The insurance industry is ripe for disruption. The 300 year-old insurance market is changing, and the digital shift brings new types of customers, with new habits, behaviours and needs – who are challenging the status quo of the insurance industry.
Insurance companies make their money from selling premiums collected from their customers and re-investing these into other areas of the business. Since 90% of premiums are sold via independent or affiliated agents, intermediaries take a big cut of the fee. However, these days new entrants are able to streamline that process and allow consumers to essentially “act as the intermediary.”
The emergence of digital channels such as the web (both desktop and mobile), has enabled insurance companies to find new ways to engage with their customers. For example, connected devices and the Internet of Things, mean traditional insurance companies are now presented with unprecedented amounts of big data, taking advantage of new opportunities.
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Insurance Startups To Watch
The insurance tech market has exploded with startups, which you can see from the chart below.
Insurance technology startups attracted $2.6bn of investment last year, up from $800m in 2014. [Source: The Telegraph]
This shift has spurred on innovation across several areas from product insurance, to comparison / marketplaces to P2P insurance companies.
EditorEye Catalyst tracks key developments and recent news for clients on disruptive InsurTech startups:
- P2P Insurance Provider Lemonade Receives Provisional B-Corp Certification [Link]
- Lemonade Hires World Leading Behavioral Economist to Aid Growth of P2P Insurance Platform [Link]
- Insurance tech startup Lemonade backed by reinsurers Lloyd’s of London, Berkshire Hathaway’s National Indemnity, Hiscox and more [Link]
- Major disruptor Lemonade in double industry first [Link]
- Oscar Health Insurance’s Obamacare Losses: Hip Startup Lost $105 Million In 2015 In New York And New Jersey Exchanges [Link]
- Oscar Health Raising Giant Funding Round led by Fidelity [Link]
- Oscar, a Health Insurance Start-Up, Valued at $1.5 Billion [Link]
- Oscar expands into Arizona [Link]
- The Zebra Named Finalist for EY Entrepreneur of the Year [Link]
- High School Dropout Raises $17 Million After Cold Emailing Mark Cuban [Link]
- The Zebra Is Latest Insurance ‘Disrupter’ to Attract Funding [Link]
- Credit Karma Claims No. 1 Spot in App Rankings [Link]
- Credit Karma gives away its one billionth free credit score [Link]
- Credit Karma Raises $175M in Venture Capital to Expand Products [Link]
- Why Credit Karma Is Free & How It Makes Money [Link]
- Zenefits lost two-thirds of its value [Link]
- Zenefits Goes Mobile with HR App for Small Businesses [Link]
- Zenefits ‘Not as Troubled’ as People Think [Link]
- When Zenefits banned vacations for employees, COO David Sacks went to the Caribbean [Link]
- Metromile Launches Uber Car Insurance [Link]
- Pay-per-mile insurance provider, Metromile, hires John Orta as General Counsel [Link]
- Metromile in California Names Former Dish Executive Chief Marketing Officer [Link]
How are the major insurance players responding to change?
Aviva, recently, announced a multi-million pound investment and strategic partnership with Founders Factory, a digital accelerator launched last year by Brent Hoberman, a co-founder of Lastminute.com.
Aviva was the first insurance company to launch a smartphone app that records driving behaviour. ‘Aviva Drive’ uses GPS to measure cornering, braking and accelerating. And, as a result, it can offer safer drivers up to 20% off their next car insurance policy.
They also launched Aviva Ventures, investing up to £200m a year in startup businesses including Appyparking, a van parking database, and Cocoon, which monitors homes and alerts users if the burglar alarm is triggered.
AXA has also launched AXA Strategic Ventures, a $200m investment fund. Notable investments include Wellth, Blockstream and PolicyGenius.
To help support the ecosystem, AXA also launched Kamet, a €100m InsurTech incubator.
As part of its mission, AXA aims to:
- Identify and support innovative startups that can improve the AXA customer experience
- Help these young firms go international through AXA’s expertise and market access
- Contribute to the development and profitability of these innovative startups
Other VC firms also investing in insurance tech include:
MassMutual Ventures, Ping An Ventures, TransAmerica Ventures, Northwestern Mutual, Capital, American Family Ventures, New York Life Insurance, USAA, China Life Insurance
Insurance Tech Accelerators
In recent years, several tech accelerators are supporting innovative startups taking on the insurance giants.
In Europe, there’s Mundi Lab, based in Germany and Startup Bootcamp in London.
Startup Bootcamp have opened their own InsurTech accelerator, incubating a new group of game changers in the insurance market including:
- Buzzmove, an online price comparison and booking platform for the removals industry and to personalise home insurance
- FitSense, helps health and life insurance companies provide better insurance by using data from wearable devices
- MyFutureNow, combines old pension plans into one low cost online account helping people to take control of the planning of their future
It’s an exciting time to be working within the insurance industry, which is flourishing with new startups and companies disrupting the sector. It’s critical to keep track of new players and understand how the market is reacting to change by either creating new products or revenue streams.
Major insurance and finance organisations use Catalyst for tailored weekly briefings and live alerts on new insurance startups and key disruptive trends – keeping your teams aware of new product ideas, partnerships, threats and opportunities.
Catalyst platform enables senior executives to stay up-to-speed on the latest innovations and market developments within their industry.
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- Product Insurance — Companies specializing in product insurance will be able to supply you with insurance for your possessions – from mobile phones to diamonds.
- Auto Insurance — Buying auto insurance will protect you against financial loss incase of an accident or your car breaking down. These premiums are customized depending on years experience, mileage use and now with technology also being able to detect reckless or inappropriate driving.
- Health/Travel insurance — Companies offering this type of insurance will take in the financial costs of health or travel incidents suffered by individuals or companies.
- Life, Home, Property & Casualty Insurance — These companies will offer a wide range of insurance from life, home, property and casualty to marriage insurance.
- Insurance Comparison/Marketplace — These are the middleman between individuals looking to buy insurance and companies selling insurance. They compare different insurance companies and advise individuals in what type of insurance is best for them.
- P2P Insurance — Peer-to-peer insurance companies and where a joint group of individuals will buy insurance for an item they mutually own, share or rent: from a houses to a car to electronic equipment.
- Insurance Data/Intelligence – These companies are the meta-insurers; they focus on analyzing the data and business intelligence of the insurance industry.
- Insurance Investors — Insurance investors will incubate, mentor and invest in new insurance companies.
- Consumer Insurance Management Platforms — These companies allow and facilitate insurance owners to file and make claims on the spot for anything relating to anything they have insured.