Amid the lingering impact of the pandemic and rapid adoption of digital technology, the global insurtech market has experienced rapid growth in recent years.

The market is expected grow to US$10.42 billion this year, from US$8.07 billion in 2021. And at a compound annual growth rate (CAGR) of 30%, it is forecast to reach US$29.75 billion by 2026, according to a new Research and Markets report.

Much of the market growth is attributable to its cost-effective approach to distribution. Insurtech eliminates the need for a middleman between the insurance provider and customer. Through digitization and highly responsive customer engagement software, insurtech reduces the steps taken by a customer for onboarding and claim processing, lowering the overall cost of the insurance policy.

North America dominates the sector with a market share of 36.84% in 2021, a separate report by Grand View Research says. In the United States, key players Oscar and Bright House have secured over US$1 billion in funding since their founding in 2013 and 2016 respectively. 

Asia-Pacific is the second largest market, with nearly half of the 335 insurtech companies in the region based in China and India, notes S&P Global Market Intelligence.

In China, however, the insurtech market has seen a slackening in fund-raising activity as a slowing economy, coupled with a regulatory clampdown on the internet sector and the country's zero-Covid policy, has dampened investor sentiment towards the sector. Last year Chinese insurtech firms raised only US$673.7 million, down from US$1.41 billion in 2020.

As a result, India has replaced China as the largest insurtech fund-raiser in the region, raising US$1.33 billion in 2021, up by over US$1 billion compared with the previous year, despite the uncertain economic environment, according to S&P Global Market Intelligence.

Around a third of the top 21 insurtech companies in the region are based in India. Among these are PolicyBazaar and CarDekho, which raised US$766.6 million and US$497.5 million respectively in 2021.

Following India and China, Singapore has performed well in the competitive Asian insurtech market. Bolttech, for example, concluded one of the biggest insurtech capital-raising exercises in the region last year, racking up US$247 million in a Series A funding round.

Insurtech firms are increasingly using hyper-automation to satisfy rising client demand and provide competitive pricing. Hyper automation is a combination of machine learning (ML), artificial intelligence (AI), and robotic process automation (RPA) that allows insurtech professionals to conduct business more quickly, efficiently, and securely.

According to a study by Cigniti, an India-based software company, more than 65% of insurtech companies are likely to adopt at least partial hyper-automation by 2024, as new technologies and evolving client expectations drive rapid transition in the industry.