The CII's Emma Ann Hughes talks to industry players about how to spot the insurtech giants of the future.
For today's tech startup to become tomorrow's tech giant, critical mass is key. Take social media -- for every Facebook, there are hundreds of rivals such as MySpace, BeBo and Friends Reunited that failed to reach the global penetration of Mark Zuckerberg's multibillion-pound social media giant.
While the insurance profession is united in recognising that insurtech is set to transform the way policies are underwritten and how claims are paid, there is far less consensus on how to spot the startups that will rise to the top and those that will crash and burn.
Glynn Austen-Brown, global insurtech lead at PWC, says the insurance market offers some of the largest opportunities, with the potential for about £50bn of revenue to be created by insurtech.
A survey conducted by PWC found that more than 80% of insurance CEOs said artificial intelligence was already part of their business model or would be incorporated within three years.
Clearly, the opportunity for insurtech startups to become tech giants is huge.
Mr Austen-Brown says: "So-called insurtech firms are looking to capitalise on this by providing innovative plug-and-play solutions to incumbents, therefore creating more tech-enabled and responsive solutions."
Professional services firm PWC has created the Scale InsurTech programme, in a bid to spot insurtech startups with great potential and assist them with strategies to achieve critical mass.
PWC's scale-up programme aims to deliver the tools, knowledge and networks to help these firms scale successfully. As a result of this programme, eight businesses were identified by PWC in July as having great potential to scale within the insurance profession.
According to PWC, the insurtech firms to watch are:
1) Artesian Risk & Compliance Hub -- lets companies automate risk assessment to allow the automation of underwriting.
2) Artificial -- helps insurers, brokers and MGAs with the distribution, pricing and negotiation of risk.
3) Atidot -- a cloud-based platform giving life insurers data-driven insights to inform decision-making and develop new business strategies. The insurtech provider allows insurers to take control of existing data to improve understanding of customers' behaviour.
4) Data-XL aims to help insurance companies manage their price variable through following the model of retail companies. It has developed two plug-and-play solutions -- price optimisation and supplier overcharge detection.
5) Innovative Applications produces AI software. It has developed machine-learning algorithms and built a protection platform consisting of three pillars specifically designed under the concept ofhuman behaviour.
6) Phinsys -- a platform of intelligent finance automation tools, to deliver systematic controls to optimise the financial close and reporting process.
7) The Reg Network addresses issues around legal and regulatory risk processes by automating the management of due diligence and compliance assessments.
8) Squirro -- a self-learning AI platform keeping insurers in the know and recommending what is next. Ready-made applications help deal with customer relationship management and more efficient underwriting.
Dr Andrew Johnston, global head of insurtech at Willis Re, says it is important to watch this part of the market, as the value created by some insurtechs in the years to come will be significant.
Dr Johnston's view is one shared by Ben Nicholls, global leader of Willis Re's alternative distribution operations.
Mr Nicholls says: "Only a few speciality insurers have begun to use technologically-sound systems extensively.
"The evolution is relatively slow, but we are now meeting a number of insurtech businesses that seem genuinely to have cracked it."
Emma Ann Hughes is communications director of the CII