Why is the Demand for Insurtech on a rise?
The insurance technology industry brings exciting opportunities by innovating and taking risks in comparison with the traditional modes. Due to the use of the changing dynamics of the market, the increase in its growth rate becomes even more inevitable. It is even stated that India has a total of 142 insurance startups that are technology-based according to Technologies.
According to the Global Insurance Tech survey, the market size of the sector in 2020 is estimated to be $ 9, 415.28 Million and will reach $ 1,58, 994.52 Million by the year 2030 with the Compound Annual Growth Rate (CAGR) of 32%. Let's dive in further to understand why there is a high demand for the Insurtech industry.
Reasons for Increasing Demand for Insurtech:
For its convenient application and services, its demand has been estimated to be increasing. Let's go through some of the most crucial factors that play a huge role in the growing demand for Insurance Tech:
1. Swift Digitalization of a Company's Models
Insurtech has started disturbing one of the extremely conservative industries (the insurance sector) globally. This has also been noted by Accenture which estimated in 2020 that about 86% of insurance firms were aiming at developing and innovating their prevailing business models to increase the insurance demands and further maintain their competitive profile.
2. Potential of the Rising Economies
Evolving economies offer noteworthy opportunities for the Insurance Tech solutions supplier to extend their providing as many insurance companies are adopting newer business models. Additionally, demand for customized and niche insurance keeps rising which accelerates the adoption of insurance tech among most insurance firms.
3. The Pandemic Impact
The pandemic had a positive influence on the insurance tech sector as the necessity of insurance covers took a turn to tremendously rise among the public. The number of policy sales skyrocketed as the customers availed of several insurance covers which ranged from home insurance, personal insurance, health insurance, and so on. Covid-19 acted as a predominant driving force in the mass to safeguard themselves against uncertain times. According to the survey revealed by Max Bupa Health Insurance, only 10% of Indians were interested in getting health coverage pre-Covid. However, that figure took a drastic spike post-Covid when 71% considered health coverage as a necessity.
4. Other Key Variables
The usage of technologies such as cloud computing, blockchain, and artificial intelligence to aid with loss prevention and predicting, claim to process, and risk monitoring has become crucial factors that offer competitive opportunities for the growth of the insurtech market.
For instance, the revenue share of the cloud computing segment in the market was over 24% in 2021. A transformation has been noticed with the use of cloud computing in the insurance technology sector owing to its resourcefulness, deployment ease, and flexibility.
The need to boost digital infrastructure to tap into its benefits also gives rise to the global Insurance Tech market. As per the survey conducted by EIS Group, 59% of Insurance, organizations want to expand their digital infrastructure expenditure.
Market Outlook of the Insurtech Sector:
Insurance distribution tech is rising with the sustenance of several robust technologies. The predicted Insurance Tech market growth from 2022 to 2032 is as follows:
Global Market Value
$ 16.6 Billion
$ 165.4 Billion
Roadblock to Growth - The Current Regulatory and Legal Framework:
Various laws that monitor the insurtech standards are different across countries. For insurance technology companies, it becomes a pivotal factor to illustrate different ways out across the manifold regulations. For example, GDPR, MiFID II, and many such rules which bring forward an inter-regulation dispute badly hinder the rise of the insurance tech market. The current legal framework set to regulate the industry restricts the potential growth as expected by experts.
The Bottom Line:
Elevated customer experience has resulted to be pivotal for the growth of this industry. It even provides the requirements of the current hour which are quick responses, personalized products, and transparent transactions. To fulfil all such needs in the longer run, a reliable sector like insurance Tech can always prove to be a great companion in aiding the insurance firms to pace up with the changing needs of the customers. Given the favourable conditions and facilities provided, it is inevitable that there will be an increase in the demand for insurtech in the present and as well as in the coming years.