What it will take for insurance technology to survive and thrive in 2023

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The global insurtech market is expected to reach $10.42 billion this year, up from $8.07 billion in 2021, confirming that the pandemic-driven digital transformation of the insurance industry is here to stay . Additionally, insurance companies are in a race to stay relevant and reduce operational costs as supply chain disruptions, geopolitical crises, labor shortages and changing habits of consumption lead to increased operating costs.

As a result, insurers are accelerating their investments in digital technologies, applying artificial intelligence (AI) and automation strategies across all business functions. These technologies help insurers operate more cost effectively and efficiently.

But as this digital transformation continues at an ever-increasing pace, it can be difficult to know which technologies to adopt. Let's take a look at the top technology trends that will shape the insurance industry in 2023.

Climate change is having a major impact on the insurance industry, and only 8% of insurers are adequately preparing for it, according to the World Property and Casualty Insurance Report by Capgemini and Efma. “Insured losses from natural disasters have increased by 250% over the past 30 years, with perils such as wildfires and storms, considered to be particularly affected by climate change, driving losses even faster. ensured", underlines the report.

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The key to climate resilience is finding a balance between risk prevention and risk management. The demand for technology solutions that can help companies leverage and integrate climate risk data into their models will continue to grow. Around 53% of companies are already integrating new data sources, such as satellite data, remote sensors, geographic data, ESG models and water levels, to assess the most important risk information in real time. accurate and detailed. Machine learning (ML) can then be used to interpret this data and generate insights into the likelihood of a climate event or its potential impact.

Advances in data analytics are also allowing insurers to more accurately measure the extent of weather-related events such as floods. Parametric insurance coverage is becoming a popular solution to deal with these risks. Instead of providing payments based on the value and actual loss related to an asset, parametric insurance uses all the data surrounding the potential for a specific weather event to calculate the cost of coverage. This approach can be a more affordable alternative for risk transfer as long as the thresholds are calculated as close as possible to any loss that may occur.

Telematics and usage-based insurance are here to stay

Telematics technology involves tracking data about a vehicle's movements. For example, it can instantly detect accidents and even initiate the claim process with the vehicle owner's insurance company. Various providers, such as repair shops, can also be donated...