Insurtech today is on the same trajectory as fintech was a few years ago (but not in Southeast Asia)

vladislav.solodkiy

The formation stage is over, and now its the time for companies that create value-add services for end clients

 

More and more investors are being attracted to InsurTech/HealthTech segment, as we can see in the new issue of “Money Of The Future” annual fintech report.

It turns out that insurance companies are more active in insurtech than banks were  fintech at a similar stage in the ecosystem’s development. They also seem to have learned from the unsuccessful decision by banks to resist (or ignore) changes.

Here are some examples from 2016:

  • A colossal US$500 million (at a US$3 billion valuation) round was raised by PingAn Good Doctor,
  • MetroMile raised US$191.5M,
  • Oscar raised US$150M (valued at $3B),
  • Quartet attracted US$40 million,
  • Lemonade – US$34 million (as part of a $60 million round in total)
  • FinanceFox – US$5.5 million (US$28M in total)
  • Huize Insurance – US$30.8 million
  • Zebra – US$17 million (US$21 million in total)
  • Trov – US$25.5 million,
  • DocPlanner – US$20 million (US $34 million in total)
  • FriendSurance – US$15.3 million
  • PolicyGenius – US$15 million (US$21 million in total)
  • Clark – €$13.2 million (US$14.3 million)
  • Alan – €13M (US$14.1 million)
  • Slice – US$3.9M,
  • Bunker – US$2M,
  • FitSense – £300,000 (US$377,000)

As always, American and Chinese players focus only on the corresponding domestic markets (Lemonade and Metromile want to cover all country by 2017) and European players think in terms of expansions (with FriendSurance and Trov entering the Australian market, FinanceFox expanded to Switzerland and Austria and DocPlanner is operational in 25 markets).

Meanwhile, Chinese insurance companies (PingAn) and Hong Kong investors (Horizon Ventures) could provide a head start to other players in terms of practical results.

Also Read: Eduardo Saverin, EDBI join insurtech startup CXA’s US$25M Series B round

As online insurance sector passes the formation stage, price comparison, product aggregators and brokers (Zebra, PolicyGenius, Bunker, FinanceFox, Alan, CoverFox) account for the majority of the market. However, (as we saw with fintech as a whole) such services flourishing now will subside in the future and make room for players able to deliver value-add for their end-clients and give him/her an enhanced range of services.

A wildly diverse industry

If insurtech startups do not follow the above model, they will have to migrate to complementary sectors for survival and retention of their client audience.

For example, Oscar Health is very active now in many areas; from arranging doctor appointments online and developing solutions for telemedicine to opening a new hospital in Brooklyn (in order to increase customer loyalty and revenue per client by providing more complex services for its clients).

Today, companies focus more and more on work with SMEs instead of big companies, which is an apparent trend caused by the growing role of gig economy (composed of freelancers, employees, and clients of intermediary marketplaces and on-demand services).

Slice, Stride, Bunker and CoverFox offer their Uber-like services for the new types of employees (and clients), which did not exist before. Metromile and Slice sell insurance services according to pay-per-mile and pay-per-use models, respectively, demonstrating clearly an on-demand approach and catering to the needs of low mileage drivers.

Another interesting approach, also borrowed from the pool of overall economy trends, is p2p-insurance. Services like Lemonade and FriendSurance is not about obtaining an individual insurance policy, but rather a member of an insurance group consisting of people you probably know (or at least people with similar need and circumstances). In case an event that requires insurance does not happen, the money is paid back to the members (with a deduction of the platform fee).

The rapid development of online consumer lending leads to increased demand for online insurance services: electronics insurance, sports equipment insurance and even musical instrument insurance (available at Trov, for example).

The high sales volumes of fitness trackers and increasing use of fitness apps instigate the emergence of companies aggregating and analyzing this kind of information about your physical activity (like FitSense). Innovations in AI and chat-bots lead to an emergence of services, which automatically offer products (Clark) or foresee critical situations (Quartet).

Insurtech and Health tech will blend

Insurtech and Healthtech are rapidly converging nowadays and this development seems logical. Insurance giant PingAn has launched PingAn Good Doctor to enable people to arrange doctor appointments online or get telemedicine services (it has 77 million clients and 250,000 doctors on board). Quartet allows people to consult with a community of therapists and automatically analyzes their symptoms. Both Docplanner and Doctoralia allow patients to make an appointment with a doctor online– the first has 8 million clients in 25 countries, the latter – 9 million in 20 countries.

Also Read: Didi considering US$6B investment from SoftBank, the biggest tech funding in China

Services of the new generation grow at ever-increasing pace by relying not only on organic growth but also on merging with one another – Docplanner has just acquired Doctoralia, Metromile has recently purchased insurance carrier Mosaic Insurance to handle the underwriting of its policies itself.

Insights

Reggy de Feniks and Roger Peverelli, old friends and partners of our fund, and co-authors of “Money Of The Future” report, shared their insights resulted in Top 10 Insurtech Trends for 2017:

  1. Massive cost-savers in claims, operations and customer acquisition
  2. A new face on digital transformation: engagement innovation
  3. Next level data analytics capabilities and AI; to really unlock the potential of IoT
  4. Addressing the privacy concerns
  5. Contextual pull platforms
  6. The marketplace model will find its way to insurance
  7. Open architecture
  8. Blockchain will come out of the experimentation stage
  9. Use of algorithms for front-liner empowerment
  10. Symbiotic relationship with insurtechs

Online insurance is one of the most dynamically developing fintech sectors and it will evolve in a separate sector in the next couple of years without a doubt.

The main hot spots are the US (Lemonade, Oscar, Zebra, Metromile, Slice, Stride, PolicyGenius, Bunker) and Germany (FriendSurance, FinanceFox, Clark and others). Other countries – Great Britain (Trov, FitSense), France (Alan), Poland (DocPlanner), India (CoverFox) and China (PingAn Good Doctor, Huize Insurance) – cannot boast of many new players.

In Singapore we can highlight only CXA Group, which has raised US$25 million in Series B investment round, co-led by B Capital Group (co-founded by Facebook Co-founder Eduardo Saverin) one month ago. The latest capital infusion will help CXA to scale its existing platform and operations beyond Singapore and Hong Kong, to include China, India, Indonesia, Japan, Malaysia, the Philippines, South Korea, Taiwan and Thailand.

Its regional expansion strategy includes scaling CXA’s SaaS platform for distribution to SMEs and individuals via banks and insurers. The company said that a large insurer has piloted CXA’s white label portal to cross-sell individual insurance and wellness products to its captive base.

Also Read: How we growth-hacked from zero to 2 million users without raising any money

Recently we met with Gerben Visser, co-founder of InsurTech annual conference in Singapore, and discussed that insurance companies in SEA still are not so active in investments or collaborations with newcomers (in comparison with their Western or Chinese colleagues). He said he is waiting growth of their attention during this year (it would be trend №11 – specially for SEA region).

Singapore’s insurtech industry is essentially nascent — but if global trends are a template, the city should see a boom in insurtech sooner rather than later.

Copyright: danielfela / 123RF Stock Photo

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