Fintech platform revenues derived from supporting the insurance industry will reach almost US$235 billion globally by 2021, up 34% year-over-year from an estimated US$175 billion this year, according to new findings from Basingstoke, England-based Juniper Research.
The research company said in a press release on Monday that growth would be driven by a combination of factors, including: machine learning investments enabling insurance providers to personalize products; insurers deploying mobile apps to improve their customer experience; and investments in blockchain technologies to underpin smart contracts.
The new study, titled Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2016-2021, argued that the value chain in the insurance market is transforming rapidly. This will force traditional providers to improve their offerings and customer service to fend off the threat posed by fintech suppliers, particularly in the auto insurance sector, Juniper said in the release.
According to the research, investments in machine learning have enabled providers of car insurance to more accurately reflect car usage and driving behaviour in their quotes. As machine learning improves insurers’ ability to stratify drivers into risk groups, Juniper believes that the technology will be used more widely in the insurance market to deliver quotes for contents insurance precisely reflecting the value of applicants’ possessions.
Juniper also predicted that blockchain will accelerate insurers’ ability to personalize products with smart contracts/smart policies that adapt automatically to customers’ changing circumstances.
However, the research cautioned that while telematics is an innovative means of collecting risk assessment data, many consumers may regard the sharing of information on their driving habits and destinations as intrusive.
“Insurers need to be transparent with regards to how they use customer data,” cautioned research author Michael Larner. “Consumers need to accept that in order to receive tailored polices they will come under greater scrutiny. The prospect of saving money will be the overriding priority for the majority of consumers.”
Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary.