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Global investment in insurance technology, or insurtech, is surging as it reached US$1.7 billion in 2016, with the volume and value of deals having almost doubled since 2014, according to new research from Accenture PLC published on Thursday.

Almost half of the investments in insurtech have been earmarked for research in artificial intelligence (AI) and the Internet of Things (IoT) as the deal volume for these two areas, combined, grew by 79% from 2014 to 2016, Accenture’s report, entitled Rise of Insurtech, finds. That’s because the insurance industry betting increasingly that developments in these fields will enhance its approach to pricing and personalizing products.

Insurtech’s rapid growth can partly be attributed to investments pouring in from startups operating outside the traditional industry. According to Accenture’s deal analysis, only 14% of the 450 insurtech deals that took place during this time involved an insurer or its venture arm. Still, the report notes, this is a marked increase from the 3% share of overall insurtech deals in 2014.

“We’ve seen a rapid acceleration of investment into and deal activity around intelligent automation and IoT startups over the past 12 months,” says Roy Jubraj, co-author of the report and digital and innovation lead at the firm’s financial services practice in the U.K. and Ireland, in a statement. “These technologies are primed to disrupt the industry in the years to come.”

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A look at the volume of insurtech deals alone offers a limited view of just how much insurers are advancing in their efforts to fund innovation, the report notes.

Although just 17% of the deals made by the world’s 75 leading insurers were in the insurtech space, the remaining investment of 83% was tied to other startups in the field of analytics, data protection and health care that could transform the insurance industry.

The Accenture report also examines the trends and challenges facing both established insurers and insurance startups as they seek to broker partnerships with each other.

Facing pressure to adapt, most incumbents are embracing the disruptive potential of insurtech, the report notes. For example, 86% of insurers surveyed said they have had to increase the pace at which they pursue innovation to “retain a competitive edge.”

Much of the perceived threat among insurers, the report notes, still comes from established companies rather than the startups. Only about 24% say that startups within the insurance industry pose the greatest risk of disruption compared with 37% who point to their existing competitors.

As a “data-hungry” business, there’s a strong recognition among insurers that AI and IoT hold the potential of improving customer experience and transforming the way the insurance industry monitors risk.

But while collaboration with startups ranks high on insurers’ agenda, in practice, those partnerships have yet to yield as much value as anticipated. That’s because there’s still a tension between the two cultures, the report notes, with incumbent firms more risk-averse than startups.

In fact, the report finds, insurers lag behind the retail banking industry in terms of collaboration with digital and technology startups. The Accenture report’s comparative analysis of the activities of 200 insurers and 80 retail banks finds that 17% of insurers have an “in-house venture capital fund” in this space. Retail banks, in contrast, roughly engage twice as much in these activities as insurers.

As the insurance industry looks to close more deals, the report notes that it should follow the lead of retail banks, which have sought to partner with financial technology (fintech) firms.

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