At times, it seems like insurtech is around every corner, with new startups materializing every day, conferences emerging out of nowhere, and accelerators doing their job of accelerating.
Generally, there’s just a lot of news and noise about the phenomenon. Until recently, most of the activity and visibility in property/casualty has been related to personal lines. Sure, there have been commercial lines startups and partnerships in the distribution space for quite some time, but the level of activity has appeared to be much less than the activity around personal lines. This has begun to change in the last six months. There has been a growing body of insurtech activity that is relevant for commercial lines. And it seems that the pace of new startups and the progress of previous startups has picked up.
SMA’s recently released research report, InsurTech and Commercial Lines: A Surge of Activity and New Implications analyzes the current state of the InsurTech world. There are approximately 400 startups that SMA has identified as relevant for commercial lines insurers. At this stage, the biggest areas of interest are small commercial (distribution) and workers’ comp (loss control and claims). This follows the natural path of technology adoption in the insurance industry. Often, new technologies and solutions are tried for personal lines first, then move to small commercial. The experience and skills gained from these early initiatives can then be applied to workers’ comp, mid-market commercial, specialty lines, and other commercial segments.
Our prediction is that insurtechs and emerging technologies will advance along this path. There are certainly some insurtechs that are applicable beyond small commercial today, but the complexity and uniqueness of other commercial lines have limited their penetration thus far.
Among the insurtechs with capabilities for commercial lines, almost half are either in the connected world or the distribution spaces. Distribution plays include digital agents/brokers, startup MGAs, and tech companies with platforms or solutions for agents and brokers. Those with connected-world solutions have great potential for risk reduction and mitigation for fleets, properties, worksites, and other areas that commercial lines insurers cover.
It is likely that insurtechs will continue to emerge with use cases for commercial lines. In the meantime, the existing body of insurtechs is maturing as they refine solutions, pilot and partner with insurers, and begin to roll out live implementations with customers.
From a commercial-lines standpoint, insurtech is no longer veiled in the shadows. As more and more insurtech activity sees the light of day, the potential to transform the industry increases.
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