Around 2010, insurtech emerged as an offshoot of the broader fintech industry. It’s since expanded into a vibrant industry in its own right, with a global market value of $3.74 million in 2021 and an anticipated CAGR of 46% by 2030, according to one Straits Research report.
There’s been a similar explosion in Insurtech recruitment and that growth isn’t over yet. Roughly ¾ of carriers expect to increase their staff over the next year, with many of those new roles focused on developing and integrating new technology.
Given that insurtech is such a dynamic and comparatively young industry, tracking trends is crucial for business leaders in the sector who want to stay ahead of their competition. In that spirit, here are three significant trends affecting the industry today.
Low-code and No-code Development
The 2022 Jacobson Group Insurance Labor Market Study confirmed what insurtech recruiters already suspected: it’s harder to hire insurance talent today than at any point in the study’s 13-year history, and technology roles are among the most difficult to fill. Even demand for temporary and freelance talent is at an all-time high as businesses scramble for solutions to their staffing shortages. Those who can’t find the developers they need face long production times and process bottlenecks for new apps and digital products.
Rather than try to compete with large enterprises to attract scant talent, many SMBs have looked to low-code and no-code development platforms. These tools allow people to develop applications even if they don’t know anything about programming languages or writing code. That lets companies make digital products faster, using the team they already have. While smaller businesses were the first ones to take advantage of this option, it’s likely the use of low-code/no-code tools will grow in insurtech companies of all sizes in 2023, especially if the current hiring challenges continue.
Personalization Centers the Customer Experience
Insurtech has expanded the ways companies can offer customized services tailored to customers’ individual needs. Telematics and other real-time data tracking allow insurance providers to offer usage-based insurance, something automotive insurers have been taking advantage of for years. These systems work in conjunction with customer self-service portals and other digital products that let consumers get the information and coverage they need without talking to an agent.
This push toward personalization can ease the workload for insurance companies. Agents spend less time answering customer questions and guiding them to the right products when those customers can make those decisions independently. On the other hand, introducing telematics means even more data that’s collected, requiring systems to store and analyze that data, as well as professionals trained in effective data management and security.
While personalization and self-service aren’t new, the proliferation of these options has shifted customer expectations. Digital portals are quickly becoming a must-have, and companies that haven’t yet added these options are rushing to catch up to the trend. In a McKinsey & Company survey of insurance professionals, 44% of agents said digital tools were the number one capability insurers need to invest in right now, while 89% expect a significant acceleration of digitalization across the industry over the coming months.
Digital Data Collection Is Replacing Outdated Legacy Systems
Telematics aren’t the only thing driving an increase in customer data. An incredible volume of data is available to companies today, and that volume is growing at an exponential rate. That can be a good thing for companies that have the resources to analyze that data effectively and derive insights to give them a competitive advantage. For others, the sheer amount of data can be paralyzing, while storing and managing these large volumes of data presents another challenge. This is likely why, despite the high volume of data available, a recent Bain & Company survey found insurers only collect about 60% of the data they need to effectively underwrite a policy.
One issue is that many legacy back-end systems simply aren’t up to the task of handling digital platforms and the data they produce. Overhauling the entire back-end system is often not feasible due to budget constraints, a lack of tech talent, or concerns over lost information or productivity. One potential workaround is shifting to a headless tech framework, with separate back-end and front-end interfaces. This allows companies to get the full benefits of digital portals and the data they provide, without needing to completely replace their legacy systems.
The Bottom Line
Digitization has changed the face of the insurance industry, and companies need to adapt if they want to stay relevant and competitive into the future. Taking advantage of trends like headless tech and low-code/no-code applications can help ease the growing pains that come with a digital transformation, helping companies meet customer needs with the staff and systems they have.