Digital Insurer Landscape 2018

We created an overview of digital insurer startups to get more transparency on where the market is heading and how the players set themselves apart

2018-01-25
Christian
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The term ‘Insurtech’ has been circling around for several years now and since then the landscape of Insurtech startups hasn’t stopped evolving. While we still see the biggest portion of Insurance startups in brokerage or better pure distribution – selling products from incumbents – , a second wave of insurance startups has surfaced over the past two years. This landscape is fully focused on this second wave.

An overview of insurtech startups

Many of these young companies became publicly visible only lately, some of them are not even live yet. The reason for this is simple: while digital distribution is relatively easy, with low market entry barriers, it takes a lot more to build a fully-fledged digital insurer from scratch. Industry know-how, new systems and technology for underwriting, administration and claims all need to be taken into consideration. And not to forget about the tons of regulation. This requires industry experienced team members, a lot of money, and even more time. Launching a digital insurer in less than one year is almost impossible.

When we started our 2018 here at Getsafe, we felt the need to create an overview of fellow digital insurer startups to get more transparency on where the market is heading and how the different players set themselves apart. We put a special focus on the lines of business covered.

1. Lines of Business

  • 57% of the 23 companies analyzed are active in the P&C space. Many of them offer, respectively announced to offer renters or product insurance.
  • 17% are active in the health insurance space and 17% in life insurance.
  • Surprisingly, we see only 9% (which means two companies) that are offering a multiline insurance proposition across all three lines of business.

While a multiline strategy comes with the highest level of complexity on the backend and regulatory side, we are convinced that is the most logical model for digital brands with a D2C strategy. Here’s why:

Customer acquisition: In order to tackle the customer acquisition challenge, young insurance brands must find ways and propositions which allow them to skip traditional distribution channels and not having to rely on selling singular insurance products in direct competition with incumbents.

Customer value: To unlock additional customer value and amortize acquisition costs, it will be crucial to build direct, long lasting relationships with young customers.

A smart life companion model is able to address both challenges. The model follows (“old world”) role models such as Allianz, Axa or Zurich, which were insurance companions for entire generations, enabled by hordes of tied agents. However, a successful and consequent adaptation for the digital generation with agents replaced by technology, is yet to step into the spotlights.

2. Geography

While the landscape doesn’t contain all startups active in the respective space on a global level, there certainly are some focus countries when it comes to geography.

  • The USA lead the space with over 50% of companies located there. Most of the players are located in San Francisco and Silicon Valley as well as New York (which is no surprise for Fintech companies).
  • At a close second is Germany, where around 35% of analysed startups are based, most of them located in Berlin, Munich and the Frankfurt a.M. area.
  • As always, China is difficult to analyse, but there is at least one huge player worth mentioning — Zhong An. This is also by far the largest player on the list.

3. Reinsurance Partners

The landscape includes exclusively companies backed by reinsures, it does not include corporate startups or subsidiaries of primary insurance carriers.

  • 5 of the 8 reinsurers backing young digital insurers come from Europe. The other 3 are US based.
  • More than a third of the companies in the list are backed by Munich Re, which is also the player most actively cooperating with young insurance models.

Our Perspective

Although we see a trend of startups also entering the more complex categories like health and life insurance, we’re still missing other startups apart from Getsafe that follow a life companion model and offer a holistic protection covering all of the customers core risks. We think that one reason for this might be that the vast majority of companies in the landscape started with the idea of building a specific insurance product. At Getsafe we took another path. We started as a broker, three years ago, and are now moving down the value chain by also building (and now already offering

Looking forward to all the amazing developments and even new players we’ll see emerging in 2018. It’s great to see the second wave of Insurtech gaining more traction on a global level.

Happy to get your feedback on this!

Chris