*By Caroline Capitani
The insurance market is undergoing transformation. Bureaucratic processes are being rethought and technical language is being replaced with an approach that is more humanized and understandable to the layperson. “One click” and “on-demand” are among the many terms that now guide the rewriting of business models in an insurance sector that is being taken over by the digital age. I believe the innovations incorporated by the insurance industry over the next 20 years will change the market much more than it has during its 200-year history.
Could it be that the Darwinian view of species evolution applies to the insurance industry? Only time will tell whether traditional companies will be able to survive in this new context or be forced to evolve quickly to avoid being swallowed up by natural selection. There are signs that this very traditional market is being reassessed, given the number of events cropping up to discuss the issue around the world: InsurTech Connect, InsurTech Conference, InsurTech Brasil, and the Global Summit for Insurance Innovation, among others.
In order to identify insurance startups (better known as “InsurTechs”) worldwide, I mapped the emerging companies listed in the CB Insights report detailing the Fintech 250 – a list of companies, including InsurTechs, transforming financial services around the world. I also reviewed a study conducted by the Swiss Re Institute entitled “Technology and Insurance: Themes and Challenges”. Both studies were published worldwide in June 2017.
Upon analyzing these emerging companies, we see the increasing influence of technology and the availability of new data sources, as well as artificial intelligence, on the insurance sector. The digitalization process is making huge strides, impacting the entire insurance value chain. The rapid spread of technologies and concepts, such as the Internet of Things (IoT), blockchain, robo-advisors, machine learning, big data, sharing economy, and open API (Application Programming Interface), are impacting the way insurance services are distributed, monetized, communicated and consumed throughout the world.
According to the report published by Swiss Re in 2016, the number of investments in InsurTechs grew 40% and approximately two-thirds of these businesses were financed by insurers, including: Allianz, AXA, Aegon, Liberty, American Family, Assurant, AIG and New York Life. In most cases, an insurance company is either an investor, partner, client or founder of these start-up companies.
In addition to insurers, technology giants such as Google, Facebook, Alibaba and Amazon are also looking at opportunities in this market.
The five InsurTechs shown in the following table appear in both the CB Insights as well as the Swiss Re list:
Platform for the economic modeling of cyber risk
Online technology platform, offering information and expertise from experienced brokers
Customized insurance for niche professionals, e.g., personal trainers, professionals paid per job done
On-demand insurance app for personal items
Simplesurance Munich Re
Software that facilitates acquiring insurance for retail purchases at the time of online checkout
The following diagram was constructed based on the Swiss Re report. Startups were categorized by primary area of innovation, but may also be present in other areas of the value chain. In most cases, an insurance company is either an investor, partner, client or founder of these start-up companies.
In order to increase access and expand study of the InsurTechs that are transforming the industry, we created an open list with information on these initiatives, which can be accessed using this link. If you know of an interesting InsurTech that has not been included, please send an email to email@example.com and help us improve this list.
*Caroline Capitani, VP of Business Innovation at ilegra