The US Insurance Distribution Technology Market (by Function, Application, Technology Type, & End-User): Insights & Forecast with Potential Impact of COVID-19 (2022-2026)
- Published: 20th Sep 2023
- Pages: 138
- Format : Pdf
Market Insight:
Insurance distribution technologies are primarily concerned with increasing the efficiency of the existing insurance sector paradigm. These technologies are also concentrating on increasing client communications and the ability to automate operations.
The insurance distribution technology business has a lot of room to develop in the US. Insurance technology companies have seen substantial growth in car, homeownership, and cyber insurance. Such rapid expansion would compel traditional insurers to either acquire technological skills or form partnerships with InsurTech firms. With millennials' increased need for creative products and services, such collaboration would become a vital requirement. Traditional insurers might gain from faster outcomes in building a tech culture as a result of such agreements. The US insurance distribution technology market is projected to reach US$209.99 billion in 2023, growing at a CAGR of 7.60% during the forecast period.
Segment Covered:
- By Function: The report splits the US insurance distribution technology market into three segments in terms of function: Insurance Carrier Spending on Commissions; Insurance Broker Spending on Technology (Broker IT); and Insurance Carrier Spending on Advertising. The commission segment lead the insurance distribution technology market, accounted for the major share of the market. The rising penetration of digital and telesales models is expected to increase the share of the broker commission. The US advertising insurance distribution technology market can be futher divided into five applications: Auto, Health, Life, Home, and SMB Commercial P&C. The US home advertising market is expected to grow significantly over the forecast period, owing to the rising development of back-end call centers in the home insurance markets, the growing use of connected devices to streamline processes, etc.
- By Technology Type: The market has been segmented into six parts namely Cloud Computing, Artificial Intelligence, Block Chain, Big Data & Business Analytics, IoT, and Others, on the basis of technology. Cloud computing held the maximum share in the market. The cloud computing market is anticipated to grow at the highest CAGR of during the forecasted period. The growth is expected to increase as cloud computing is a valuable delivery model that insurers can use to facilitate or accelerate business transformation. Moreover, cloud computing has a huge impact on the insurance industry, with benefits for internal processes, new customer acquisition, and building policyholders’ loyalty.
- By End-user: The report provides the bifurcation of the US insurance distribution technology market based on eight end-user: BFSI, Automotive, Manufacturing, Transportation, Government, Healthcare, Retail, and Others. The healthcare segment is anticipated to grow at the highest CAGR during the forecasted period. The growth can be attributed to the widespread use of the platform and peer-to-peer business models and lower insurance premium rates leading to a rise in the number of policymakers.
Top Impacting Factors:
Growth Drivers
- Soaring Urban Population
- Rising Millennial Population
- Rise in the Use of Internet to Buy Insurance Products
- Increasing Use of Mobile Technology and Applications (Apps)
Challenges
- Security Concerns
- Infrastructure Bottlenecks
Trends
- Increasing Use of Social Media as a Distribution Channel
- Rising Personalization Trend
- Growing Adoption of Telematics
- Escalating Demand for Digital Self-Service
Driver: Rising Millennial Population
Millennials make very different choices as compared to older generations. Millennials perceive digital as a way of life. Thus, the pace of adoption of digital channels among millennials is on the rise. Therefore, they place high importance on mobile, internet, or website channels for conducting insurance transactions. To meet this generation's expectations, insurers are providing seamless omnichannel access by simplifying existing products and processes to create relatable offerings available for purchase. Hence, the rising millennial population would boost the market growth of insurance distribution technology in the US.
- Challenge: Security Concerns
Cyber security threats are escalating and becoming increasingly complex for the insurance industry as they transition to smart and more connected information technology infrastructures. Insurers have a wealth of data points on individuals – across their health details, property, cars, and other vehicles, etc., making insurance network security a primary IT concern. The essential data hold by the digital insurance sector makes a conspicuous market for hackers and cybercriminals. The potential threats to insurance security include malware and phishing attempts, unsecured mobile devices, lost and stolen mobile devices, unrestricted access to computers, inadequate disposal of old hardware, etc. Therefore, the security concerns would negatively impact the growth of the insurance distribution technology market in the US.
- Trend: Rising Personalization Trend
Insurance digital distribution is expanding very rapidly. By activating and collecting the right data, from IoTs such as connected cars, activity trackers, and other wearables, insurers can better understand consumer needs and offer customized advice, coverage, and tailored pricing. Usage-based insurance policies, for instance, tap into customer data to charge users according to their specific needs and behaviors, putting the consumer in charge of their fees. Such personalization benefits both customers and insurers. Thus, with the growing personalization trend along with improving user satisfaction, insurance companies are increasingly adopting digital strategies. Thereby, augmenting the growth of the insurance distribution technology market in the years to come.
The COVID-19 Analysis:
The US insurance distribution technology market growth was positively influenced by the COVID-19 pandemic. The COVID-19 pandemic is forcing almost all organizations to speed up their digital transformation priorities. In regards to the insurance distribution technology industry, the most significant change is the growing interest throughout the pandemic in digital products that are more dynamic. This change would lead to much greater levels of personalization and so change the customer experience and value proposition. In post- COVID era, insurers must explore technologies like virtual reality, augmented reality, and virtual-visit solutions for facilitating virtual sales and intermediary enablement.
Analysis of Key Players:
The US insurance distribution technology market is fragmented in nature, owing to the presence of a large number of small businesses catering to the demands of life and non-life insurance sectors. The key players of the US insurance distribution technology market are:
- Brown & Brown, Inc. (Coverhound)
- Goosehead Insurance, Inc.
- Porch Group, Inc.
- GoHealth, Inc.
- Clover Health Investments, Corp.
- Oscar Health, Inc.
- MediaAlpha, Inc.
- Hippo Holdings Inc. (Hippo Insurance Services)
- Root Inc.
- Lemonade Inc.
Some of the strategies among key players in the market for insurance distribution technology are partnerships, mergers, acquisitions, and collaborations. For Instance, Lemonade entered into an agreement in 2021 to acquire Metromile (the data science company focused on auto insurance). Whereas, GoHealth has invested in multiple sectors such as HRTech, Employer Insurance, Employee Health IT, and more. MediaAlpha is one of the largest digital aggregator companies in the market. Whereas, companies such as GoHealth, Goosehead, and Porch are integrated distributors. Insurance distribution technology firm’s ability to promote insurance industry innovation by generating new products would aid insurance companies in meeting the changing needs of their customers. As a result, various insurance distribution technology companies are gaining traction by providing a new and diverse set of services.
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