The majority of insurtechs will help carriers innovate. But even those competing with incumbents head on can offer valuable lessons to insurers on how to improve customer interaction and utilize digital technologies, according to Jeff Goldberg, SVP of research and consulting, at Novarica.
“These lessons that startups bring to the marketplace about embracing modern technology, design and automation are things you can replicate,” he says. “It’s hard to defend a business [model] that is predicated on a bet that incumbents won’t modernize.”
In a new Novarica report, “InsureTech for Insurers,” Goldberg profiles 80 startups, divvied up into four categories. Most of the companies cited in the study are based in Silicon Valley, with the largest industry newcomer included earning $206 million dollars in seed funding to date.
Novarica defines Analytics Arms Dealers and Beneficial Bots startups as insurtechs developing products for data aggregation. These platforms leverage drones, telematics and the Internet of Things, Goldberg notes. Meanwhile, Creative Carriers and Digital Distributors are more directly involved in the insurance space, selling on-demand insurance as competitors or serving as online brokers.
Novarica's examples of insurtechs in the aforementioned categories are below:
- Analytics Arms Dealers: Cape Analytics, Tractable, Cambridge Mobile Telematics.
- Beneficial Bots: Roost, Nexar, Betterview, Snapsheet.
- Creative Carriers: Slice, Figo, Trov.
- Digital Distributors: Jetty, Ladder, Sure, Zensurance.
Among the study’s other findings is the revelation that insurance companies are increasingly viewing insurtech as an external innovation lab. There is even opportunity for mid-size carriers to get involved, as many startups looking for pilot customers would let carriers experiment with their technology at little to no cost, according to Goldberg.
“Insurtechs need to have tech they've proven in a real environment,” he said, adding the only impediment for mid-sized insurers could be having IT resources already stretched too thin by year-long core systems projects.
Even so, Goldberg warns insurers should be selective with the technologies they invest time and money in. Insurtech will disrupt businesses if carriers do nothing while competitors push forward. But carriers have to pass on something as not all technologies are a perfect fit.
“No insurance company can leverage every piece of technology in an effective way,” he concluded. “The goal is not to do anything because of laziness or inertia. It is to understand the market place and make decisions that will have the most impact on your lines of business.”
