Just like the Willis Towers report we posted earlier, NTT has also taken the insurtech temperature and found that things are cooking with gas right now. Here’s the press info;
Insurtech investment hit $6.3 billion in 2019, rising 58 percent from 2017-2018 according to new research from NTT DATA, a world leader in consulting and IT services. This new data forms part of the latest annual Insurtech Global Outlook report by everis, an NTT DATA company.
The Insurtech Global Outlook research draws on a detailed analysis of almost 1,000 insurtech entities and more than 2,000 deals from 76 insurers’ investment arms. An additional survey of 44 major insurance companies from around the world supports this data, and paints a comprehensive image of an industry in robust health at the start of 2020.
The findings reveal the dominant position of health insurtech startups, attracting 29 per cent of total funds invested in insurtech in 2019. The largest venture funding rounds from last year were also raised by two healthcare companies – Clover and Bright Health – both focused on improving health insurance plans with affordable pricing and enhanced medical services.
Innovation driving investment
The Insurtech Global Outlook report revealed that a consumer desire to live a healthier lifestyle for a better quality of life is generating a boom in innovation and investment in insurtech – from health to auto insurance. Big tech companies are helping to drive this change, pushing forward the advances in wearable technology, digestibles1, smart devices and data collection to help track and monitor lifestyle choices.
The rise in concern for consumer health was highlighted in a separate survey of 2000 UK citizens by NTT DATA, which found that the appetite for using technology to track, monitor and improve health is growing in the COVID-19 world. While 30 per cent of UK citizens already feel they have a responsibility to take care of their health and use technology to help, a further 22 per cent have stated that after lockdown they will use technology for this purpose.
Additionally, while 35 per cent of those surveyed stated they were happy to share data pre-COVID-19, a further 20 per cent will be happy to share health data from wearables and apps. These findings are corroborated by data figures from EE, which show that the use of fitness apps like Strava and Map My Run has tripled over the last 3 months.
Alphabet (including CapitalG and GV) is a big player in this ‘healthy living’ ecosystem, surrounding itself with a host of big names such as Fitbit (wearables), Calico (longevity and well-being research), and Verily (life-science research). In addition, in the last year, 70 per cent of the investment in startups of this ecosystem (a total of 69 companies) was concentrated by four companies: Bright Health, Clover, Water Drop and Singlife.
Kim Gray, Head of Insurance and Head of Diversity & Inclusion at NTT DATA UK said:
“Thanks to a focus on healthy living and wearable devices, health companies and insurers are also impacted by this change in the increased adoption of healthy lifestyle habits. As our lifestyles change, the demands placed on health insurance are shifting. Insurance companies are starting to reward users with discounts on premiums to those who show they take care of their health. Industry players may want to watch the major Asian startups Waterdrop and Singlife, who are betting hard on continued disruption with their experiential approach to health insurance, offering a digital experience powered by smart technologies.”
The future of health insurance
Another key takeaway from the Insurtech Global Outlook report was the increased number of insurtechs that are starting to work closely with the healthcare industry. Technology is being used in a preventative capacity to help screen earlier for symptoms – Doctor on Demand is leading the way here, in the Alphabet ecosystem.
Likewise, advances in the field of genomics (spearheaded by disrupters like 23andMe) are moving towards a world of hyper-personalised medicine for each patient. Insurtechs are increasingly partnering with these healthcare organisations to create a streamlined method for consumers to obtain insurance, and using data captured through these partnerships to help make better assessments on claims.
Martin Garcia, Head of Insurance at everis UK, an NTT DATA company, commented: “Improvements in lifestyle habits have caused a great change in consumer behaviour in recent decades. The insurance industry has responded, undergoing a period of transition from its traditional role in financial compensation to diversifying its offering into a prevention and mitigation partner of the healthcare industry – producing a more seamless experience for customers.
“There are challenges ahead for health insurtech organisations. COVID-19 has inflicted unprecedented economic damage, creating a host of new risks in insurance that we could not have predicted when we wrote this report. There has been a shift in the dynamic between private health providers and the NHS in recent months, and it will be interesting to see the long-term change in this relationship. Nonetheless, the mix of innovation, adaptability and strong financials of healthcare insurtechs should be a solid grounding for them to adapt and continue to thrive in this ‘new normal’.”