2023 marks the beginning of – to borrow a phrase from the state of Missouri – the "show me" era of insurtech. Venture investment is drying up – more than a quarter of insurtechs are likely to exit the market, Forrester predicts – and insurers are looking for innovations that will reach financially pinched customers.
"[Carriers] are going to have discipline and be very focused on their business model and driving profitable growth," says Ellen Carney, principal analyst for Forrester. "The one thing that the past six or seven years have done has shown insurance companies the art of the possible. You saw the digital labs, innovation centers, and stuff like that. The problem that they had was scale."
Carney explains that while carriers are going to continue fairly robust digital investment, the focus will be on driving a deeper connection with customers. "it's been a return back to data and analytics… how do we use all this data that we have to create hyper personalized coverage, better rate risk."
Chris Raimondo, Americas Insurance Technology Leader for EY, agrees. He says that companies are going to take a "more measured" approach to investment. While a lot of the groundwork for digital transformation, in terms of core systems replacement, there isn't a set standard for digital experience in insurance, thanks to the disparate customer bases, business models, and product designs in the sector.
"You have to now invest in your systems of engagement and your experience layers, and then your systems of analytics and insights, to actually complete the transformation," he explains. "The reality is, every carrier should aspire to a certain level of digital maturity."
Here are some other things analysts anticipate for insurance in 2023:
Agents' digitalization catches up. While early insurtech innovations assumed some disintermediation of the agent force, the complexity of the market is making them more valuable again. Agents and technology providers are responding with new services. "We're gonna see this intense digitalization of the agencies as well," Carney says. "When their offices are closed, the customer can still interact with a chatbot" for example, she explains.
Embedded insurance stays on the rise. Raimondo says Ford's recent announcements have the potential to be a catalyst for embedded initiatives. "I think there's still some general skepticism about how fast or how large that market will be. But I think from what we're seeing in not only in the insurance industry, but interest from the OEMs and other sectors that see potential to grab more of the insurance value chain," he says.
