The InsureTech investment wave has propagated for another year as more investment firms focus on the space and more insurance companies find ways to participate. Announcements of new startups have not slowed; there are far more out there than there were a year ago, and many have been acquired.
Despite an increase in industry veterans starting companies, the Silicon Valley investment model is still an outsider’s. The goal of many startups is to validate a business model first, then work out the details later (or to get acquired and let someone else tackle that step).
Most of the major InsureTech realities have remained the same, yet some notable trends have cropped up for the most recent wave of startups, including:
- The proliferation of AI, especially in chatbot and conversational platforms.
- Non-medical underwriting for life insurance; long a desire of the industry, many startups are using AI and big data to give it a try.
- Increased attention on commercial lines, as more industry veterans are taking the reins at startups tackling backend processes in this line of business.
- Niche lines of business, including startups that sell post-purchase warranties, provide platforms for event insurance, focus on catastrophes, and act as rent guarantors.
In the future, the volume of venture capital pouring into this space likely will diminish. At that point, the term “InsureTech” will broaden to cover all insurance technology in general, similar to how “FinTech” now applies across financial services. In the meantime, the outside money will serve as an opportunity for insurers to investigate new ways of doing business, using technology, or bringing IT talent into their organizations.
For more on the InsureTech boom, see our recent report, InsureTech for Insurers: 150 Startup Profiles.
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