VC Roundtable: Where is insurtech's room to grow?

There is enormous room for continued innovation in insurance. I think the most important thing incumbent insurers can do to work effectively with startups is to begin with a very clear strategy for transformation and the have executive sponsors in a driving seat to create focus and speed of action. Sharing this strategy openly and having true intent to act will attract great startups teams to partner with carriers.

If you think about it, insurtech is an extension of well-known enterprise software trends. Insurers were just slower adopters of technology, primarily because they are risk-adverse and operating in a regulated industry. SaaS maturity in other verticals has helped de-risk enterprise SaaS in insurance, but still today there are a number of on-prem deployments among insurer incumbents. When we started MMV in 2014, not all the large carriers had yet implemented private cloud architecture. There is significant money to be made in the next five years building out the next couple of layers of insurance technology. The incumbents are well-capitalized and have been discussing the need to engage in banking-like digital transformation for over a decade now.

We are now seeing incumbents acquiring technologies and/or distribution channels – see the recently-announced acquisition of Bold Penguin by American Family, whose venture firm had led that insurtech’s early financing rounds, or Assurance IQ’s acquisition by Prudential back in 2019. Correspondingly, the public markets are showing an appetite for new insurtech issuances, especially for consumer-oriented plays, as demonstrated by Lemonade, Root, SelectQuote, and others.

Significant opportunities exist across all parts of the insurance value chain. We expect to see focus and acceleration around usage-based insurance, enhanced customer journeys, self service and remote claims assessment, rapid acceleration of digital health solutions linked to health and life insurance, growth in cyber solutions particularly for SME’s, growth in alternative and affinity distribution relationships and in commercial lines further development of active risk management and proactive policyholder engagement.