On Wednesday (13 March), embedded insurance company Open announced it was acquiring UK-based insurtech company SO-SURE.
Open is one of many insurance companies looking to acquire insurtech startups to stay ahead of the curve with technology that is disrupting the insurance industry.
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Open’s acquisition will see the insurance company leverage SO-SURE’s mobile protection and content products to accelerate its growth in the UK market.
“The acquisition of SO-SURE is a key step in our strategy to expand our global footprint and deliver unparalleled insurance experiences, and we’re likely to pursue further acquisitions as a route to enter new markets,” CEO of Open, Jason Wilby, said.
Manoj Pant, senior director and EMEA insurance industry principal at Pega, told Verdict that insurtechs are putting pressure on insurers to leverage technology for improving customer experience.
“An increasing number of insurers are partnering with insurtechs to gain digital capabilities that can be rolled out quickly,” Pant said.
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By GlobalDataWhat is Insurtech?
Insurtech is a term given to the use of technology innovations within the insurance industry.
Insurtech startups are honing emerging technologies such as AI, the Internet of Things (IoT) and data analysis to make the current insurance business model more efficient.
Some insurance companies are already using data analysis and AI to provide unique offerings to individual customers, boosting the demand for higher-quality offerings across the industry.
Insurance companies have also utilised IoT devices and wearables to receive real time insights into policyholder behaviour, allowing insurers to implement more accurate risk assessments.
Technology advancements have reshaped how insurers interact with customers, as well as transformed the entire insurance value chain, driving greater efficiency and competitiveness in the market.
Richard Hartley, CEO and co-founder of Cytora, told Verdict: “Insurtechs are supporting the digitalisation of the industry, leading to some significant efficiency and productivity gains.
“Some insurtechs are enabling commercial insurance industry to better use AI to generate value for brokers and customers and to improve the daily lives of underwriters and claims handlers.”
However, Ralph Tucker, industry lead in insurance technology at NTT DATA, told Verdict that insurance companies adopting AI need to ensure that their AI models make clear, traceable decisions so they can justify their provision of fair value to consumers.
“This will likely require more thorough data strategies, with many firms struggling to reconcile a whole suite of legacy applications and data siloes,” Tucker said.
Some insurance companies have been slow to adapt
Not all insurance company have been rushing to work with insurtech companies.
The insurance industry is known to be subject to heavy regulation, and some large insurance companies take a more cautious approach to working with startups.
Implementing technologies like AI and IoT raise privacy issues. IoT wearables, in particular, require a customer to give up a lot of personal and identifiable data.
