Top 3 Trends Shaping the Future of InsurTech in 2024

Having topped $5.45 billion in 2022, the global insurance technology (InsurTech) market is projected to grow at a whopping CAGR of 50% for the next seven years.

These statistics, if anything, demonstrate the growing interest in technology solutions that streamline insurance agents’ work and improve their customers’ experiences.

The Internet of Things (IoT), telematics, customer relationship management (CRM) solutions, and machine learning (ML) have long been the insurance industry’s darlings.

Could we possibly expect a different set of technologies to start trending in 2024?

If so, what will these technologies be, and how are they going to impact the insurance sector, which is known to be slow at digitalizing operations?

A group of innovation analysts from insurance software development company Symfa, an US/EU-based software engineering company, attempts to provide grounded answers to these burning questions.

Insurtech Trends to Watch for in 2024

For the purpose of this article, we’ll deliberately omit technologies that already enjoy steady adoption rates in the insurance sector.

These include the following:

Robotic process automation (RPA), which is used in certain functions by up to 70% of insurance companies
Cloud computing solutions, which are on the agendas of 91% of all insurance firms
And IoT systems, which have been around since 2016, empowering insurance agents to dive into customer behavior patterns, such as driving behavior and lifestyles

Instead, we’ll focus on emerging and, perhaps, lesser-known technologies with high transformational potential.

1. Rise of generative artificial intelligence (Gen AI). According to Accenture’s A New Era of Generative AI for Everyone report, the insurance industry could be one of the primary beneficiaries of the upcoming Gen AI revolution. Generative AI systems are powered by large language and computer vision models with advanced architectures. These models are trained on billions of parameters, which significantly increases their cognitive capabilities compared to traditional ML tools. The adoption of generative AI in insurance could help businesses automate up to 48% of all tasks. Specifically, Gen AI excels at processing claims, analyzing tremendous amounts of data to better assess risks, handling customer inquiries, spotting fraudulent activities, and generating content and strategies for personalized marketing campaigns.

What makes us think generative AI will see a significant uptake in 2024? For one thing, the insurance industry workforce is aging. Over the last ten years, the number of insurance specialists aged 55 and older has increased by 74%. Unlike tech-savvy Millennials and Centennials, older employees often struggle with novel technology and would thus greatly benefit from Gen AI tools with conversational interfaces. And for another, generative AI promises never-before-seen automation opportunities, allowing the sector to address workforce shortages, which could reach 400,000 employees in two years.

2. Greater adoption of low-code and no-code tools. Even though the US economy has marginally avoided recession in 2023, it’s still set for a soft landing, meaning companies will remain cautious about their technology investments through 2024 and beyond. Despite the fact that insurance companies desperately need to replace legacy systems in order to remain competitive and win customers, they tend to put digital transformation on hold to save money. Is there a way out of this lose-lose situation? Apparently, there is. We are talking about low-code and no-code platforms for building enterprise-grade apps using drag-and-drop visual interfaces and syncing disparate technology systems via ready-to-use middleware.

Popular enterprise platforms, such as Salesforce and TIBCO Software, are rolling out complete development environments that allow enterprises to craft robust business applications with little to no coding. Next year, we are thus expecting more insurance companies to drift towards such an application creation process and collaborate with platform-certified insurance software engineering companies instead of building bespoke software from the ground up.

3. Focus on sustainability technology. 2023 marked another year of natural disasters, political and social crises, and economic uncertainty. From massive tech employee layoffs to the stagnating post-COVID economies, there are numerous factors impacting the insurance sector, decreasing demand for certain insurance products and rendering traditional risk assessment methodologies ineffective. In particular, it is climate change that disrupts the insurance market the most. Higher claims for damages caused by floods and wildfires, coverage withdrawal for high-risk areas, and the emergence of new insurance policies, such as coverage for renewable energy projects, are just a few examples of such influence. To address the emerging challenges while avoiding operational losses, insurance companies turn to sustainability technology.

In particular, we are witnessing a steady interest in AI-powered data analytics and generative AI. The former helps insurance companies analyze miscellaneous data, from satellite images to sensor readings, to better predict climate-related risks, while the latter can assist with modeling complex natural disaster scenarios for more precise risk evaluation. The synthetic data produced by Gen AI models can further be used for creating digital twins, i.e., virtual replicas of physical assets such as property, supply chains, manufacturing processes, and even human beings. Given that 65% of CEOs across all industries see Industry 4.0 technologies as critical to addressing environmental challenges, we can expect more insurance companies to jump on the sustainability tech bandwagon in the coming year.

As more tasks and processes are partially or completely automated, insurance specialists will be able to focus more on value-added activities such as consulting and risk management. This, in turn, will increase customer trust and satisfaction, resulting in improved bottom lines for insurance companies.

However, to ride this wave of innovation, insurance professionals must keep their finger on the pulse of InsurTech advances and develop effective change management programs.