The latest crop of InsurTechs began appearing in force around 2015, with promises to disrupt the insurance industry and change the world. Industry veterans have often taken those boasts with a grain of salt, while others concluded the benefits were genuine but not necessarily revolutionary.

But that was then. Venture capitalists say some startups from that early batch of InsurTechs have accumulated enough size and capital that older school carriers should start paying serious attention.

“What we have now is a handful of companies that have reached scale. They’ve gotten to the point where, in the U.S. at least, they have licenses or are operating in most if not all of the states [and we’re] starting to see billion-dollar-plus valuations, and some scale on the revenue side,” Jonathan Soberg, managing partner of MS&AD Ventures, said.

Startups need to take into consideration a number of factors in the months ahead if they hope for success in the pandemic and post-pandemic era, panelists said.

Notaras recommended that startups “make sure they are solving big enough problems that it causes someone [transformative] pain – [such as] older InsurTechs like [virtual claims technology provider] Snapsheet suddenly given the opportunity to prove how important remote inspection is.”

She added that incumbent or older companies also “need to be finding that edge” and pushing their limits and comfort zones to adapt with new technology and ideas.

Soberg said he has been talking to his firm’s portfolio companies about the need to prove themselves soon.

“There will be a crunch time here late this year, or early next year,” he said.

He explained that most of the VCs that worked with their portfolios to extend their cash burn rates was intended through the end of this year, but not into 2021. Faced with that reality, Soberg warned that startups will struggle to “get above the noise” if they’re not in “the quality band” of companies offering something urgently needed.

His message to startups is to “be careful with the runway and what they are doing to differentiate themselves from anybody else.”

Sampson concluded that COVID and the need to help startups conserve money has been a distraction in the marketplace. For 2021, she said, there will be some changes, with a focus on “getting back to basics and focus, to be well positioned and differentiate when we get to the beginning of the year.”

That transition will also be an opportunity for old companies seeking to transform their operations, Samson added, potentially through the InsurTech world in some way.

“This is a unique time to get away from that inertia,” she said.

Source: Carrier Management