What's Happening?
Gallagher Re has released a report indicating that global investment in insurtech firms has exceeded £45bn ($60bn) since 2012. The report highlights a significant increase in funding directed towards artificial intelligence (AI) based insurtechs, with £11bn ($15bn) allocated to AI-focused propositions. In the latest quarter, 57.1% of insurtech funding was awarded to AI-centered companies. Despite some skepticism within the insurance industry regarding AI's impact, Gallagher Re's global head of insurtech, Andrew Johnson, emphasizes the importance of utilizing AI to remain relevant. The UK ranks third in insurtech investment, trailing only the US and France.
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Why It's Important?
The surge in insurtech investment, particularly in AI, reflects a transformative shift in the insurance industry. AI's integration into core processes such as risk assessment, pricing, and claims management is expected to provide a competitive edge for property reinsurers. This technological adoption is crucial for the industry to manage increasing threats from catastrophes, contributing to a more stable market. The focus on AI signifies a reshaping of risk transfer, potentially enhancing the industry's ability to support communities and economies in adversity.
What's Next?
As insurtech investment continues to grow, companies are likely to further explore AI's capabilities to improve efficiency and competitiveness. The insurance industry may see increased collaboration between insurtechs and traditional insurers to leverage AI for better risk management. Stakeholders will need to address skepticism and demonstrate AI's practical benefits to ensure widespread adoption.
