The InsurTech movement is in full swing, and one need look no further than the InsureTech Connect 2017 conference for evidence.
The event itself mirrors the trajectory of the most successful InsurTechs that seemingly come iout of nowhere to achieve overnight success in the insurance industry. Any event that grows from nothing to 1,500 participants in year one, and then mor than 3,000 participants in year two, is worthy of attention.
InsureTech Connect, and in fact InsurTech overall, has been a wild ride. And I say this as an active participant in InsurTech — as a mentor, advisor, researcher, and strategist to InsurTechs, insurers, and incumbent tech firms.
Observations and predictions
Here's my take on the forward momentum boosting the InsurTech movement.
Growth. In early 2015, SMA began tracking InsurTech startups. The initial list had about 50 companies and has grown rapidly to have almost 1,200 InsurTechs worldwide today. There have been failures along the way, but there is still an upward trend in the number of startups.
Maturity. In many of the first encounters I had with InsurTech founders, there was a certain self-admitted naivety regarding the insurance industry. Many happily volunteered that they knew nothing about insurance, but had a really great idea that was going to disrupt the industry. Fast forward to today and you find many industry veterans that have been brought on board, much learning about the industry on the part of those inexperienced with insurance, and a newfound respect for the strengths of the traditional industry.
Partnering. Everyone in the ecosystem is seeking partners — re(insurers), InsurTechs, existing tech companies (what I now call "MatureTechs"), accelerators, and others. In most cases, it is not about displacement but more about enhancement through partnering.
Experimentation. Trying new business models, new products and coverages, new distribution approaches, and new operational activities is more widespread in the industry than it has ever been.
Excitement. There is a palpable sense of excitement, energy, and enthusiasm in InsurTech crowds. The mix of individuals and background is more varied than ever, creating sparks of innovation everywhere.
The one aspect of InsurTech that is still in early stages are the powerful, mind-bending results. There are premiums being run through InsurTech players every day; insurers are achieving operations efficiencies and improving the customer experience, and they are placing new products on the market. But in the context of a massive industry, the numbers and the impact are still small.
I offer three main predictions on where InsurTech is likely to head over the next few years:
Results/Impact. Many InsurTechs and their insurer partners are on the verge of rollouts and implementations that will produce more substantial results. We are likely to see some insurtechs emerge as big winners.
Growth Curve. SMA expects the number of InsurTechs to continue to increase as capital and appetite are still there to fuel growth. However, we will enter a phase in the next 1-2 years when more startups close their doors, are acquired, or otherwise exit as standalone firms.
Convergence. Insurers and InsurTechs are already finding successful formulas that leverage the traditional strengths of the insurer with the new technologies, capabilities, and ideas of InsurTechs. This is likely to be the predominant trend over the next few years.
InsurTech is beginning to change the industry, playing a major role in insurance transformation. Many insurers have already been spurred into more aggressive strategies because of the activities in InsurTech. At the InsureTech Connect 2017 and similar events, we are starting to glimpse the new face of the insurance industry.
Mark Breading is a partner at Boston-based SMA. Email him at firstname.lastname@example.org. This article first appeared on StrategyMeetsAction.com, and is reprinted here with their permission. Opinions expressed in this article are the author's own.