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Monday, August 26, 2019

Artificial Intelligence will Transform the Insurance Sector

Historically, the traditional insurance sector has been reluctant to change established methods. However, the relationship between insurance companies and technology vendors has evolved, as emerging Insurtech offerings disrupt the legacy insurer business model.

The overall insurance market is experiencing significant upheaval, as new technology-enabled solutions impact the prior status quo. As an example, the use of price comparison websites is commonplace and other forms of customer-facing online services are widespread.

However, the internal processes of loss notification, claims management and underwriting have not changed much from those used by insurers many decades ago. Therefore, savvy Insurtech vendors can help to revolutionize outmoded methods and introduce new ideas to the insurance marketplace.

Insurtech Market Development

That said, traditional insurers are now becoming increasingly involved within the Insurtech space, through direct investments and strategic partnerships with startup technology companies.

According to the latest worldwide market study by Juniper Research, the value of artificial intelligence (AI) underwritten insurance premiums will exceed $20 billion by 2024 -- that's up from an estimated $1.3 billion in 2019.

This growth of new AI use cases and software application development will be driven by streamlined underwriting processes, faster customer onboarding and reductions in operational costs.

Moreover, efficiencies in underwriting will be enabled by increased use of telematics and internet of things (IoT) management tools in the automotive, home, life and health insurance sectors.

Insurer's increased access to operational and customer behavioral data will enable enhanced data analysis capabilities, thereby allowing insurers to guard against the potential of evolving risks.


Juniper analysts anticipate that global revenues from telematics will grow from $1.2 billion in 2019 to $5.4 billion by 2024. They forecast that this growth will be driven by increasing support from automotive OEMs, as part of wider 'connected car' strategies.

As the global market evolves, increasing vehicle numbers in the Far East and China regions will drive telematics applications growth, increasing its revenue share from 15 percent in 2019 to 33 percent in 2024.

The research forecasts that industry cost-savings from AI will grow from an estimated $340 million in 2019 to $2.3 billion by 2024, as insurers exploit efficiencies achieved through the automation of resource-intensive tasks.

Juniper predicts that the automotive insurance industry will likely have the largest cost-savings benefit -- accounting for over 60 percent of total savings globally by 2024, enabled by the adoption of AI-based Insurtech premiums and several startup vendors applying AI to great effect.

Outlook for Vertical Sub-Sector Apps Growth

Additionally, the analysts identified the traditional healthcare market as a sub-sector primed for disruption and recommend that health insurers employ AI applications as an effective way to reduce their high operating costs and enable more competitive pricing.

Juniper also anticipates that advances in Natural Language Processing (NLP) will enable insurers to leverage the abundance of existing unstructured data, essentially allowing them to create new value from big data sources. This innovation should result in even more streamlined business processes.