According to a new research from Accenture (NYSE:ACN), Artificial Intelligence (AI) and the Internet of Things (IoT) now account for almost half of total investment in insurance technology (insurtech) startups globally.
The research, which includes new analysis of CB Insights data on 450 insurtech deals over the last three years, appears in a new Accenture report titled “The Rise of InsurTech.”
According to the document, the combined number of deals across AI (including automation) and the IoT (including connected insurance) increased 79% in 2016.
Even though the two technologies represented only one-quarter (24%) of the 216 insurtech deals globally last year, they accounted for 44% or US$711m of total insurtech investment — compared with just 10% in 2015.
The insurance industry views AI and the IoT as a critical factor to delivering increased levels of personalization and better real-world outcomes for customers.
Artificial intelligence has the potential to transform the insurance industry from simply assessing risk based on past experience to monitoring risks in real-time and mitigating, or preventing, losses for customers.
The IoT will enable insurers to offer more-personalized, real-time service, enhance operational efficiency, and price their products with increased precision.
At a country level, despite the political and economic uncertainty around the United Kingdom’s vote to leave the European Union, the country continued to attract strong insurtech investment in 2016. Even though the number of insurtech deals in the U.K. remained flat, the value of the investments there more than doubled last year, to almost US$19m with AI and the IoT increasing significantly, to almost US$1.7m in total.
Germany and France also saw strong growth in investment in 2016 to round out the top three insurtech markets in Europe.
With insurtech’s investment expanding globally, the United States’ share of deal volume in 2016 dropped, from 63 to 56% of total deals. The percentage of insurtech investment for the rest of the world (deals outside the traditional hubs) more than doubled, from 11% in 2015 to 23% in 2016.
As fintech, Insurtech is showing a shifting geographic focus with China, and more broadly, Asia Pacific, playing a more prominent role as investment destinations.