Insurtechs will see an uptick in merger and acquisition activity and consolidation this year, according to technology company Duck Creek. 

The shift will be prompted by a decline in the number of start-ups and the amount of funding available, it says. And it may result in fewer but more robust and proven technological innovations for insurers to harness.  

“Insurtech companies are likely to remain at the forefront of acquisition activity as carriers increasingly recognise the importance of these capabilities for transformation efforts across the entire value chain,” Duck Creek said. 

“Insurers must remain vigilant and proactive in seizing these opportunities for operational enhancement.” 

Duck Creek expects an increase in consumer privacy demands this year, and says artificial intelligence (AI) may fill some “talent gaps” in customer service and underwriting, while boosting underwriting efficiency.  

“All signs point to 2024 being a year of tech convergence, where big data, analytics and AI seamlessly blend into one overarching strategy. 

“Although public perception of AI will trend towards positive, cybersecurity concern increases, and processing will be limited by chip availability.” 

Duck Creek says while high interest rates pose hurdles to venture capital, climate change will spur innovation among insurtechs, particularly around new data and underwriting solutions for natural catastrophes. 

“The financing challenges faced by insurtechs necessitate insurers to be more strategic and selective in their partnerships with these start-ups. However, the innovation opportunities presented also mean insurers should be ready to leverage new technologies to improve underwriting and claims processing for catastrophic events.” 

Insurers can stay ahead of the curve by embracing new technologies to streamline operations and minimise costs, and they “must transform their offerings to meet evolving consumer expectations, emphasising risk prevention and loss mitigation. Insurers will need to embrace AI’s transformative potential, especially in underwriting, to enhance risk selection and simplify tasks.”