Tag Archives: insurtech predictions

2021, We Can’t Wait to Get Going!

In my annual rundown of the year that was, and things to look forward to, I like everyone else have missed far too much of what we love so much but adapted and got on with it, traveling the world from the comfort of my own chair. I also watched our industry go through great highs and horrible lows. Some of that is reflected in this year’s predictions as leading indicators as to what we need to do and will fix through 2021 and beyond. I’ve started recently to use one word to describe 2020 — quite simply, it was relentless.

Before we get into this year’s predictions, as usual here’s my scoring of 2020’s predictions!

See here for the full predictions. My quick report card is below 👇🏻

  1. Insurtechs fade away — We have seen some startups leave us this year, fewer than I thought, to be honest. I do wonder how the funding runway survives through 2021. Marks 1/2
  2. Move innovation externally — I think, given COVID, innovation hasn’t really happened at all. If anything, innovation units changed shape and got shut down. Marks 0
  3. Collaboration slows — I’ve definitely seen this through 2020, mainly because our focus has been on surviving 2020 and ensuring business as usual (BAU), reemphasizing that some insurers are notoriously hard to work with and slow when it comes to decision-making (note, not all of them!). Marks 1
  4. Convergence of fintech, insurtech and wealth — I was hopeful for this, but I don’t feel it’s here yet at scale. We have pockets of examples, when you look to the likes of Revolutl with 10 million customers you can do all three. Marks 1/2
  5. Invisible and embedded — Still plodding on. This feels like my pandemic or cyber risk item on the Annual WEF global risks report. I’m going to keep it on the list until it actually comes true. An encouraging number of partnerships and new capabilities gives me a generous result. Marks 1.
  6. SME, SME, SME — I remain super excited by this, globally. Has anyone cracked it yet? Not really. I remain optimistic, based on what I have seen this year as well as the many legal cases this year. Marks 0
  7. Peak conference — This happened for the wrong reason but still was correct. As we all moved to Zoom, Teams, Meet, etc — only a few of the great conferences survived online, and with that a welcome collaboration between ITC and DIA. I do hope to get back to them in person in 2021. Marks 1
  8. Fewer but larger investing rounds — I was right on the money on this one; our research in Q3 proved it, too – read the full report hereMarks 1
  9. Health — COVID-infused, this trend has just started, and has even more focus going into 2021. Marks 1
  10. e-scooters will work  Darn it, I hate being right sometimes. Another COVID-accelerated outcome, with trials around the U.K. and more to follow, with them expected to be legalized shortly. They are here to stay. Deal with it, Nigel. Marks 1.
  11. The year of the electric vehicle. This was helped by the U.K. government bringing forward the deadline to 2030 to scrap petrol and diesel vehicles. A great read here, but sales of EVs are up on last year and continue to rise. We also expect that the U.S. will rejoin the Paris Climate Accord under a the new administration, which will further accelerate the EV trend in 2021. Marks 1. (Don’t mention the Apple car yet; still a few years off.)

2020 Score: 8/11 – 73% — I’ll happily take that.

2021, Looking ahead – so here goes!

1. Let’s fall in love with insurance

If 2020 taught us anything, it is that insurance matters, really really matters! When it doesn’t do what you expected it to do, you lash out and claim it’s not fit for purpose, it was sold incorrectly or whatever, but you likely didn’t read or (if you did) you didn’t really understand what you was buying.

The U.K. Business Interruption Test Case is a wake-up call to the industry on so many levels, especially for small businesses. Many other cases are going on around the world, too. Add to that event cancellation, travel disruption and wedding insurance, plus many others that have all kicked into action. Back in April, the ABI estimated payouts to be in the region of £1.2bn in the U.K. Motor insurers across the world refunded premiums. I tracked many of them back in April here, which I found super-encouraging, with many thinking and looking to why insurance is not more of a utility? This was a positive move by many global carriers (but very view U.K. ones!).

A large part of this is that policy wordings simply have gone too far for too long. Regardless whether direct carrier or delegated to a broker, we are out of control, and if we are not out of control then we don’t really know in some case what we are signing up to. We need to know what’s included and what’s not; this is clear across all business lines – more importantly, we need to ensure people on all sides of the table understand policy wording if we are ever to fall in love and build (rebuild?) trust. The SARS outbreak in 2003 had us rethink things and tighten up wordings but not in a uniform and consistent way. In many cases, this is no different from silent cyber or solar flares. For every new event/issue that emerges, we can’t keep going back over the same old costly process every time. Wording will come into further scrutiny by regulators in 2021.

2. Education and awareness

To fall in love, we need to talk and engage more. During the pandemic, communication has been consistently poor (see our SME research here). We heard from practically everyone over the last year that we have ever engaged with or given our email address to, other than our insurance company or broker (I appreciate a sweeping generalization, and this is not true in all cases). Net result, we need simplicity and transparency in the industry, and we need to start now.

Communication cant just be about up-sell/cross sell. We also need to look to education and understanding around insurance (and broader financial services, much much earlier). I look at my kids and see they will come out of school knowing about cosines, sines, tangents and many other things, I hope — but won’t know how or why to use a bank account, change a plug or car tire or, importantly in this instance, the purpose and need for insurance, how you mitigate and manage risk.

As an industry, we have improved a lot already, but we have a long way to go, especially if the embedded and invisible nature of insurance takes off as we expect. It’s at risk of being further and further away from the consumer’s or business owner’s mind.

In 2021, we will see people get smarter and wiser when it comes to insurance. As an unintended consequence, we may see a resurgence in agent and broker channels to support some of the demystification.

See also: 3 Trends That Defined 2020

3. Access to talent

By agreeing we need to address #1 above, starting with #2, we will ultimately have a larger talent pool of people who want to and will come into insurance over the next decade. The fix will take a generation or, worse, multiple generations. But there is an intrinsic link among all three of these, a continuous direct correlation. As our industry relies more and more on technology, partnered up with deep insurance domain, we need more people — lots more people — and in today’s digital age, when everyone is remote, competition has never been fiercer. Talent pools are now global, no longer restricted to your local area. Your options and competition may be thousands of miles away.

To attract great talent, we need to change the narrative, rebuild trust, make insurance an inclusive and diverse environment and show that we are tackling problems that really matter, from global climate change to keeping businesses moving and people alive and healthy. As a result, we will see more insurers focus on brand and reputation. This was never more apparent for me than recently when interviewing industrial placement candidates for Deloitte; they knew more about and importantly were inspired more by our values, purpose and actions than by our actual capabilities, practices and the client work we do. Reputation will be a key focus for insurers in 2021, with many, including Aviva, already making moves; see here for their most recent appointment around brand and corporate affairs.

Insurtechs such as Lemonade have long focused on their giveback as well as being a certified B-Corp. Randomly, I first wrote about insurance brand in 2015 here.

4. Acceleration vs disruption — digital indigestion

2020 meant everything was accelerated. The things we thought would take years got completed in months. After all, necessity is the mother of innovation. It was amazing to see the speed of change in an industry that is frankly not known for this.

That said, the change we have seen is acceleration, not true change. We, like many industries, are doing the same things in a digital way. We have not re-imagined, rethought or in many cases challenged what we are doing in the first place or why we are doing it. Zoom, Teams, Google Meet replaced physical, face-to-face meetings. Collaboration tools replaced whiteboards. Online forms replaced paper ones. For many, there is no going back to the old ways of doing things. My point here is that the old and current ways in most cases are the same, just digitized. I truly take my hat off to the many teams that got on with this, worked tirelessly to enable remote working, purchased laptops and remote desktop tools and generally in most cases allowed business as usual.

As we enter 2021, I expect to see an element of digital indigestion. How do we cope with all these things we put in to patch things up? What are the implications? Are these things what the business needs now and in the future? Are they effective and efficient? I expect many of these now to be reevaluated and held up accordingly to see if they will or should survive the test of time. Are they needed still, can they be simplified or changed entirely? Most of this indigestion is purely from a process/technology lens — and doesn’t yet take into account the human element of change needed.

While 2020 was relentless and while we achieved so much, 2021 will in some ways slow this progress down again and force us to re-look, reflect and address the areas where we can truly make an impact.

5. Consolidation

In our funding review last year here, you see that there were zero net new startups in the first half. Add to that that 80% of the funding went to the top 10 insurtechs; that simply means there are a lot of mouths to feed with very little money left, even if funding surpasses, as we expect it to, that of 2019. Hardly surprising: The world is a very different place right now. Insurtech has matured, some markets and lines more than others. We have seen IPOs from Lemonade and Root (congratulations, Daniel, Alex and respective teams!) with an IPO filing from Oscar Health on the health side. Hello, world! WeFox raised $110 million, Series B, and there is a profitable 2021 ahead. Insurtech has firmly landed on the lawns! Lemonade cruised to a market cap of more than $10 billion!

A whole flurry of new deals emerged in the last few weeks, too, across traditional incumbent players consolidating, carriers buying insurtechs and insurtechs buying insurtechs, including:

  • RSA acquired by Intact — here in a megadeal.
  • InsuraMatch acquired by Travelers — here.
  • Brolly acquired by Direct Line earlier in the year — here.
  • Drover acquired by Cazoo — here.
  • Drivit acquired by Zego — here.
  • Juniper Labs acquired by Next Insurance — here.
  • RiskGenius acquired by Bold Penguin — here.

I expect consolidation to accelerate into 2021 for a number of reasons, from funding runways reducing, insurer decision making slowing and bandwidth to focus on innovation and new tech drastically reducing, given the focus on what 2020 delivered us. I also think the digitization push of 2020 COVID enabled many of the traditional carriers to level up with insurtechs that, while they had a strong initial proposition, were still just a feature of a larger play. Insurtech’s dominance for 2021 will focus on those that enable further existing carriers vs full stack competing ones (despite the success of Lemonade, Root, WeFox and soon to be Oscar) or those that have specific communities or niche groups they serve. With the latter, the question will always be — how do we get to scale still?

6. Healthcare is the real winner in 2021

From listening to customers, colleagues and partners over the last 12 months, I think health is the big winner ahead. As with life insurance, while thinking about mortality and what happens if… we have also turned to our own health. I remember, early on, a U.K. national press headline read something like: Coming out of lockdown, you are going to emerge a drunk, chunk or hunk!

While the industry has moved mountains, we ourselves haven’t moved as much, or in some cases at all. This in itself has had a profound impact on our health, physical and mental. Insurers have stepped up and then some in this category, both for our own thousands of employees across the globe, displaced to home, and for customers. I recall listening to Ali Parsa from Babylon Health on Secret Leaders Podcast talk about how pre-pandemic an MD in the U.S. said people would never use telemedicine, and as soon as the lockdown hit there was a gold rush. This to me is the Zoom of our industry.

This year alone, I have done an at-home DNA test with 23andme and a blood test with Thriva, and I keep looking to buy a Whoop Band to give myself more data than I care to imagine (the company raised another $100m in Series E in October). If my healthcare provider could take all this information, I would let them have it in a heartbeat. I’m pretty sure I know more about myself now than they do, which I would love to reverse — they are the experts. Take all this data and tell me how I can be healthier and live longer; don’t wait for my call or claim.

Some proof points for me, beyond the forthcoming Oscar Health IPO, include.

  • Physical health with Peloton — right time, right place, and those who know and follow me already know I’m addicted. The IPO was in September 2019 at $29 per share, now trading at over $150 per share. They just doubled down with a $400 million acquisition of Precor, and now with a market cap of $49 billion. Apple, of course, also launched Apple Fitness as many other gyms, yoga studios and more all turned to Zoom. Those that have vertical integration are still winning, in my mind.
  • Mental health with Calm — now valued at $2 billion, with their latest $75 million investment here showing that mental health is more important than ever and that companies large and small need ways to help individuals manage their mental health.
  • Brain health with Heights, from Dan Murray-Serter and his team, recently raising over £1 million in just 20 minutes through crowdfunding. Heights is a new smart supplement, focused on your brain health — a subscription service that’s packed with goodness and a podcast of health experts and brilliant insights with supporters including Stephen FryJay Shetty and Dr Rangan Chatterjee, to name but a few.
  • Remote dentistry – Instant Dentist from Aalok Shukla and Lucie Marchelot Shukla and how they are bringing remote dentistry here really surprised and impressed me with the level of engagement and capability of things you can evaluate and see, without ever sitting in a dentist’s chair — music to many ears, I’m sure! Add to this, cosmetic care such as Straight Teeth Direct, also from the comfort of your own home, very similar to Invisalign. Super impressive. Excited to see where this goes.

Finally, Swiss Re’s new partnership with Google Verily demonstrates how insurance is further partnering with Big Tech to drive clear benefits for customers — more here on the recent announcement of a Verily patch. Again, the exciting thing for me is the combination of hardware, software and services in one proposition.

There’s actually a great webinar with Bupa led by Mark Allan, chief commercial officer, joined by their new group CEO Inaki ErenoDr. Neil SikkaDr. Luke JamesRichard Norris and James Sherwood, in which some of these issues are discussed. See here for the full replay on digital health insights and where the market may go in 2021.

I’m not sure I should include this in health, but, hey, 2020 and all! — pet insurance is on a roll! With everyone at home, I just need to look at my Facebook feed, immediate friends and the price of pets, and it seems the entire world has bought a dog (except us; Emma won’t let us!). The reason I mention pet insurance here is that I genuinely believe there are a lot of similarities between human healthcare (systems, processes, etc.) and pet healthcare. In the same way that humans have turned to telemedicine, so have our pets with 24×7 video calls to vets and much more. Bought By Many has partnered with FirstVet. Others, including everypaw, have followed suit, offering the same service. I mean, after all, we love our pets more than we love ourselves sometimes!

I should say a huge thanks to the online community for continuing to motivate each other — Bobbie, Sharon, Nick, Pat, Ed, Chris and many others! We truly have kept each other moving, when some days we never really wanted to!

7. Life and protection grow

Much focus and funding will shift from P&C to life, protection and health. We have seen some of this already with the likes of Dead Happy (making life insurance simple), YuLife (rewarding living) and the InsureTech Connect global winner this year, bequest, which is bringing life insurance, wills and family well being all under one roof! (Another push to simplification and composites!)

8. Embedded and invisible finally lands

While I have been banging this drum for years now, from my narrative on value added services to loyalty, the icing on the cake, the prediction still holds true for me, now more than ever. Simon Torrance recently put together a great article on embedded insurance, well worth a read — highlighting the $3 trillion market opportunity.

This year, we have seen huge advances from folks like Swiss Re with iptiQ and IKEA, new motor partnerships with Daimler, partnerships with PingAn, back in the U.K. John Lewis partnering with Munch Re Digital Partners and (another) rumored Tesla partnership or insurance launch. That’s not even starting on the GAFAs (Google, Apple, Facebook and Amazon) of the world. Traditional insurers creating platforms for partnerships: There is a great example from Nationwide in this video here, as well as others such as the Chubb Studio, described as insurance in a box.

From Angela StrangeA16zDo you want insurance with that? relates to ecosystems and much more. I had a ton of fun last year helping non-insurance companies define and build insurance propositions (more on that in 2021!) and can only see this trend growing. I wrote about it earlier this year when Amazon launched its Care Hub. Will the winner in the future be those that own distribution and access to the asset, be it the home, car, truck, fleet, ship or building, rather than layers and layers of additional providers? Sure, we will always want choice, but how much – when does convenience and ease take priority when we are already time-poor?

We just need to look at neobanks like Starling, which recently hit 2 million new customers and which has continued to grow both its personal and SME offerings, both including multiple insurance lines from mobile to motor to health and life, almost in line with what I have highlighted above. It’s making me think, have I been too short-term-focused or is Starling ahead of the curve?

Starling Bank - Personal Market Place
Starling Bank - SME Market Place

And that’s it! What do you think? Do you agree? Have I missed anything obvious? Focused too much on the short term? Come up with ideas that are too far and can’t be true? (I honestly don’t think the latter this year).

See also: Has Pandemic Shifted Arc of Insurtech?

Looking for some additional perspectives? Check these out:

As always, many of of my friends throughout the industry make similar predictions. Here are a few of my favorites:

  • Martha Notaras, managing partner of Brewer Lane Ventures – 11 Predictions for 2021 – here. I’m 100% with Martha on these, especially “Do you want insurance with that?”
  • Matthew Grant and Robin Mertens from InsTech London this year crowd-sourced insurance predictions, with an all-star cast from around the market – a great event to re-watch and look out for the post on soon.
  • My old friend Tony Tarquini from Pega not only is as fit as a fiddle but has a great summary in “3 Trends That Defined Insurance in 2020” here.
  • Chris Frankland, CIO over at Care Bridge. has posted his year in review here.
  • Outside of Insurance, look no further than Kara Swisher and Scott Galloway from Pivot Podcast and their Big Predictions for 2021 here Always good to look outside our own wheelhouse to see how the rest of the world is reacting, and these two are my favorites!

Of course, look out for our own insurtech predictions show in early January with InsurTech Insiders here, which we recorded a few weeks back. Thanks, Hanna, Sarah and Alex.

If one thing has encouraged me in 2020 it is that the community is stronger than the individual and that the global insurtech community brings it by the bucketload — I’m delighted to be a small part.

Look forward to your feedback, challenge and thoughts as always, as well as seeing as many of you in person through 2021!.

11 Insurtech Predictions for 2021

Despite what we all feared in March, insurtech has continued to flourish, with lots of capital supporting the sector in public and private markets, closer integration between incumbents and startups and promising solutions for longtime needs in SME and cyber. Keeping up the annual tradition, here are my 11 predictions for the insurtech market in 2021.

1. Do you want insurance with that? Insurance will be embedded in every financial and retail transaction

Because no one loves shopping for it, we will see more insurance being sold as part of another transaction, where the user has a high intention to buy. “Embedded” has been a buzzword in fintech for several years, best illustrated by Buy Now Pay Later (BNPL) players like Affirm and Klarna. Embedded insurance started with travel insurance and extended warranties sold at point of sale, like Square Trade and Assurion. Branch Insurance now sells home and auto as part of the mortgage process, and Matic is embedding with mortgage servicers. 2021 will bring opportunities to embed insurance into transactions, with the goal being delivering a seamless experience of product plus protection.

2. 2021 will be the year for Plaid for Insurance

The original Plaid provides infrastructure to connect banks to financial apps like Venmo, which need access to a consumer’s bank account, so the user can take money from a bank and send it via Venmo, to the recipient’s bank. The explosion of financial apps drove dramatic growth at Plaid. Yes, the Department of Justice has sued to block the acquisition of Plaid by Visa. Worst case: Plaid is forced to go public at a valuation way above the $5.3 billion offered by Visa. In 2020, at least seven “Plaid for Human Resources” were funded. Data connections and enablement are critical across life, health and P&C insurance. In 2021, we will only see more pitches for Plaid for Insurance, and some of those pitches will be winners.

3. The robotic uprising: Automation will take over routine processes and improve customer experience

Automation will be used to support and empower the humans who are still in the process, starting with claims. Startups will accelerate the sale of automation to incumbent insurers, leading to improved customer satisfaction. Who wants to call an insurer to check whether the policy includes glass coverage? Consumers prefer to use their cell phones to text or speak, submit the claim and schedule the windshield replacement service. To show how quickly this change is happening: In 2019, State Farm ran ads mocking Lemonade’s bot; in 2020, State Farm led a venture investment in Replicant, which provides Voice AI to support human call centers. Faster, better customer service, which is cheaper for the carrier: Automation is a win-win with unstoppable momentum.

4. Playing for keeps: Deeper partnerships between incumbents and startups, accelerated by the pandemic

At the beginning of the insurtech phenomenon, way back in 2015, insurers responded by creating innovation groups and adding innovation KPIs to employee reviews. Following the law of unintended consequences, the result was incumbents starting a lot of experiments and proofs of concept with startups. It was frustrating all around, and many of those experiments failed. Now, insurers have moved the decision making back to the operating teams, and those teams are choosing partners to last. The pandemic has focused the efforts of incumbents. That focus will only get stronger going forward, as incumbents understand that they depend on startups to deliver the organization’s goals.

5. More startups will go full stack

Insurtechs will continue to take off their MGA training wheels. Following the high-profile IPOs of Lemonade and Root, 2021 will see full-stack carriers multiply. While the managing general agent model has the advantage of being capital-light and enables a startup to get to market quickly, structuring as full stack gives the startup maximum control over its product and customer experience. Capital is available to build a carrier, coming from multiple sources, as evidenced by sizeable fundraises by Pie, Kin, Hippo and several life insurance startups.

6. SME market will finally get the solutions it needs

At the end of 2019, I swore it was the last time I would predict the success of insurance solutions for SME. But there are finally some serious signs of success and traction in this market. Embroker, Vouch and Next Insurance continue to grow. And Bold Penguin has integrated with the flow of existing insurers, delivering value where incumbents could not. Finally, SME will have some good choices in protecting their businesses, thanks to persistent insurtechs!

See also: Has Pandemic Shifted Arc of Insurtech?

7. Achieving scale with coretech

Incumbents are yearning for alternatives to existing core systems, with an average age over 15 years, antiquated programming languages and vendor implementations measured in years. Two trends are providing hope here: no code/low code and coretech, delivering cloud-native core capabilities. The challenges of 2020 encouraged more incumbents and insurers to start limited implementations of no code and coretech. In 2021, we will start seeing a few insurers adopt these new approaches at scale.

8. Cyber insurance will lead the market in delivering dynamic risk protection

There have been many startups in cyber insurance, covering one of the existential threats for companies. Some startups have struggled by aiming at companies that are too small to afford the premium; others have chosen the wrong threat assessment partner and taken unwarranted risk. The whole market continues innovating and growing, which is good news, because cyber threats are also increasing. By combining real-time threat assessment with insurance, startup cyber insurers will deliver dynamic risk protection, enabling their customers to reduce risks as soon as they are identified. That may be a model for future real-time risk coverage in other business lines.

9. Parametric coverage will surge

Insurtechs will tackle claims costs and delays by eliminating the claims process, via parametric solutions. Defining a loss by reference to a standard objective index like rainfall in a specific geography is no longer reserved for markets like drought risk in developing countries. Now, insurtechs are delivering parametric cover for a range of risks, including earthquake, wind and cyber outages in developed countries. One driver is the user experience, where the insured no longer needs to trust the insurer to pay an indemnity claim promptly. Look for more kinds of risks to be covered by parametric solutions in 2021.

10. Record support for insurtechs at all stages

The pace of both early- and later-stage investments in insurtechs proves that investors remain enthusiastic about the market. Valuable business models built in fintech will serve as examples to its younger sibling, insurtech. There is still plenty of insurtech innovation to go around, and abundant capital to support it. We will see new launches and a record amount of capital raised across insurtech in 2021.

11. More big exits

The public market in 2020 has been the story of hot money looking for a home, and eager to pay up for future growth. Insurtech carriers Lemonade and Root went public via IPO, and Hippo is expected to become public either via initial public offering (IPO) or special purpose acquisition company (SPAC). Metromile became the first insurtech carrier to be acquired by an SPAC. These successful exits will drive continued investment in insurtechs that are taking big swings, and we will see more public exits. We can also expect more insurtechs buying insurtechs, like Bold Penguin’s acquisition of Risk Genius and Next Insurance’s purchase of Juniper Labs. The target will be filling a specific strategic need for the acquirer, and buying is faster than building.

In addition to going public, insurtechs will find other options, including strategic exits. Prudential’s 2019 acquisition of Assurance IQ created a lot of hope, but insurers have not yet shown a broad willingness to pay startup valuations. Brokers, always ready to spot the main chance, have made a couple of acquisitions and can be counted on to find deals that deliver focused value to their existing clients. Verisk, Duck Creek, Guidewire all have public currency, and at least the latter two have created long lists of partnerships with startups. There will be multiple insurtech exits in 2021, ranging from additive deals between insurtechs all the way to more IPOs.

Has Pandemic Shifted Arc of Insurtech?

Right before the pandemic hit, I published a blog that reflected on the first decade of the insurtech movement and made predictions for the decade. Little did I know that the world was about to plunge into chaos and fundamental change. My predictions on insurtech through 2030 were based on my involvement in the movement over the last decade as a mentor, adviser, researcher and consultant to startups, insurers and venture capital firms. Of course, predictions are predictions, and those that are a decade out should always be taken with a grain of salt. But now the big question is whether the events of 2020 have permanently altered the trajectory of the insurtech movement and subsequently thrown all my predictions out the window.

Despite all the turmoil of 2020 and the dramatic changes to society and business, I have decided to stand by my earlier predictions. There have certainly been big implications for insurtech during the year – our research report from October contains our observations (The Top 10 Themes for InsurTech 2020: Operating in the Pandemic Era).

Here are the six pre-pandemic insurtech predictions and my commentary on how 2020 has supported (or altered) those predictions:

1. By 2030, we will see multiple insurtechs with over $1 billion per year in revenue.

The insurtechs that were on a strong growth path at the beginning of 2020 continued to grow throughout the year. Companies like Root, Hippo, Lemonade and others already have multibillion-dollar valuations and are on a growth path to be $1billion-plus in revenue before 2030.

Prediction Assessment: On target

2. The term “insurtech” will fade by mid-decade, but the impact of the movement will be lasting.

Despite some assessments early on in the pandemic that insurtechs would fade more rapidly, the movement picked up steam again in the second half of 2020. There is as much or more activity than ever in terms of funding, partnerships, pilots and even the launching of startups during the pandemic. The term “insurtech” is not even close to fading out of the lexicon.

Prediction Assessment: On target, but the term may be around a bit longer

3. The next three to five years will see a flurry of M&A activity in the space.

M&A, between insurtechs and of insurtechs by incumbents, increased in the second half of 2020. Marquee acquisitions included the Bold Penguin acquisition of RiskGenius and the Brown & Brown acquisition of CoverHound. The market conditions are currently favorable for M&A activity, and this is likely to continue into 2021.

Prediction Assessment: On target

4. Insurtech funding over the next five years will be greater than the prior 10 years combined.

The final numbers are not in for 2020, but a series of blockbuster deals in the second half of the year, along with the Root and Lemonade IPOs, demonstrate a continuing strong appetite by investors for insurtech startups. With many insurtechs maturing and growing, it still seems likely that there will be very significant funding over the next five years and even more deals in the multiple hundreds of millions of dollars.

Prediction Assessment: On target

See also: Tapping Cloud’s Ability to Drive Innovation

5. Insurtech distributors will gain significant market share in personal lines, but agents/brokers will still dominate in commercial lines overall.

The lockdowns and work from home environment of 2020 have accelerated e-commerce and the digital transformation of the world. More people are now comfortable with doing business online and have higher expectations about interacting with companies digitally. This will drive more of the personal lines customers to direct digital distribution options. For more complex risks on both the personal and commercial lines sides, there will be an increase in digital enablement, but agents and brokers are still in a strong position to play a major role.

Prediction Assessment: On target, may accelerate on the personal lines side

6. Insurtechs will play a major role in reshaping ecosystems for connected vehicles and smart homes, but the revolutionary changes in these areas will occur in the 2030s.

The interest in telematics is increasing significantly due to the pandemic’s alteration of driving patterns. Likewise, the increase in individuals staying home for work and school has caused new activity in the smart home space. Thus, 2020 may serve to accelerate the impact of these new ecosystems earlier than the initial prediction, although big impacts may still lie five years out or more.

Prediction Assessment: Maybe too pessimistic – COVID is accelerating smart home and connected vehicle activity

I would be very hesitant to make any detailed predictions about 2021 given the high degree of uncertainty still surrounding the pandemic and economic implications. But over the longer term, the big themes that have been present in insurtech and these six predictions from just before the pandemic seem to be on course.

To read the original blog “InsurTech: A Decade Gone, A Decade Ahead,” from February 2020, click here.

Insurtech: A Decade Gone, a Decade Ahead

The insurtech movement has been underway for the better part of a decade. Now that we have entered the 2020s, it might be worth exploring what could be on the horizon for insurtech over the next 10 years.

Insurtech has evolved from its origins in the early part of the last decade (as an offshoot of the fintech movement) and quickly gained momentum over the last few years to experience a strong close in 2019. Along the way, there were rumors of its demise – maybe it was a wish made by those hoping insurtech would just go away and stop creating competition or driving the need to innovate. Along the way, there was also plenty of hype. Some even predicted massive disruption and the decline of the incumbents. But, as is often the case, the truth falls somewhere in the middle.

Viewing a snapshot of 2019 as the culmination of the first decade of insurtech is very informative. SMA’s recent research report, “Insurtech and Transformational Tech: Highlights and Insights for 2H19,” does just that. The second half of 2019, in particular, demonstrates how strong the movement is at this stage in its evolution. The number of deals is up. The funding for the second half of 2019 (and the full year) is up. Even more important is the fact that late-stage funding is dominating, signaling that insurtech winners are growing and likely here for the long term. In fact, there were eight P&C insurtech funding events in 2019 for $100 million or more.

See also: Time to ‘Flip the Bird’ on Insurtech  

So, what is ahead for the next decade? There may still be some that are rooting for insurtech to fizzle, or at least to have a smaller impact than expected. However, most are embracing insurtechs as an important part of the insurance ecosystem with roles as catalysts for innovation and change. With that background in mind, here are my top predictions for insurtech in the 2020s:

  1. By 2030, we will see multiple insurtechs with over $1 billion per year in revenue.
  2. The term “insurtech” will fade by mid-decade, but the impact of the movement will be lasting.
  3. The next three to five years will see a flurry of M&A activity in the space.
  4. Insurtech funding over the next five years will be greater than the prior 10 years combined.
  5. Insurtech distributors will gain significant market share in personal lines, but agents/brokers will still dominate in commercial lines overall.
  6. Insurtechs will play a major role in reshaping ecosystems for connected vehicles and smart homes, but the true revolutionary change in these areas will occur in the 2030s.

Depending on your viewpoint, these predictions might be bold. Or they might just be common sense. Prognostications of this sort are always difficult, especially looking out 10 years and especially while the world and the industry are in the midst of transformation. Therefore, you can feel free to disagree and come up with your own predictions for insurtech. But do check back in with me in 10 years to see if these predictions were fulfilled or if insurtech and the industry have gone in different directions.