Which technology should InsurTech investors move away from, and what should they embrace instead?
These are typical questions investors in the space (and others) must ask themselves over time, in order to maximize their returns and cut losses when a particular bet doesn’t work out. Trends toward increased digitization brought on by the COVID-19 pandemic have also accelerated the need for these questions, some observers say.
There isn’t a particular consensus on priorities, however, however, even during a pandemic that initially curbed investor appetite across the board over Q1 2020 before venture capital levels generally recovered later in the year.
Reevaluating Priorities
Tech Demanding More Attention
“If we think about the period between 2014-2017 as being customer experience focused (e.g. apps and taking products online), [and] of 2017-2020 as being insurance infrastructure focused (e.g. building software for insurers), my sense is that the end of 2020 and the next couple of years will be oriented around new insurance products,” Jones said.
He added that the idea of investing in new insurance products is “enormously interesting” to his firm, “as we like to invest with a view to closing protection gaps.” In other words, expect Anthemis to be more active in this space over the coming months.
“Even amid a hardening reinsurance market, we’re seeing an appetite for developing new products, whether it’s around artificial intelligence, intellectual property or climate volatility,” he said. “We hope this continues, even as underwriters hit their targets due to rate increases on traditional business.”
Craig, who was also co-founder and CEO of Valen Analytics (now part of Insurity), said there is a particular area of technology investment that deserves more venture investor attention.
“Microservices architecture accessed through modern APIs for policy and claims administration is an InsurTech technology that is being overlooked but is most needed,” he said.
Notaras said that rather than investors devoting time on general market distribution of personal lines insurance, she instead sees “companies that are reaching targeted populations, in more subtle ways, such as delivering real value like relevant content and interactivity, before asking for the sale.”
As well, she said interest has shifted to incumbents who “are doing the cost-benefit and are willing to invest in implementation resources in more holistic solutions that will deliver a solution to more of the problem, and deliver more value.”
Carbone said he sees a number of technology areas that could use some InsurTech investment interest.
“I see huge opportunities in the distribution of P&C coverages by incidental channel,” Carbone said. “I consider commercial lines the area where the opportunity is more relevant. There are (non-insurance) players [who specialize] on a business segment, with an existing customer base, with data that can be used to better transfer risks of this customer base or event to mitigate these risks, and a position on the customer journey that allows to effectively sell the insurance coverage.”
Source: Carrier Management
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