InsurTech investment dipped slightly during Q1 2017, according to a new quarterly briefing on insurance industry technology.
This is the first of the Quarterly InsurTech Briefing reports being published by Willis Towers Watson Securities (Willis Re), the global risk management and insurance brokerage based in London, in collaboration with the New York City-based data analytics company CB Insights.
Researchers determined that InsurTech funding volume fell to $283 million in Q1 2017 from $783 million a year earlier.
Speaking recently to PC360, one of the report's authors cautioned against viewing the quarterly data on which the report is based as an indication of an InsurTech market slowdown. "I wouldn't read too much into the quarterly numbers," said Willis Towers Watson Securities CEO Rafal Walkiewicz.
Timing, he said, is the biggest reason for these results as many InsurTech companies sought their first rounds of funding in 2016, and are now bringing their products to market.
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"Funded companies are (now) launching products and testing the market," Walkiewicz said. "The successful ones will come back for bigger financing rounds" that will mean increased InsurTech investment going forward.
Why produce a quarterly InsurTech report when quarterly data may not provide a big-picture perspective? Because, Walkiewicz said, an industry as ripe for technological disruption as insurance will continue to attract startup entrepreneurs. These startups will continue to spur incumbent insurers to innovate around automation, efficiency and customer satisfaction.
The quarterly reports are aimed at incumbent insurers who may be uncertain about how to prioritize their innovation efforts, and InsurTech startups who may lack a real-world understanding of the insurance business.
Such a potentially volatile business landscape demands regular analyses, Walkiewicz said. What's more, each installment will focus on one particular aspect of the ever-evolving InsurTech landscape.
This first installment takes a deeper look at innovation potential within the small business insurance market.
|Billions up for grabs
"You can have an exciting chat about drones and other futuristic things," he said, "but how can you monetize that? … One area is small business insurance. It's a very big market, and extremely fragmented."
Researchers deduced that there's a potential of $100 billion to made from "transformational digital disruption" of the small business insurance market, and that 25% of total small business insurance premiums will be digitally underwritten by 2020.
Walkiewicz concludes in a press release about the new Quarterly InsurTech Briefing:
"(Re)insurance market participants must also not be afraid to "fail fast" if they are going to identify technologies that will help them adapt their existing business models in order to position themselves for success in a streamlined insurance industry that is likely to look much different in the future than it does today."
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Elana Ashanti Jefferson
Elana Ashanti Jefferson serves as ALM's PropertyCasualty360 Group Chief Editor. She is a veteran journalist and communications professional. Reach her by sending an e-mail to [email protected].
