments are often a window of what we are about to see in a particular industry in the coming years.
The investment interest in the insurance industry, as demonstrated in KPMG's “Pulse of Fintech” report for the first half of 2018, has experienced a huge increase, with massive investment (“mega”) rounds worth over US$ 100 million; for example, investments in Oscar and Lemonade. Particular emphasis is placed on integrating and improving customer experience, by offering on demand holistic customer centric package; as an example, the collaboration of AXA and ING. In addition, the early stage of insurtech investment in Asia is observed with great interest. It is expected that in the coming years more emphasis will be placed in this industry and important technological solutions will be produced there (Asia is already at the forefront of fintech solutions today, absorbing a substantial portion of investment).
It is clear that insurtech leads the insurance industry towards innovation, disrupting the traditional models with penetration and cross-wide application, across a wide range of companies and chains. The debate should not be whether technology will bring significant value to the chain but how should an insurance company assess its particular model and characteristics and decide how to take advantage of cutting edge and innovative technological solutions. At first, insurance companies need to assess the following:
Collaboration with the right partners: Although several innovative companies developing insurtech solutions are looking to disrupt the current model, the most effective model is the one that combines the old with the new. The most successful start-ups are those who have achieved a “cohabitation” with already-established insurance companies. For a start-up company in the industry, the first step towards efficiency is to be able to properly identify and define the problems and gaps in a coherent and innovative manner, in order to follow a properly-structured development of integrated solutions that add value to the industry.
Particular emphasis is placed on Blockchain technology, since we believe it will play an important and disruptive role across the insurance coverage chain. From “know your client” to managing and paying claims, the application breadth of this new technology is expanding day by day. Undoubtedly, an important field that Blockchain is already applied upon is “smart contracts”, which ensure the automation of the application and the payment of contracts and requirements, as well as the exchange of information with all parties involved. Fields of Blockchain application in the insurance industry include: life and travel insurance, personal accident insurance, insurance claims management, reinsurance requirements and management of various files.
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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.