Almost half of global investment into InsurTech startups is now funnelled into AI and IoT, with UK firms continuing to attract strong investment despite Brexit uncertainty last year.
A report, written by Irish consultancy firm Accenture, analysed 450 InsurTech deals since 2014 and showed a 79% increase in deals last year across the AI and IoT sectors.
Investment in the two technologies accounted for 44% of global InsurTech investment last year (or $711m), despite only making up a quarter (24%) of the sector’s deals. This is up from just 10% of global InsurTech investment in 2015.
Despite concerns across the UK insurance industry over Britain’s vote to leave the European Union – with the Lloyd’s of London insurance market announcing a new Brussels base this week – the UK InsurTech industry still attracted significant investment last year, doubling to almost $19m (£15.2m).
According to the report, the InsurTech industry views AI and IoT as critical in delivering increased personalisation and customer convenience. AI in particular could transform the insurance industry, enabling insurers to base their risk assessments on real-time event monitoring rather than past experiences.
The report, titled ‘The Rise of InsurTech’, was released in conjunction with Accenture’s FinTech Innovation Lab, a London-based accelerator.
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“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, Accenture’s Digital and Innovation lead and co-author of the report. “These technologies are primed to disrupt the industry in the years to come.”
Germany and France also saw strong InsurTech investment in 2016, with the United States’ share of total InsurTech deals dropping slightly from 63 to 56%.
Julian Skan, senior managing director at Accenture’s Financial Services practice, which oversees the FinTech Innovation Lab, said that the expansion of InsurTech funding is “further evidence of the growing role that new technologies are playing in shaping innovation across financial services”.