Insurance companies invest in startups

Feb 9, 2019 Finance

Insurance companies invest in startups

Already 2/3 of the world’s insurance companies invest in start-ups, and the value of these investments reached 3 billion dollars last year. Young, innovative companies are willingly interested in large players who want to catch up with the changing market. Technological start-ups usually offer innovative solutions in the field of risk assessment, data analysis and damage assessment, as well as new products such as P2P insurance, i.e. social insurance.
– The insurtech segment will revolutionize the market, because insurers will have to adapt to customers who in five or ten years will want to buy insurance here and now, using the technology available on their smartphones. Company specializing in implementation services for the financial, insurance and banking industries.
The insurance industry has undergone significant changes in recent years. Due to the development of big data, insurers have more data on their customers than ever before and can use them in sales processes. On the other hand, social media, new technologies and mobile tools have created a new type of customer who expects different communication channels and flexible, better tailored products.
In order to keep pace with the changes, large insurers are increasingly willing to invest in insurtech start-ups that use new technologies and offer innovative insurance products. According to the report of the world research company Gartner, already 2/3 of the world’s leading insurers have invested in start-ups in the insurtech industry. By 2018, almost everyone will have decided on a similar step.
– The last three years have seen a significant increase in interest in insurance start-ups. More and more boot camps, i.e. places where start-ups meet and merge with already formed companies, are developing. Only three years ago, about half a billion dollars was invested in similar projects. In 2015 it was almost USD 3 billion, and this year will bring another 30-40 percent growth.
A good example of a start-up in the insurtech industry is an Oscar operating in the United States, which allows Americans to purchase medical insurance via the Internet. Until recently, only agents and brokers dealt with it. Lemonade, a peer-to-peer real estate insurance company, is becoming increasingly popular in New York. Through an application downloaded to a smartphone, the client enters information about the apartment or house, and after a while he receives a ready offer, which determines the scope of the policy and the amount of monthly premium (even several times lower than in traditional insurance).
In the following years the leading companies will be those start-ups that process and deliver risk protection scoring based on data.
– An interesting undertaking is the start up FitSense, which collects data on health and life insurance. However, this data is already collected by such applications and in a moment it may turn out that new insurances will be offered on the market based on these solutions.
– Probably in the next few years there will be undertakings based on external data sets. We can use the example of Uber, i.e. a simple and easy application behind which there are really hidden estimates and maps of Google, a service that charges fees and several minor solutions that combine into one. The same will slowly happen in insurance.
Experts argue that the revolution is soon to be followed by the segment of motor insurance, where telematics is becoming more and more popular. The on-board computer of the car collects data (such as driving style, speed, braking and acceleration), the analysis of which allows for the assessment of accident risk and calculation of an adequate insurance rate. According to estimates, by 2020 the share of telematics insurance in the market will amount to several percent and will grow dynamically.
– Ultimately, in a few decades an autonomous vehicle will be built, which will completely revolutionize the approach to risk. This is where companies such as Bull, Apple or Mobily come to the fore, which can control a car without a driver.