Investment in data analytics within the insurance industry between 2024 and the end of September increased by 220% compared to all of 2023, according to a new report.
According to GlobalData Insurance data analysis According to the report, sectoral M&A investments in the first nine months of this year totaled $5.7 billion, compared to $1.8 billion for all of last year.
Noting two years of “extremely weak” investment in 2022 and 2023, he calls performance for 2024 so far a “quite extraordinary turnaround”, suggesting it is indicative of renewed enthusiasm for analysis of data in the sector, associated with “small global improvement”. macroeconomic and investment environments.
The report highlights that renewed interest in artificial intelligence (AI) is likely one of the drivers of this enthusiasm. Figures from GlobalData show that the value of the AI market has grown from $81 billion in 2022 to $103 billion in 2023 – an increase of more than 27%, with an even higher compound annual rate of 39 % forecast between 2023 and 2030.
Regarding the relevance of AI, the report explains: “Data analysis is at the heart of the rise of AI and personalization within insurance. The power of data is what allows AI to function properly and helps insurers create customer insights and offer personalized policies.
He adds: “Data analysis greatly facilitates the rise of AI, and AI relies heavily on data to create results. It combines perfectly with data analytics as it allows insurers to collect, manage and analyze vast amounts of customer data that would otherwise be too time-consuming.
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By GlobalData
Other areas where AI can transform the insurance industry include improving underwriting processes, claims management, customer service and predicting future trends.
Data analytics M&A investment levels in the insurance industry in 2022 ($4.3 billion) and 2023 ($1.8 billion) were notable due to this that had happened before. Investment increased from £2.1 billion in 2018 to $8 billion in 2019 and £8.8 billion in 2020 before peaking at $16.5 billion in 2021.
GlobalData suggests that the crisis after 2021 was likely due to a difficult macroeconomic environment around the world, with a cost of living crisis, high inflation rates and high energy creating a difficult investment environment. He also notes that insurers “may also have improved their ability to create their own internal data teams,” which could partly explain the decline.
Despite these factors, the report states that data analytics remains a key theme in the insurance sector and suggests that continued investment in the future will drive a range of innovations within the sector in the near future. .
