Top 10 Insurtech Trends for 2016

The year 2015 saw insurtech emerge as the new frontier in fintech. In fact, one could dare say that 2015 was the year that insurtech went mainstream!

All eyes continue to be set on this industry as we advance into 2016. Here are the 10 key insurtech trends to watch out for this year:

1. Investment Boom in Insurtech:

Investments in insurtech surged from $800 million in 2014, to more than $2.6 billion in 2015!

This investment high continues to move at a steady pace in 2016. In fact, the first quarter of this year has already witnessed more than 45 deals that brought $650 million in funding to insurtech.

Out of these deals, the most talked about was the landmark $400 million mega-round for health insurance carrier Oscar. This round was led by Fidelity Investments, with the participation of Founders Fund, General Catalyst Partners, Goldman Sachs, Google Capital, Horizons Ventures, Wellington Management and Khosla Ventures.

According to CB Insights’ data, the past quarter has been the second-largest quarter ever for investments in insurance technology!

The rest of 2016 will also see increased investments in insurtech. Isn’t that great news for insurtech startups?

2. Current Insurers Will Support Insurtech Startups:

Although most investments in insurtech come from private equity and VC firms, many established insurance companies have also emerged as active investors in recent years. The year 2015 saw several corporate insurers, from Allianz Digital Corporate Ventures and AXA Strategic Ventures to Mutual Ventures, pour investments into insurtech startups.
For example, Allianz Digital Corporate Ventures and Transamerica Ventures came together in an $8 million funding round for QuanTemplate, an insurance reporting and analytics software. In January 2016, AXA Strategic Ventures, Transamerica Ventures and MassMutual Ventures helped PolicyGenius, an online insurance policy comparison platform, raise $15 million in funds.

Expect the corporate VCs in the insurance industry to become more active investors in insurtech startups this year. In addition, 2016 will see more insurance firms move to formal venture investing arms.

Maybe your startup will also score investment from established insurers!

3. New Sources of Data:

Insurers need data all the time! In 2016 insurers will look to Internet-connected devices and sensors as new sources of real-time, meaningful data. Wearables, Internet of Things and mobile apps will emerge as reliable and powerful sources of data that will increasingly complement traditional underwriting data.

What’s more, analyzing new sources of data will help insurers create direct links with customers. As Steve LaValle from Ernst & Young (EY) says, “Now you will have real, live links. You can know who your customers are, what they’re doing and how they’re changing over time, which will drive more individualized relationship management and personalized product bundling.

Are you ready for this shift in data sourcing?

4. New Wave in Peer-to-Peer Insurance Business Model:

Recent years have seen insurers increasingly leverage the power of community to provide affordable insurance. As a result, peer-to-peer (P2P) insurance has been steadily gaining traction. At the end of 2015, P2P insurer Lemonade got the industry buzzing with its $13 million seed round.

The year 2016 will see a new avatar of P2P insurance: a self-governing network model that will use either bitcoin, or the technology behind this cryptocurrency—the much spoken-about blockchain.

In fact, Russian insurtech startup Teambrella has developed a unique insurance system that uses bitcoin to hold client money. This allows users to make decisions on every aspect of insurance without the middlemen.

Expect to see the rise of the self-governing P2P insurance model in 2016. Is your startup based on this new model of P2P insurance?

5. Ability to Turn Insurance Cover On and Off:

Convenience comes at a premium price. And millennials are more than willing to pay! This year, the freedom to be able to digitally turn insurance cover on and off, as per the needs of the user, will be increasingly adopted.

Understandably, unit premiums will be higher. However, this cost will be a secondary consideration, outweighed by a greater demand for convenience.

6. More Blockchain in Insurance: 

Insurers will increasingly realize the advantages that blockchain technology brings to the table—reduced cost of claims processing, an increased level of trust and an immunity to conventional cyber threats. That’s not all—blockchain’s immutability can stimulate the insurance industry to create new products.

Speaking of blockchain, Georg Schwegler, CEO of Transamerica Ventures, says, “The encouraging part is that a lot of finance companies, banks and insurance, are becoming aware of the advantages of the technology, finally.”

Dynamis is another insurtech startup that has leveraged blockchain in insurance. This company has successfully created peer-to-peer insurance on the Ethereum blockchain. We will definitely be seeing more of blockchain in insurance this year.

Blockchain has the power to transform the insurance industry! Is your startup exploring this powerful and rapidly evolving technology?

7. Putting the Customer First:

In 2016, insurers will concentrate on meeting their customers’ expectations. Consumers and businesses are increasingly demanding simplicity, speed and transparency in their transactions. As a result, the insurance industry will have to turn to technology to meet these customer expectations.

We will also see increasing personalization of insurance products and services in 2016. In fact, insurance is already being offered as a lifestyle product through digital engagement. Insurers will continue to look at personalizing insurance covers to take into account the unique circumstances of customers.

Eighty percent of insurance consumers are looking for personalized offers, messages, pricing and recommendations from their auto, home or life insurance providers.

In 2016, we can expect more investments in interactive technologies, to match the rising demand for innovations in the design and delivery of insurance products.

Is your startup offering products or services that make insurance more personalized?

8. Just-in-Time Insurance Startups to Get More Funds:

With mobile users getting access to a range of services and products at the click of a button, the on-demand economy is steadily expanding.

What does this mean for the insurance industry?

 

Insurtech startups that offer consumer-facing products at the click of a button are rapidly attracting investments. Sure, Trov and Cuvva are just some of the insurtech startups that have leveraged the demand for just-in-time insurance.

Does your startup offer just-in-time insurance products and services?

9. Fintech Startups Will Add Insurance Applications:

In 2016, we can expect to see an increasing number of fintech startups offering a comprehensive package of financial services, including insurance.

SoFi CEO Mike Cagney told Business Insider, “We’re looking at the entire landscape of financial services, like life insurance, for example.” Indeed, many fintech startups will start to realize the value of integrating other financial products, including insurance, into their applications.

This year, there will be an increase in the number of new and existing fintech startups that make strategic moves into insurance, alongside their non-insurance verticals.

10. More Cross-Border Partnerships:

Insurtech is picking up momentum globally. The industry has already witnessed several strategic partnerships and investments beyond borders. In fact, U.S. insurtech startup Trov recently announced the launch of its app in Australia.

In 2016, we will see more insurtech startups in the United States seek investment and partnerships across borders. In addition, startups with traction abroad will look to expand to the United States.

Are you ready for cross-border collaboration?

As insurtech continues to expand in 2016, we can expect to see new trends unfold. What other key trends will the insurtech space see in 2016?

Are you looking for funding for your insurtech startup? We have compiled a list of upcoming funding competitions for early-stage tech startups. Check it out now to register for the best funding competitions for you!

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