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:

1. Definition and clarification of current problems: which problems are important to be solved? This will solely depend on each company, but the first step is to establish a customer-centric approach, offering a unique customer experience journey, while making sure the main challenges are identified.
   
   
2. Identify insurtech opportunities: the process may involve either identifying current technological solutions or even setting up a technology lab. Based on real problems and large data sets to be processed, as well as taking advantage of the relevant algorithms using artificial intelligence and machine learning, this lab will engage in the development of innovative solutions. Relevant examples are those of Allianz and Metlife.
   
   
3. Address integration challenges: Although 95% of senior executives, according to a relevant KPMG survey, recognise the importance of innovation, only 45% believe that their organisation follows and applies an innovative philosophy. Hence, insurance companies must assess how this technological transformation can be achieved. This is not only about which innovative solutions and related technological infrastructures can be taken into account, but also about how human capital can realistically respond.

    

4. 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.