Blockchain, Smart Contracts and Machine Learning to Drive Insurtech Platform Revenues to $235bn by 2021
A new study, ‘Fintech Futures: Market Disruption, Leading Innovators & Emerging Opportunities 2016-2021’, has forecast that fintech platform revenues derived from supporting the insurance industry will reach almost $235 billion globally by 2021, up 34% year-on-year from an estimated $175 billion this year.
The analysis, from Juniper Research, a company that provides research and analytical services to the global hi-tech communications sector, claimed that growth would be driven by a combination of factors. Investments in blockchain technologies to underpin smart contracts were found to be key to this development, alongside machine learning investments and insurers deploying mobile apps to enable personalisation of products and improvements to be made to customer experience.
Juniper predicts that blockchain will accelerate insurers’ ability to personalise products with smart contracts and smart policies which have the ability to adapt automatically to customers’ changing circumstances. Transformations in the market were forecast to force traditional providers to improve their offerings and customer service to compete with the threat posed by fintech suppliers, particularly in the car insurance sector.
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.
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.
Research author Michael Larner noted: “Insurers need to be transparent with regards to how they use customer data. While consumers need to accept that in order to receive tailored polices that they will come under greater scrutiny. The prospect of saving money will be the overriding priority for the majority of consumers.”