Last week, echCrunch looked into the changing health of the insurtech business, delving into recent category victories and losses as well as what the sector has in store for this year. Insurtech firms had an outstanding fundraising year in 2021, achieving new highs in terms of both money and deal value. At the same time, the value of publicly traded insurtech firms has plummeted, with several recent sector IPOs erasing the vast majority of their market value as the year progressed.
The awful news was conveyed in our Friday notes. We’re going to flip the coin today. Despite shifting valuation circumstances for some insurtech businesses – primarily the neoinsurance subcategory – the harm has been limited. So, which insurtech businesses have the most chance of succeeding? Could the market create room for still-private neoinsurance companies to avoid falling into the same trap as their public forerunners? We met with a number of venture capitalists and startup entrepreneurs who expressed optimism about taking on the insurance industry: “It’s too huge, too valuable, and too out of date not to get a shovelful of technology,” they said.
That doesn’t necessarily imply more neoinsurance firms like Root or Lemonade. Other models are also available. For example, the Zebra (an online insurance marketplace) published some growth data, and TechCrunch has covered AgentSync (data APIs for the insurance business) several times in the last few years as it grew from a small startup to a unicorn.
Allow us to quote ourselves: “The main winners this year should be those that can prove they are tech businesses and/or are enabling the digital shift of insurance incumbents,” we said in part one. With the help of Florian Graillot of Astorya.vc, let’s go down what “supporting the digital transition of insurance incumbents” implies.
He told TechCrunch, “I strongly believe insurance cannot be the only industry in the world that does not embrace digital [and] mobile.” “A number of insurtech solutions enabling incumbents are gaining steam, anywhere throughout the value chain,” he noted. The need for insurance to go digital also explains numerous neoinsurers’ success, at least in terms of user acquisition.
Graillot noted that “many of them are certainly gaining momentum beyond financing,” noting that neoinsurers can be both brokers and full-stack insurance providers. He cited Bought by Many, Getsafe, and Luko as examples from around Europe and the United Kingdom, all of which have hundreds of thousands of clients. It’s unclear if strong client bases will be enough for private neoinsurers to prosper when their public counterparts’ tank, but there’s a case to be made – and NEXT Insurance CEO Guy Goldstein is making it:
“We don’t believe the current market conditions have any bearing on the value of what insurtechs can do, and their ability to support individuals they serve remains strong.” There is no doubt that as insurtechs mature, the market will recognize the value they bring to the greater insurance business.”
