Global insurance services market expected to grow due to IoT and changes in operating models

The global insurance services market is expected to grow at a compound annual growth rate (CAGR) of 4.9% over the next five years due to the increase in the use of the Internet of Things (IoT) and changes in operating models adopted such as the emergence of peer-to-peer and on-demand insurance models, according to a new report.

Global technology research and advisory company Technavio released Global Insurance Services: Procurement Intelligence Report 2017-2021 on Thursday. The research report provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at “helping organizations achieve superior business performance,” Technavio said in a press release. The report also provides insights on pricing, supplier positioning and “top” companies.

The report noted that insurers utilize IoT in the form of vehicle telematics, connected home technologies (such as smart security systems, switches, and other devices) and wearables, which collect information about physical activities of wearers. Insurers also automate various office functions using artificial intelligence. “Recent developments in the industry involve the use of robo-advisors or chatbots to resolve customer queries,” the report noted.

Technavio has published a new report on the global insurance services market from 2017-2021. (Graphic: Business Wire)

Other trends discussed in the report:

• Buyers are adopting reverse auctions to evaluate and select service providers and to reduce the prices of service offerings. Buyers are also comparing insurance offerings with industry peer groups to make informed decisions – they can compare various options covered by insurance companies to choose the best options for employees (in the case of business insurance);
• Unbundling of insurance services can help identify the best match for the insured and help procure the right level of benefits at the right prices. This practice has gained momentum in recent years due to the increased adoption of digitization in the insurance sector; and
• The adoption of various cost optimization levers helps buyers of insurance services realize cost savings and achieve category management and value benefits (including a reduction in procurement complexities).