With a widening range of capabilities and business strategies, the insurtech market is quickly expanding. In addition to strong exit activity, the market has seen a dramatic increase in fundraising valuations and volumes.
Investments in InsurTechs are being made by insurers and private equity (PE) companies in an effort to increase business productivity and expand into new markets.
At the same time, clients of today need the same smooth, customised digital experiences with insurance that they receive from other service providers. Insurance companies are being compelled to adopt cutting-edge technologies and consumer-focused business structures as a result of these raised client expectations.
By comprehending the main technological and business issues facing insurers, insurtech investors may capitalise on the current disruption by identifying potential clients who have the most innovative solutions.
Partnership opportunities in the insurtech market
However, today’s players are frequently focused on partnerships rather than direct competition with established insurance companies as they formerly were. Furthermore, insurers that once saw InsurTechs as a danger are now prepared to partner with and invest in businesses that can assist them in swiftly and effectively bringing novel insurance products to market.
Embedded insurance is one answer that is becoming the catalyst for current collaborations. Both traditional carriers and non-insurers are placing strategic bets to acquire InsurTechs that can assist in integrating insurance products that generate income into their ecosystems.
The investment environment for insurtech
According to CB Insights, insurtech companies closed 566 deals and raised a record $15.4 billion in capital in 2021, more than double what they had done in 2020. The P&C sector accounted for 73% of InsurTech deals through the third quarter of 2021, which saw the most investment activity.
Values are rising as the market is more developed. The average financing increased from $21 million in 2020 to $33 million in 2021. Mid- to late-stage deals, which raised somewhere between $100 million and $1.2 billion, accounted for more than one-third of the total funds raised in 2021.
Monitoring these four technological trends
There are four major technological trends that are influencing the sector:
1. Artificial Intelligence
A strategic imperative has emerged around utilising AI-based platforms to increase the efficacy and efficiency of crucial operations. Automation is already being used to speed up the claims process from the initial first notification of loss (FNOL) to the adjustment and settlement. The trend of P&C and life insurers saving a lot of money as a result of more automation is expected to continue.
2. Big data
A new area of competitive advantage has emerged: utilising big data from outside sources and carriers’ own systems to enhance consumer personalisation, minimise losses, and better underwriting procedures. P&C insurance companies are using sensors in homes, cars, and buildings to proactively lower losses in areas like non-weather-related water damage.
3. Embedded insurance
The addition of insurance products to the ecosystems of banks, automakers, and other partners can boost income and enhance value propositions, benefiting both distributors and insurers.
To increase speed and efficiency throughout their value chains, Carriers and InsurTechs are integrating elements of AI, big data, and open APIs using cloud-based platforms and as-a-service business models. Read about this in detail on W3techpanel technology.
Watch these four advertising themes
The following four main commercial themes are motivating investment activity:
1. Increasing spending on third-party technologies
2. Giving automation priority
3. Making money from massive data assets
4. Improving RegTech and cybersecurity