A new report by consultancy firm Accenture claims that artificial intelligence (AI) and the internet of things (IoT) accounted for almost half of total investment in insurtech startups globally in 2016.
Accenture’s report, titled 'The Rise of InsurTech', includes data on 450 insurtech deals over the last three years.
According to the report the combined number of deals across AI (including automation) and the IoT (including connected insurance) increased 79 percent in 2016. Despite the fact that the two technologies made up barely a quarter (24 percent) of the 216 insurtech deals globally last year, they accounted for 44 percent or $711 million of total insurtech investment – compared with just 10 percent of global insurtech investment in 2015.
"We’ve seen a rapid acceleration of investment into and deal activity around intelligent automation and IoT start-ups over the last 12 months," said Roy Jubraj, a co-author of the report and Accenture’s Digital & Innovation lead in the company’s Financial Services practice in the UK and Ireland. "These technologies are primed to disrupt the industry in the years to come."
The insurance industry views AI and the IoT as critical to delivering increased levels of personalization and better real-world outcomes for customers, according to the report.
It points out that artificial intelligence has the potential to transform the insurance industry from simply assessing risk based on past experience to monitoring risks in real-time and mitigating, or even preventing, losses for customers. The IoT will enable insurers to offer more-personalized, real-time service; boost operational efficiency; and price their products with greater precision.
According to the report, the UK continued to attract strong insurtech investment in 2016 despite the political and economic uncertainty around the 2016 vote to leave the European Union. Even though the number of insurtech deals in the UK remained flat, the value of the investments there more than doubled last year, to almost $19 million. Investment in AI and the IoT also increased significantly, to almost $1.7 million in total.
Germany and France also saw strong growth in investment in 2016 to round out the top three insurtech markets in Europe. With insurtech’s investment expanding globally, the United States’ share of deal volume in 2016 dropped slightly, from 63 to 56 percent of total deals. The percentage of insurtech investment for the rest of the world (deals outside the traditional hubs) more than doubled, from 11 percent in 2015 to 23 percent in 2016.
Accenture, Artificial Intelligence, Internet of Things, Insurtech, Funding, M&A, Europe, North America, Roy Jubraj