To be InsurTech or not to be InsurTech – is no longer the question

It’s probably a bit presumptuous to liken the InsurTech startup movement to Hamlet’s famous “To Be or Not to Be” soliloquy. It is, after all, a well-known and historical Shakespearean reference.

However, the similarity is in the questions asked, and such a question has probably been asked prior to many defining moments. And just as Hamlet pondered many questions, there are many questions that revolve around the state of the InsurTech movement.

At this juncture, some five years into this movement, the one question that has most likely gone by the board is — is InsurTech real?  You can debate about whether we are at the beginning of the InsurTech cycle or at the end. However, there are several strong points in favor of the fact that it is real.

Strong realities have emerged

SMA has been following the InsurTech startup trends since 2013. Currently, we track approximately 1,200 InsurTechs. It’s definitely a fluid number.

Some startups go out of business, and others come in to fill the void at a regular pace. In the 2013-2015 timeframe, the InsurTech startup landscape was a tsunami of activity — it was difficult to get one’s arms around what was happening. In the latter half of 2017, some strong realities emerged.

SMA’s recently released research findings have revealed several major InsurTech trends or themes that are specific to insurance and have meaningful implications for the industry. In response to the “is this real” question, three of the 10 themes anchor the InsurTech movement firmly in reality:

• InsurTech has spread to all tiers and lines of business. Originally, most of the activity was in personal lines and health. Now, of the P&C contingent, which SMA data indicates is 39% of all the activity, a little over half is personal lines; 35% is commercial lines; 13% is workers’ comp. Historically, technology providers have targeted particular tiers for their sales efforts. The startup community targets insurance business problems without a specific tier focus. What this means is that insurers of all sizes are able to adopt InsurTech-provided technology. SMA partnering data shows that there are InsurTechs with customers ranging from top 10 insurers down to single state insurers. The bottom line: The fact that InsurTech is not focused on the top echelon of global players but rather on business problems across the insurance ecosystem lends itself to the “it’s real” theme.
• Live implementations are increasing. Not surprisingly, in the beginning of the startup movement, most of the activity was around fundraising and proofs of concept. In 2017, and continuing at an accelerating pace in 2018, insurer “go lives” are happening. Some InsurTechs have 10, 12, or more insurer logos on their websites. These are not investor listings; they are the names of insurers that are rolling out capabilities in the marketplace. In particular, drone usage, smart home/connected property and connected vehicle initiatives are common and growing. The “it’s real” indicator is that insurers are not going to roll out technology that impacts their customers just for the fun of it — customers are not appropriate guinea pigs. Insurers are seeing the value in InsurTech offerings and are executing.
• InsurTechs are partnering. While there is nothing wrong with a technology provider staying in their space, a long-standing trend within the insurance industry has been partnering for greater value. This has not escaped the attention of a number of InsurTechs. For example, Bold Penguin and Ask Kodiak have partnered, as have Elafris and Hippo, and Betterview and Understory. Mature technology providers also see the value of startup partnering, for example, Willis Towers Watson and Roost, Verisk Analytics and Driveway. Majesco partners with a network of InsurTechs. The “it’s real” factor is that InsurTechs are not simply attempting to see what they can do just for today — but rather, what they can do for the long haul, to become strategic contributors within the insurers they work with.

While there are still questions about the InsurTech movement, one of them should not be — is it real? Business value is being generated by many startups — and no insurer is going to walk away from that. New channels and new service opportunities are emerging that are generating interest and execution.

New products are sprouting up at a regular pace. Not every startup and every idea are going to be winners, but many will be. And some already are. Bottom line? Both Hamlet and Shakespeare would be proud of the insurance industry for seeing the possibilities and not just the questions.

Related: The state of InsurTech in 2018

Karen Pauli is a principal at Boston-based SMA, independent advisor to insurers and InsurTech solution providers. Email her at kpauli@strategymeetsaction.com. The opinions expressed here are the writer’s own.