Insurance Innovation in 100 Years
Information technology (IT) innovation is now upgrading insurance services. Insurtech, a word coined by blending "insurance" and "technology," is transforming the insurance industry. The emergence of totally new types of insurance services has been fueled by the new technologies of the Fourth Industrial Revolution, such as artificial intelligence (AI), Internet of Things (IoT) and big data.
In particular, the insurtech market has a great growth potential as the insurance industry requires more customized products than in any other financial areas, according to experts. Advanced countries in terms of insurance services, including Europe and the United States, have been expanding the insurtech market. According to the Korea Insurance Development Institute, the size of the global insurtech market reached US$1.19 billion (1.33 trillion won) as of 2016. It increased by 4.5 times in just three years from US$260 million (293.23 billion won) in 2013. The global insurtech market is led by the U.S. About 70 percent of the total insurtech investments around the world is made in the U.S.
Recently, the South Korean insurance industry has been also showing a move to make use of insurtech. It has introduced chatbot services using AI and systems that reduce insurance premiums by securing users’ data. Moreover, it has adopted the system that reduces the complex process of receiving insurance money in hospitals, raising its competitiveness.
An official from the insurance industry said, “The landscape of the insurance industry is changing from moment to moment, including the introduction of the new international accounting standard (IFRS 17) and the K-Insurance Capital Standard (K-ICS) and the rise in interest rates. Insurtech will be a key factor that determines the competitiveness of insurance companies in the future.” Yoon Il-young, a researcher at the Convergence Research Policy Center, said, “Insurtech is expected to play a role as a major catalyst for innovation in the insurance industry in 100 years and the government needs to carry out support projects to promote it.”