S&P Market Intelligence has recently published a report on the state of the Insurtech market, and on November 7 the company held a briefing on the subject. Panelists included Slice CEO Tim Attia, Drew Aldrich, Principal at American Family Ventures and the report’s author, Research Analyst Thomas Mason.
Here are some of the trends observed by S&P in the insurtech space:
- Insurtechs are still in very early stages and that means it could take up to seven years before the recent crop of successful insurtechs go public and return investor capital.
- Digital agencies and tech-focused underwriting generated the largest amount of deal value in the first half of 2018.
- Companies that have full control of distribution, underwriting and servicing their policies (full-stack companies) have amassed substantial funding.
- Disruption of the sort wreaked by Netflix on the entertainment industry is unlikely for the many lines of insurance (auto for instance) that are already dominated by the direct distribution model.
- In commercial insurance where direct sales are not as prevalent, large incumbents are vigorously competing with startups for direct sales.
The panelists had this advice for incumbents who are looking to compete with nimble insurtechs:
- Prediction is the next big frontier.
- Spin off a separate digital insurer, it’s a lot easier than changing existing systems, silos and layers.
- Embrace a culture of entrepreneurship and willingness to experiment.
- Consumer expectations are changing quickly – the disruption could have happened already, and we don’t even know.