Investors betting on AI and IoT insuretech startups
26 July 2017
Almost 50 per cent of insuretech startup revenue being invested in AI and IoT technology.
Almost half of the total investment for insurance technology (insuretech) start-ups globally is being directed at firms developing products related to artificial intelligence (AI) or the internet of things (IoT), research has showed.
The report, undertaken by Accenture, analysed CB Insight data on 450 insuretech deals over the past three years, and found that the combined number of deals across AI (including automation) and the IoT (including connected insurance) increased by 79 per cent in 2016.
Even though the two technologies represented only a quarter (24 per cent) of the 216 insuretech deals globally last year, they accounted for 44 per cent – or $711million – of total insuretech investment — compared with just 10 per cent of global insuretech investment in 2015.
According to the report, the insurance industry views AI and the IoT as critical to delivering increased levels of personalisation and better real-world outcomes for customers.
Artificial intelligence has the potential to transform the insurance industry in many ways, from simply assessing risk based on past experience to monitoring risks in real time and mitigating, or even preventing, losses for customers.
The IoT will enable insurers to offer more personalised real-time services, boost operational efficiency and price their products with greater precision.
Despite the political and economic uncertainty around the UK’s vote to leave the EU, the country continued to attract strong insuretech investment in 2016. Although the number of insuretech deals in the UK remained flat, the value of the investments there more than doubled last year, to almost US$19million. Investment in AI and the IoT also increased significantly, to almost US$1.7million in total.
Germany and France also saw strong growth in investment in 2016 to round out the top three insuretech markets in Europe. With insuretech’s investment expanding globally, the US share of deal volume in 2016 dropped slightly, from 63 to 56 per cent of total deals. The percentage of insuretech investment for the rest of the world (deals outside the traditional hubs) more than doubled, from 11 per cent in 2015 to 23 per cent in 2016.