As H2 of 2024 is now fully upon us, the InsurTech sector is set to face new tests and set its sights on new opportunities. With regulatory tests on the horizon, and a notable shift towards digital solutions looking set to take the sector by storm, H2 looks set to be seismic for the space.
InsurTech Analyst‘s Harry Slade recently engaged with a range of industry experts to delve into the key InsurTech trends for the second half of the year. Here’s part two of that insightful conversation.
The power of data
Granular data refers to the level of detail within a data set, representing the smallest unit of data available. It describes how finely data fields are broken down. For instance, consider a name field: if it is divided into separate fields such as first name, middle name, and last name, it is more granular compared to a single, undivided name field. As data is further divided into more specific components, it becomes increasingly granular.
Many industry experts believe that these insights, at a highly specific level, could have transformative potential in the InsurTech space throughout the rest of 2024.
By enabling insurers to analyse data points such as individual customer behaviours, regional risk variations, and micro-segments within broader demographics, granular data enhances precision in underwriting, pricing, and risk management.
This heightened granularity allows for more accurate risk assessment and personalised policy offerings, leading to improved customer satisfaction and retention.
Moreover, it supports innovative predictive modelling and real-time adjustments, fostering agility in responding to emerging trends and risks.
David Pittman, AVP – Sales, Risk Control Technologies, explained that organisations are beginning to take advantage of this budding potential.
“We are seeing an increased impetus on Risk Control/Engineering data at commercial P&C carriers to drive decisions around actuarial modelling and underwriter pricing. A lot of organisations are waking up to the fact that they have had this great source of granular data in their risk control team’s work for some time, and are now really starting to lean into that.”
As the industry adapts to the demands of an increasingly data-driven environment, the focus is not just on harnessing granular data but also on understanding its broader implications.
The shift towards finer data granularity aligns with the growing need for comprehensive exposure management strategies.
This evolution underscores a broader trend where insurers are not only refining their data collection and analysis techniques but also reassessing their strategic approaches to risk and resilience.
In this context, digital transformation plays a crucial role. Insurers are integrating advanced technologies to leverage granular data effectively, which, in turn, influences their ability to manage complex and evolving risks.
The emergence of innovative InsurTech solutions enhances the capacity to analyse and act upon detailed data, thus supporting a more proactive and strategic approach to risk management.
Melanie Hayes, CMO & co-founder of KYND, explained, ”As digital dependence grows, insurers must collaborate on exposure management strategies to mitigate these pervasive threats and ensure market stability. InsurTech companies, with their blend of innovative technology and deep industry expertise, are set to play a pivotal role in this transformation. Their contributions will reflect a collective commitment to bolstering the insurance sector’s resilience, adaptability, and financial stability in the face of an ever-evolving threat landscape.”
How digital-first solutions will revolutionise healthcare
With the insurance industry now treating the idea of digitisation with effervescence, the idea of integrating digital-first solutions into health and wellness sectors could well be poised to transform the space, according to a host of industry experts.
As the demand for more personalised, efficient, and accessible healthcare solutions rises, digital-first approaches are emerging as game-changers. These innovative technologies offer a streamlined and user-centric experience, leveraging data analytics, artificial intelligence, and digital platforms to enhance both insurance processes and wellness management.
Peter Ohnemus, CEO of dacadoo declared that the shift could be similar to the advent of the Internet. He stated, “We believe that we have seen the largest correction in InsurTech so far, indicating that digital life & health is becoming mainstream. Many first-generation technology companies did not survive the market correction, similar to what we saw in 2000 with the internet before it became mainstream. For example, in the case of search engines, after many start-ups, standards, and leadership became clear to technology buyers, and consumer preferences drove growth forward.”
By prioritising digital transformation, health InsurTechs can deliver tailored coverage options and predictive insights, while wellness platforms can provide real-time health monitoring and personalised recommendations.
This move not only promises to improve patient outcomes and operational efficiencies but also to redefine how we approach health and wellness in a rapidly evolving digital landscape.
Air Doctor Founder and CEO, Jenny Cohen Derfler explained, “The industry is undergoing a notable shift towards digital-first solutions and the integration of health and wellness services into insurance offerings. InsurTech companies are adapting by providing more comprehensive and seamless digital experiences, driving service and claimless processes.
“For example, health and travel insurance providers are now covering telemedicine and remote health services, which offer unparalleled convenience, cost-effectiveness, and accessibility — especially for travellers. Imagine a traveller in a remote area who suddenly falls ill. Instead of navigating an unfamiliar healthcare system, they can instantly connect with a doctor via video consultation, get a diagnosis, and even have prescriptions sent to a nearby pharmacy,” she continued.
Air Doctor is already adeptly navigating this evolution by expanding its service offerings to meet the growing demand for accessible healthcare solutions.
The company is addressing this shift by enhancing its physical appointment network while also scaling up its video consultation services. As a result, users can now connect with healthcare professionals anywhere they travel, ensuring that medical support is always within reach.
Battling regulatory challenges
As always, regulatory frameworks are evolving to keep pace with technological advancements and emerging market dynamics in this fast-paced space.
In the second half of 2024, the regulatory landscape for InsurTech is expected to become increasingly complex, particularly as firms integrate advanced technologies like artificial intelligence and machine learning (ML) into their operations.
This shift brings new challenges in areas such as data privacy, ethical AI use, and transparency.
David Howland, CMO at Earnix explained this phenomenon, stating, “As InsurTech firms continue to integrate more sophisticated technologies like AI and large language models, they will need to navigate an increasingly complex regulatory environment. For instance, AI applications in insurance—from underwriting to claims processing—present novel challenges in data privacy, ethical use, and transparency. Regulators are still crafting the rules for these areas, aiming to balance innovation with consumer protection and market stability. InsurTech companies must remain agile, adapting to new regulations as they emerge, to ensure compliance and maintain their competitive edge.”
As ML becomes more deeply embedded in the operations of InsurTech firms, its growing sophistication raises the stakes for regulatory oversight. While ML offers tremendous potential to enhance processes like underwriting, risk assessment, and claims management through automation and predictive accuracy, it also introduces new risks.
Unchecked, ML models can inadvertently perpetuate biases, create opaque decision-making processes, and mishandle sensitive data.
This makes the need for regulation increasingly critical. Policymakers will likely seek to establish guidelines that ensure the responsible and transparent use of ML, requiring companies to implement frameworks that mitigate bias, uphold data privacy standards, and provide clear explanations for AI-driven decisions.
“The need for responsible machine learning ML practices will continue to become paramount. Insurers must balance the accuracy of their AI models with accountability and transparency. This involves developing frameworks that ensure ethical data usage, mitigate biases, and provide clear explanations for AI-driven decisions. Responsible ML is essential for maintaining customer trust and meeting regulatory standards,” Howden explained.
But that isn’t all when it comes to potential banana-skin legislation for firms. FullCircl‘s Ashleigh Gwilliam suggested that issues related to cybercrime may well take centre stage.
This comes amid new research from Check Point which has revealed a significant rise in global cyber attacks, with a 30% surge in Q2 2024, marking the highest increase observed in the past two years.
This sharp uptick underscores the growing urgency for businesses to enhance their cybersecurity strategies. In response, the cyber insurance industry will need to adapt swiftly, offering more comprehensive coverage and adjusting policies to address the evolving threats.
As attacks become more frequent and sophisticated, insurers must not only account for higher risks but also offer tailored solutions that help organisations recover from financial, operational, and reputational damage.
Gwilliam explained, “While Data Protection, Consumer Duty and changes to Solvency II are still prevalent issues, advancement in Cybercrime processes and attacks are going to cause issues for all industries – we expect stricter legislation and a need to adapt businesses cyber protection methods, which may result in a need to modify cyber insurance covers.”
Looking ahead
The second half of 2024 is shaping up to be a pivotal period for InsurTech firms, as they navigate an evolving landscape driven by the implementation of granular data, increasing regulatory pressures, and the growing demand for digital-first solutions, particularly in the healthcare sector.
With challenges arising every day, companies are either adapting to these shifts or risk falling behind.
In this fast-paced, tech-driven environment, adapting is key in an era defined by innovation and digital disruption.
Copyright © 2024 InsurTech Analyst
