Fintech platform revenues derived from supporting the insurance industry (Insurtech) will reach almost $235 billion globally by 2021, that's up by 34 percent y-o-y from an estimated $175 billion this year, according to the latest market study by Juniper Research.
Growth will be driven by a combination of factors, including:
- Machine Learning investments enabling insurance providers to personalise products;
- Insurers deploying mobile apps to improve their customer experience;
- Investments in blockchain technologies to underpin smart contracts.
Fintech Market Development Trends
The new worldwide market study uncovered that the value chain within the insurance market is transforming rapidly. According to Juniper analysts, this will drive traditional insurance providers to improve their offerings and customer service, thereby reducing the impact of competition from fintech suppliers -- particularly in the automobile sector.
Moreover, investments in machine learning have enabled providers of car insurance to more accurately reflect usage and driving behavior in their quotes. As machine learning enables insurers to segment drivers into risk groups, the technology will then be used more widely -- i.e. to deliver quotes for household contents insurance, by precisely reflecting the value of applicant possessions.
Juniper also predicts that blockchain will accelerate insurer ability to personalize products with smart contracts and/or smart policies adapting automatically to the changing circumstances of their customers.
However, the research cautioned that while telematics is an innovative means of collecting risk assessment data, many consumers may regard the sharing of information on their driving habits and destinations as intrusive.
"Insurers need to be transparent with regards to how they use customer data. While consumers need to accept that in order to receive tailored polices that they will come under greater scrutiny. The prospect of saving money will be the overriding priority for the majority of consumers," said Michael Larner, analyst at Juniper Research.