Insurance technology start-ups have set a new investment record, already attracting more financing deals this year than they did over the whole of 2017.
The findings from Hampleton Partners show that there have been 224 InsurTech deals recorded so far this year, up from 202 in 2017 and the 174 that took place in 2016.
Total fundraising has reached $2.6bn (£2.03) – just shy of the record $2.7bn set in 2015 – with incumbents increasingly looking at start-ups as valuable future partners.
“There’s an army of InsurTech startups challenging legacy players and the market has adopted a survival of the fittest environment,” Hampleton Partners founder, Miro Parizek, said.
“Mergers and acquisitions (M&A) have been the natural solution to incumbents’ problem of accelerating technological transformation and evolving their traditional business models for the 21st century.”
One key example of an insurance giant innovating via M&A was when Zurich International last year acquired telematics provider Bright Box and its connected car platform Remoto.
The insurer is working with data gathered from the connected car technology to develop personalised insurance services – something that is expected to be widespread within five years.
Swedish microinsurer BIMA is another example of a firm harnessing technology to offer new services, providing small-ticket insurance in emerging markets with high mobile penetration and low insurance coverage.
Introducing new products, services or entering new segments is seen as the most popular way to use the new technology, followed by reducing administration and claims management costs.
Lowering costs by providing customers with a digital interface and using a direct model is third most popular.
“InsurTechs have become a natural threat to incumbents, but also potential valuable partners in this changing landscape,” Parizek continued.
“How quickly incumbents adapt to these inexorable market changes will determine the size of their share in the next generation of the insurance industry.”
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