In this article, Quentin Colmant, CEO and Co-founder of Qover, takes a look at how insurtech is going to change and evolve throughout 2024.
Stepping into the unpredictable landscape of insurtech in 2024, let’s opt for a refreshing breakdown of predictions into two distinct categories: familiar trends that resonate with the majority of industry leaders and more audacious forecasts that few are willing to vocalise.
From the omnipresence of AI to escalating regulatory measures and the evolving funding landscape, the year ahead promises to be a dynamic one for insurtech. Let’s delve into these projections, exploring the common ground before venturing into more contentious territory.
The rise of AI and increased focus on ESG in insurtech
No one can ignore the seismic impact of AI over the past year, with OpenAI and Google’s Gemini setting the stage. However, we need to stay grounded in reality; AI is a powerful tool, but integrating it into the insurance industry will be an evolutionary process. Prepare for a gradual shift, unfolding over the years, encompassing enhanced automation, technical pricing, and refined risk definition.
At the heart of insurance lies a commitment to caring, and this will continue to intertwine with the growing emphasis on environmental, social, and governance (ESG). Beyond the selfless allure, ESG will become a driving force from both the ground-up and the top-down, reshaping industry values in the process. Europe may be leading the charge, but we can expect a global surge as companies assess partners and suppliers through the lens of ethical business practices.
Increased insurance regulation in Europe and beyond
Post-Brexit Europe and other global dynamics are dictating an era of heightened insurance regulation. However, while regulation creates opportunities, a potential downside exists in the competition that the current environment could breed amongst regulators.
Additionally, now that Brexit has been fully implemented in the insurance industry, pan-European players have to cope with both European and UK regulators, resulting in significantly higher costs and administrative burdens. A delicate dance ensues, reflecting the complexities of a post-Brexit world and how this might impact the insurtech landscape not only in Europe, but also in the US and the Asia-Pacific.
Embedded insurance and an auto insurance revolution
In 2023, embedded insurance orchestration emerged as the triumphant model for insurtech – a logical consequence of long-established trends we’ve observed over the last decade. As businesses embrace digital transformation, integrating embedded insurance into value propositions becomes an untapped opportunity.
A prime example of this is the auto insurance landscape, which is poised for significant transformation in 2024. The traditional model, where insurers or large brokers spearhead insurance initiatives for major Original Equipment Manufacturers (OEMs) with a localised approach, is set to evolve.
OEMs, particularly those specialising in electric vehicles, are evolving into software-centric entities. This transformation empowers them to create a more interconnected experience for their clients, facilitating the seamless integration of insurance. Embedded insurance becomes more than an offering; it becomes an integrated service, accessible through apps and even car computers.
Insurtech bankruptcies and increased scrutiny of practices
Every industry faces its own scandal, and insurtech may be on the brink of its day of reckoning. Increased regulatory scrutiny could unveil unethical practices, from sky-high commissions to obscured loss ratios. The potential for scandals in insurtech emphasises the need for transparency, ethics, and adherence to ESG principles. After all, embedded insurance should be about creating a global safety net to protect people rather than strictly about making a profit.
Additionally, we’re bracing for more insurtech bankruptcies to become public in 2024. Many insurtechs have already failed, whether in the form of official bankruptcy or a purchase of assets by a risk manager, yet this sobering reality has largely stayed under the radar. Those that do survive are poised to become industry giants in the coming years.
Strategic investors taking over insurtech funding
The insurtech funding landscape is evolving, with strategic investors poised to eclipse traditional venture capitalists. Patience and a nuanced understanding of the industry has become paramount. Although direct-to-consumer (D2C) insurtechs grapple with high acquisition costs, strategic investors who understand the strength of an insurance business’ long-term portfolio will enter the scene at the right moment and back the insurtech champions that have weathered the storm. This shift from VCs to strategic investors signals a maturation and recalibration in the insurtech funding ecosystem.
2024 is set to be a year of transformation for insurtech, as more predictable trends evolve and surprises undoubtedly shake up the scene. From the rise of AI to potential insurtech scandals, the industry is charting a course that demands adaptation, resilience, and a commitment to values. As Qover navigates these waters, we remain steadfast in our belief that the insurtech landscape will emerge stronger, more ethical, and better equipped to serve a rapidly changing insurance world.
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