Mark Shumway, Global Head of Strategic Advisory, JLT Re
InsurTech activity to date has been focused on distribution, improving the accessibility of personal lines insurance products and simplifying the buying process.
To a lesser degree, we also see machine learning and robotics in the claims management process, reducing frictional costs for high volume, low severity claims, as well as the more effective detection of fraudulent claims.
Start-ups and technology disruptors
So-called technology disruptors, such as Amazon and Google, are expected to leverage their expertise and data in order to enter the insurance market.
Start-ups, such as pay-per-mile insurer Metromile and data-driven Clearcover are also breaking new ground.
However, barriers to entry in the auto insurance market are relatively high and start-ups have yet to mount a serious challenge to traditional carriers.
In contrast, insurers have been investing in their own technology capabilities and expertise, as well as supporting a growing number of technology-focused start-ups and managing general agencies (MGAs).
Advancements can only add to already fierce competition in the auto sector. InsurTech should lead to lower expense ratios for insurers, as well as improved underwriting performance from the use of data and predictive analytics (the sector is already witnessing an uptick in accident frequency and claims inflation, in particular in commercial auto).
Traditional insurers that fail to adapt to new technology will be overtaken by those that do. Data and analytics and the use of robotics will increasingly become a differentiator in the auto insurance market, where the most profitable carriers will be those that use technology to outperform and meet the needs of consumers.
Mark Shumway | Global Head of Strategic Advisory, JLT Re
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