The insurance industry has been slow to embrace tech innovation. Now, however, VCs are investing heavily in insurtechs and driving the evolution necessary to meet the demands of today’s market velocity.
And, these insurtechs are hot, as evidenced by valuations in excess of a billion dollars without ever having recorded an underwriting profit.
So, what do I see on the horizon for insurtechs—and the insurance industry as a whole?
- Given its retail focus, insurtech growth is occurring in the general insurance space, but being customer-centric is just as important in the commercial sector—which is where we operate. In the wake of COVID, people must operate more efficiently and effectively in the workplace than ever before to ensure business sustainability. Simplification is needed, and insurtechs can deliver it.
- M&A in Q3 2020 represented the second-highest global volume ever—nearly 3x more deals were struck than in Q2 2020. This is surely an impact of COVID-19, as those in the insurance space recognized the need to operate with far greater agility than achievable through traditional processes.
- Telematics is not only providing granular data to the home insurance market but to the commercial insurance world, as well. As we see parametric insurance on the rise to support the P&C market, providing more dynamic models to catastrophic exposure, look to the critical importance of telematics in the transportation industry, as well.
- M&A will burn out the insurtech movement, as insurtechs enable incumbent insurers to change their digital footprint in an instant—but they’ll be watching quietly from the sidelines for a while, first, in order to see their value.
- We should never forget the value of the agent. True disintermediation will not occur as a result of insurtechs—these tech companies will simply provide the tools that empower agents to operate more efficiently and effectively than they could previously. This will free them up to invest in the relationship-building that’s critical to business growth.
I’m excited about what the future holds for the transportation insurance industry. Not only because of what tech can do for us—but because of what it frees us up to do.