CommerzVentures, the fintech venture capital fund of Commerzbank, has released a white paper highlighting the key technologies which it believes will transform the insurance industry.
Aimed at providing insights into their potential uses in the insurance sector, CommerzVentures’ ‘Emerging Technologies Transforming the $4tn Insurance Industry’ paper explores how the insurance chain value will be transformed by technological innovations.
Innovations such as artificial intelligence, connected devices, drones, blockchain tech, among others, are enabling new value propositions and distribution methods, the firm says. Effectively cooperating with startups may be the only way for incumbent insurers to fend off potential competitors such as Google, Amazon, Facebook and other non-traditional players, it argues.
Generating over US$4 billion in global revenue, insurance is one of the two major sectors within fintech and the largest long-term opportunity, and yet insurtech companies have received 12 times less funding than bankingtech.
CommerzVentures believes that there are four generic opportunities for insurtech, the first one being new, tech-enabled products and business models; the second being technologies to reduce risk/number of claims; followed by innovative distribution channels; and finally lower cost of claims processing.
According to the firm, the five cutting-edge technologies that are transforming the insurance industry are:
Artificial intelligence, or systems that can autonomously adapt to information and their environment. These systems can analyze vast amount of data from disparate systems through self-learning algorithms.
Connected devices such as wearables, smartphones, cars, household applications, collect personalized data that allow analytics and informed decision making.
Drones allow efficient oversight of individual objects or large areas from a distance.
New payments enable quick mobile payments or money transfers without traditional banking.
Blockchain technology allows data to be automatically validated and kept safe from alternation or tampering.
According to CommerzVentures, incumbent insurers, big tech companies, non-obvious entrants and startups will shape insurance in different degrees.
While incumbents have recognized the potential of technology, they are limited in their innovative scope and are likely to require partners for innovation. Startups are best positioned to drive innovation, and either be enablers for incumbents or disrupt individual parts of the value chain.
CommerzVentures predicts that telcos, vertical entrants and other financial service providers will gain important. Although direct full scale entry is unlikely, limited-scope involvement is probable for all of them.
Similarly, big tech companies such as Google, Facebook, Apple and Amazon, are unlikely to enter insurance on a large scale. Instead, they will form partnerships to create more accurate risk models, the firm says.
Read CommerzVentures’ ‘Emerging Technologies Transforming the $4tn Insurance Industry’ white paper: http://de.slideshare.net/JenniferLanger/commerzventures-white-paper-on-insurancetech
