Fintech platform revenues derived from supporting the insurance industry will reach almost $235 billion globally by 2021, up 34% y-o-y from an estimated $175 billion this year, says a new study from Juniper Research.
The study, Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2016-2021, forecasts that growth will be driven by a combination of factors including machine learning investments enabling insurance providers to personalize products, insurers deploying mobile apps to improve their customer experience, and investments in blockchain technologies to underpin smart contracts.
Juniper says the value chain in the insurance market is transforming rapidly, which will force traditional providers to improve their offerings and customer service to fend off the threat posed by fintech suppliers, particularly in the car insurance sector.
Investments in machine learning have enabled providers of car insurance to more accurately reflect car usage and driving behavior in their quotes. As machine learning improves insurers’ ability to stratify drivers into risk groups, Juniper believes that the technology will be used more widely in the insurance market to deliver quotes for contents insurance precisely reflecting the value of applicants’ possessions.
Juniper also predicts that blockchain will accelerate insurers’ ability to personalize products with smart contracts/ smart policies adapting automatically to customers’ changing circumstances
However, cautions research author, Michael Larner, while telematics is an innovative means of collecting risk assessment data, many consumers may regard the sharing of information on their driving habits and destinations as intrusive.
“Insurers need to be transparent with regards to how they use customer data, while consumers need to accept that in order to receive tailored polices that they will come under greater scrutiny,” Larner advised. “The prospect of saving money will be the overriding priority for the majority of consumers.”