Generative AI has helped reignite investment in insurance following an extremely difficult couple of years for the insurtech sector. Investment into emerging technologies had been booming before it was hit hard by Covid-19 in 2020 and the cost-of-living crisis in 2022, but there are signs of recovery in 2023, which is in large part due to the buzz around generative AI.
GlobalData’s Deals Database found that the number of completed M&A deals in insurance tagged to the artificial intelligence theme increased by 153.5% year-on-year in 2023. This followed two extremely sharp drops in investment in 2020 and 2022. The cost-of-living crisis and tough investment environment have actually continued into 2023, and almost all other technology themes are still struggling to see growth (big data, blockchain, and cloud all saw declines in the total value of insurance M&A deals in 2023). However, GlobalData believes the buzz around generative AI and how it can transform the insurance industry in the immediate and more long-term future is a leading reason behind this sharp increase.
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This is backed up by our News Database. This also recorded declines in the number of news stories tagged to AI in insurance in 2020 and 2022 but saw an 11.2% rise in news stories on AI in insurance in 2023. This highlights how interest in the theme was sparked throughout the year. A number of leading insurers have already embraced generative AI despite it being in its nascency, with both Zurich and Helvetia launching partnerships with ChatGPT in 2023. Zurich is using it to analyze historical data and help understand what causes claims to improve underwriting, while Helvetia is upgrading its chatbots.
It is evident that generative AI has had a significant impact on the insurance industry over the past year. This is clear in both discussion around the topic, as well as in the number of completed M&A deals and active case studies from leading insurers. GlobalData expects to see a lot of innovation within this theme in the coming years.
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