Over the past two years, Novarica has profiled over 150 InsureTech startups. In that time frame, only two have failed. This is not to imply that all startups in this space are immune to failure—but for the time being, industry enthusiasm for this space has not slowed down.
I recently attended InsureTech Connect in Las Vegas where I had the chance to see firsthand the excitement and influence of new technologies and startups in the insurance industry. Some trends stood out as worthy of insurer attention for 2019.
Getting Gig-ey with It
The 1099 and gig economy workforce is widely projected to continue growing within the next few years. This market segment has remained largely untapped by insurers, though many are waking up to the need to engage these consumers. Many InsureTech companies target this market. For example, Stride Health is a digital agency offering voluntary benefits (dental, health, vision) for freelance and gig economy workers. Platforms such as these may serve as a valuable vehicle for insurers to reach consumers in the gig economy without having to commit substantial resources or totally rewrite products.
Niche Coverages
The most recent wave of InsureTech has brought with it a combination of startups founded by industry vets and companies willing to tackle more than just the front-end consumer experience. These startups are setting their sights on niche lines of business that have historically been difficult to write and profit from. Pie, for example, is tackling direct online workers’ compensation insurance, and Neptune is writing flood insurance direct to consumer. Companies like these are showing insurers that they will need more than just expertise to be competitive, and data and analytics will increasingly have a role to play in better underwriting products and targeting consumers.
The Expanding Scope of the Insurance Product
InsureTech startups are demonstrating that emerging technologies and advanced analytics can change the way in which insurance can be written and sold. What’s more, they can potentially revamp the purpose of carriers themselves. Why couldn’t data services and analytics, risk-mitigating tech, and insurance all come from the same provider? Startups have demonstrated this possibility, and many will look to monetize their analytics expertise in tandem with coverage.
The proliferation of InsureTech startup growth will inevitably slow; no one startup will upend the industry, and no one startup will serve every insurer need. Yet for the time being, these companies are teaching insurers that running the business of insurance looks different in the face of changing consumer expectations, new technologies, and digital nativity.
For more on the startup landscape, see Novarica’s latest report on the topic, InsureTech for Insurers: 150 Startup Profiles.
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