Industry Trend Reflections, Evaluating Insurtech Trend Predictions

Industry Trend Reflections, Evaluating Insurtech Trend Predictions?

Six months into 2022 we are looking back at the trend predictions made at the start of year. Last year was a record-breaking year for insurtech, Global VC investment in insurtech grew from $1.8bn in 2016 to $10.5bn in the first three quarters of 2021 alone.?VCs also funneled €2.7bn into European insurtech startups in 2021, minting six unicorns in the process including Marshmallow, and AI insurance startup Tractable.?The insurance industry, having responded well to the pandemic, is currently at the cusp of significant growth and transformation opportunities. Winners in the market will be those willing to be bold and forward-thinking and adapt their strategies and business models to the ever-changing market landscape. At the beginning of the year there was lots of speculation as to what the defining industry trends would be this year, we looked into various predictions laid out by thought leaders and picked out some of the highlights:?

The Rise of Embedded Insurance

Embedded finance has gained a lot of traction over the last couple of years and is set to dominate insurtech in 2022. The embedded insurance market is projected to reach?$3 Trillion by 2023.??Even major non-insurance companies, such as?Amazon, are beginning to offer embedded insurance.

Climate change and sustainability to become key topics

In 2020, climate-related natural disasters generated losses to the tune of $81 billion. 2021 was no improvement, with natural catastrophes causing an estimated $105 billion in global insured losses, the fourth-highest since 1970.?Insurance companies as a whole are making commitments to take a stronger stance on ESG. Last week we saw Kita, the world’s first carbon insurer raise 350k backed by Insurtech Gateway.?

Drones and Robotic Insurance Technology

January 2022 set out expectations for robotics and drone technology will play a more prominent role in many industries, especially in certain lines of insurance.?

Increased Adoption of Health Wearables

The demand for health wearables is booming as advanced insurance technology allows people to monitor their health progress and get rewards for healthy living.

Data-first Insurtech Ecosystems

Legacy systems are losing their value as the market rewards dynamic carriers that leverage APIs, microservices, and web services to build ecosystems that offer the right experience on the right platform to the right people. A study by McKinsey indicates ecosystems will account for 30% of global insurance revenues?by 2025.?

Growth of Low-code / No-code Insurance Technology Platforms

Insurers today are faced with a choice: innovate quickly, or lose market share to competitors and emerging insurtechs. Indeed, only?15% of customers are satisfied?with their insurer’s digital experience and?41% of customers?say they are likely to switch providers due to a lack of digital capabilities. Low-code/no-code software can reduce application deployment time for insurance technology from several months to a few hours.

So what have we seen…? We brought together a panel of Insurtech specialists to go into this further.. Janthana Kaenprakhamroy, CEO, Tapoly - Insurance On Tap, Mark McDonald, Head of Strategy, Altus Ltd, Matt Connolly, CEO, S?nr Global?& David Fontain, CEO , Foresight Commercial Insurance.?

We were all in agreement that the rise of embedded solutions will be the defining trend of 2022, it’s changing the landscape - that’s why it’s so competitive. "98% of insurtechs are enablers, not attackers" said Matt Connolly. This is a changing attitude, previously insurtechs were seen as a threat to the incumbents whereas now we are seeing a cultural shift to a focus on the opportunities that they enable.?

"Embedded solutions allow insurance to be seen as a step in a seamless process"? Mark McDonald.?

The current economic climate is in a very different state from the beginning of the year. We discussed the signs pointing towards an economic downturn and what that will mean for insurtech. Last year there was so much money invested into space, this year the overarching themes will shift to just how difficult will it be to raise capital like start-ups did last year? Where is that money coming from and what will they need to be evidencing to get that capital? This economic environment dictates a different business strategy, and will undoubtedly change the market and investing behaviors massively. ?

So how have investors’ interests changed? What was the fundraising experience last year and how different is it now? David Fontain draws on his experience raising a series b round at the end of 2021 and discusses how VC's are being more cautious with their investments. He predicts that by not seeing the same amount of deals, this shortage of money will shape innovation and we will see a pivot to strategies that require less capital. Janthana echo’s this, being an insurtech veteran, Tapoly raising their seed round in 2018, she highlights the need for operational efficiency, scalability, and continuity this year.?

We asked Mark if these ideas reflect what he’s actually seeing being implemented, he explains that he is seeing more m&a and incumbent insurers becoming more Interested in some of the solutions that are out there in the market and how they can be integrated in an effective way. Going forward this year he is looking forward to seeing this trend evolve and how the increased sharing of data and incumbents embracing these solutions will transform the space from being less focused on bringing in customers and a more focus on the later stages of the value chain.?

"The key is figuring out what you’re good at, what is your main innovation, and then partnering with other insurtechs to find those missing puzzle pieces - that’s the most efficient way to work" David Fontain.

"Innovation really starts to happen when people participate and partner, we are only at the beginning" Janthana.?

For more on this topic listen to the full conversation from the latest episode of The Leadership In Insurance Podcast. Find us on Spotify here or on Apple Podcasts here.

Episode Panel:

Matt Connolly, Founder & CEO, S?nr?

Matt has worked across innovation for the past 15+ years.?In his early 20s he founded an innovation agency which worked with household brands around the world. It ultimately grew to become the UK's #1 digital agency.?He subsequently went on to build, and invest in, a number of tech startups.?Recognising the need to help insurers better adapt and innovate, Matt founded S?nr - a leading Insurtech Scouting and Open Innovation business.?S?nr’s tracks data on millions of companies around the world and provides intelligence on market trends, competitor playbooks and disruptive tech companies globally. And it incorporates a suite of tools to help clients better source, manage and track innovation activity.?S?nr’s intelligence is used by leading insurance companies around the world including RGAX, Allianz, Generali, Vitality, Munich Re and Tokio Marine, to identify opportunities and succeed in today’s changing world.??

Janthana Kaenprakhamroy, CEO, Tapoly

Janthana is the CEO of Tapoly, one of the first on demand insurance providers for SMEs and freelancers in Europe, and the winner of Technology Development at the European Business Awards 2021. Listed by Forbes as number 6 of the Top 100 Women Founders to watch, and among the Top Ten Insurtech Female Influencers according to The Insurance Institute. Recently she has been named as one of the Most Influential Women in Tech 2021 and as the winner of Insurance Leader of the Year by Women In Finance Awards 2021. She was a former chartered accountant and internal audit director at investment banks, having previously worked at UBS, Deutsche Bank, JPMorgan, and BNP Paribas.

Mark McDonald, Head of Strategy, Altus LTD

Mark McDonald?joined the Altus Consulting Insurance team in 2018 as a Business Consultant, having previously worked in technical and operational functions in Financial Services. With over 12 years’ experience working in Financial Services, Mark focuses on General Insurance and specialises in the Insurtech ecosystem.?He brings his wealth of experience from working with a variety of customer-facing FS products, supported by his technology background, to working with clients to shape change and strategic development for both Insurers and Insurtechs alike.?Mark stays well informed on emerging technology, particularly where it can accelerate innovation in the industry, enhancing customer experience and improving operational efficiency.?

David Fontain, CEO, Foresight Commercial Insurance

David Fontain?is the Co-Founder and CEO of Foresight, the workers compensation insurtech that is pioneering real-time, rewards-driven pricing for safety-forward clients. Foresight completed its $39 Million Series B round at the close of 2021. Featured in Business Insurance, Insurance Business America, The Leadership in Insurance Podcast, InsNerds, Risk & Insurance, and the Insurance Journal, Dave has been an entrepreneur and thought leader in the insurance thought leadership space for nearly a decade, and is a regular speaker at key industry conferences and events. An Australian native, Dave resides in the Bay Area and enjoys surfing and the outdoors when not working.?