At times, it seems like insurtech is around every corner, with new startups materializing every day, conferences emerging out of nowhere and accelerators doing their job of accelerating. Until recently, most of the activity and visibility in property/casualty has been related to personal lines. Sure, there have been commercial lines startups and partnerships in the distribution space for quite some time, but there has appeared to be much less activity than around personal lines. This has begun to change in the last six months.
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SMA’s recently released research report, InsurTech and Commercial Lines: A Surge of Activity and New Implications, analyzes the current state of the insurtech world, and there are approximately 400 startups that SMA has identified as relevant for commercial lines insurers. At this stage, the biggest areas of interest are small commercial (distribution) and workers’ comp (loss control and claims). This follows the natural path of technology adoption in the insurance industry. Insurtechs and emerging technologies will likely advance along this path. There are certainly some insurtechs that are applicable beyond small commercial today, but the complexity and uniqueness of other commercial lines have limited insurtech's penetration thus far.
Among the insurtechs with capabilities for commercial lines, almost half are either in the connected world or the distribution spaces. Distribution plays include digital agents/brokers, startup MGAs and tech companies with platforms or solutions for agents and brokers. Those with connected-world solutions have great potential for risk reduction and mitigation for fleets, properties, worksites and other areas that commercial lines insurers cover.
It is likely that insurtechs will continue to emerge with use cases for commercial lines. In the meantime, the existing body of insurtechs are maturing as they refine their solutions, pilot/partner with insurers and begin to roll out live implementations with customers.
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From a commercial-lines standpoint, insurtech is no longer hidden in the shadows. As more and more insurtech activity sees the light of day, the potential to transform the industry increases.