AI isn’t the magic bullet solution to every online insurance issue. Nor is Blockchain, remember that hype?
In reality IT systems are always evolving, developing and being used in different ways. We don’t yet know how useful AI will be across insurance because it’s still in its infancy. So much AI “deployment” within the insurance sector is actually about automating very mundane, repetitive tasks, like pre-filling quote forms for example, or automatic responses via chatbots. You know what the questions will be because of local regulation, customer feedback, an email keyword search etc. so all you really need is an AI system that understands and triages the typical answers in 90% of cases.
Perhaps the big win will be in claims, especially those involving more than one person – usually the insured. AI could gather lots of evidence pre-incident, then sift the stated evidence against public databases, online comment and the T&Cs of the specific insurance contract in force. That could – in theory – save 1000s of working hours every single week for a typical claims operation, especially if AI can advance to a point where it can understand the long term consequences of complex injury claims.
Nobody can deny AI still has a long way to go. So too does regulation affecting its deployment. One thing that is certain is that VC investment is still pouring into the AI bubble right now. Whether all of it is being spent wisely is another issue, and past bubbles on Blockchain, the Cloud and even the first internet retailers, all show how fingers can get burnt very easily. Here’s some data on investment flows from AltIndex;
After raising a record amount of fresh capital in the first half of the year, AI startups have seen a considerable decline in VC funding activity in Q3 2024. Three weeks before the end of the quarter, the total value of deals hit $8.6 billion, or 35% less than in Q3 2023. But despite the apparent decline, 2024 remains the record year for investing in AI startups.
According to data presented by AltIndex.com, AI startups have raised $48.4 billion year-to-date, or 25% more than in the entire 2023.
Record Amount of Fresh Capital Despite the VC Funding Drop
After two years of unstoppable growth, the AI sector is experiencing mixed investor sentiment, triggered by the US government’s expanded export restrictions on AI chips to China, expectations of future interest rate cuts, concerns about the AI giants` valuations, and their disappointing earnings reports.
The softened investor’s optimism about artificial intelligence has triggered a significant decline in the VC funding activity in Q3, with the total value of deals falling by 35% year-over-year to $8.5 billion. The number of investments also dropped. The Crunchbase data show AI startups saw 638 VC investments in the nine months of 2024, down from 914 in the same period of 2023.
But despite that significant decline, AI startups already raised much more money than last year. According to Crunchbase data, VC investors poured $38.8 billion on fresh capital in the AI sector in 2023, or 25% less than year-to-date. Moreover, with $48.4 billion raised in the nine months, AI startups have also set a new record, outperforming 2021’s $48.3 billion, now the second-highest funding amount in the market`s history.
Cumulative Funding Climbs to Over $237 Billion
With $48.4 billion raised in funding rounds during the nine months of the year, the cumulative funding amount in the AI sector has jumped to over $237 billion. In comparison, that is $13 billion more than the total funding amount in the IT startup market.
Statistics show US companies raised almost 65% of that value, or $151 billion, with California as the leading hub. Their Asian counterparts saw three times less fresh capital, or nearly $52 billion, while European AI startups follow with $31.3 billion.
The Crunchbase data also shows most of the VC investments in the AI field went to machine learning startups, which raised $113.6 billion so far. AI software and information technology startups follow, with $76.8 billion and $59.5 billion, respectively.
The full story and statistics can be found here: https://altindex.com/news/ai-startups-raise-records
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