Global Digital Business- and IT services leader NTT DATA has published its Insurtech Global Outlook 2023, highlighting opportunities for the insurance sector. According to NTT DATA, the insurance industry is being pushed to an unprecedented level of change where tech innovation is inevitable. In the previous editorial highlighting NTT DATA’s Insurtech Global Outlook 2023, we looked at the emerging challenges of Climate Change, Cybersecurity, Embedded Insurance and Corporate Care. This time, we will look at the more practical side: opportunities in Embedded Insurance and Connected Underwriting. The insurance industry and marketplace now go beyond carriers and customers with new ecosystems emerging involving new players from other industries. This creates an opportunity for many players to seamlessly connect with each other, and also digitise and distribute insurance data to enhance customer experience, risk assessment and claims.

Smart distribution

Embedded Insurance is a cost-effective way to increase sales and revenues in the industry. According to Simon Torrance, recognized expert on embedded finance, Embedded Insurance could account for over $700 Billion in gross written premiums by 2030, or 25% of the total market worldwide, in Property & Casualty alone. It is a 3 trillion market opportunity that has become the distribution model with the highest growth in recent years; enabled through cloud-connected platforms and open APIs, and led by Insurtechs and Tech Giants.

The Top 3 unicorns in Embedded Insurance are Extend, Bolttech & Zego, with a total of $735M+ in funding. Extend provides extended warranties as a service to merchants and innovates the broken customer experience often associated with these services in the past. Bolttech is an international Insurtech company that aims to build a technology-enabled ecosystem for protection and insurance. And Zego is a commercial motor insurance provider that provides businesses with insurance offers for self-employed drivers and riders.

Industry and platform giants have successfully integrated value-added services or provide additional services on their platforms. Think of Tesla, Toyota, Uber, Apple and Airbnb. Tesla launched insurance based on real-time driver data and partners with local insurers to expand locally. And Airbnb launched AirCover, which groups Host damage protection, Host liability insurance, and Experiences liability insurance. Airbnb’s insurance underwriters include Zurich and Generali.

For insurers, there are different ways of implementing new distribution models such as Embedded Insurance. Allianz has acquired 100 percent of the shares in Simplesurance to further dig into its ecosystem strategy. Chubb Studio, leader of Embedded Insurance, launched Blink insurance, offering income- and cyber-protection for self-employed workers.

Curious why and how to build a successful Embedded model?

Next Level Underwriting

Insurance has historically been perceived as a commodity and the consequences of a world with low insurance penetration can be severe in uncertain times. An additional challenge is inflation: the top 1 concern for the insurance industry in 2022, and a cause for even higher uncertainty in insurers’ outlook. Losses caused by increasing natural catastrophes placed pressure on homeowners’ profitability, with 2022 being the worst year for P&C underwriting results since 2011.

Investing in specialised underwriting insurtechs has high benefits, as new underwriting models can reduce costs and claims pay-outs, which enables competitive pricing and higher customer engagement. Insurtechs that operate for various business lines are exploring the incorporation of new data sources to streamline the underwriting process, increase efficiency and decrease cycle time. Insurtechs create new underwriting models as part of broader ecosystems. Think of:

Smart Mobility

Insurtech players:

• Trov

• Bambi Dynamic

• Cambridge Mobile Telematics

Ecosystem players:

• Tesla

• Grab

• Allianz

Healthy Living

Insurtech players:

• Qumata

• Omniscience

• FOXO

Ecosystem players:

• Vitality

• Ping An

• AliHealth

Home Safe Home

Insurtech players:

• Floodmapp

• Arturo

• Openly

Ecosystem players:

• Airbnb

• Amazon Alexa

• Google Nest

Business Shield

Insurtech players:

• Descartes Underwriting

• Planck

• Coalition

Ecosystems players

• Chubb

• Amazon

• Munich RE

Starting from the actual underwriting process, NTT DATA already sees insurers, insurtechs, technology companies, and industry giants leveraging the power of data and technology to automate and accelerate the process of underwriting to achieve higher operational efficiency and higher product profitability.

Curious about how to implement next-level underwriting through a continuous framework?

ITC DIA Europe 2023

ITC DIA Europe’s platinum partner NTT DATA helps clients move confidently into the digital future through consulting, industry solutions, business process services, IT modernization and managed services. At ITC DIA Europe, Richard Calvo López, Head Insurtech at NTT DATA EMEAL presented the report. Also, NTT DATA’s Head of Data Insurance EMEAL, Mark Toye, hosted one of our Talk Shows: “Better, Faster, Stronger but Not Harder: AI and Insurance”.

Would you like to learn more about any of the topics discussed in the report, and how insurtechs can help tackle these issues?