Business ideas: Insurtech
With billions of VC funding being funnelled into insurance technology, could this be the year you start a business in this rapidly growing sector?
Fintech, proptech, adtech: In recent years we've seen many established sectors disrupted by ambitious little start-ups with big ideas and new ways of doing things.
It was only a matter of time before the world of insurance welcomed its own wave of technological disruption and it's arrived with its own contraction; Insurtech (insurance technology).
In a similar way to fintech and proptech firms, many of the new start-ups in the insurtech space aim to introduce some transparency into the market and reconnect with disenchanted customers.
For instance, Startupbootcamp now runs what it claims to be the “first truly global” start-up accelerator for insurtech – a three month programme focused on businesses operating across areas such as retail insurance, corporate risk management and new risk models.
If you’ve got expertise in the insurance field and a novel solution to a problem in the sector, 2017 could be the year you start a business in this estimated $4 trillion industry…
Starting an insurtech business: Why it’s a good business idea
A recent report from Tallt Ventures on the digital disruption of the insurance industry found that over $2.65bn in venture capital (VC) money was invested into insurtech in 2015.
Meanwhile, consumers have come to expect a more transparent and equal relationship with their insurer. As consumers turn away from large, established insurance companies that represent the old guard, a new start-up responding to their needs has the potential to secure custom and scale quickly.
As technology continues to disrupt and transform every aspect of our lives and industries, insurance needs to change its approach to keep up.
New concepts such as the sharing and the gig economy will require new kinds of insurance so now’s the time to lead the charge.
Insurtech business opportunities
The Insurance Disruption Report identified a number of different key areas to improve the insurance sector including on-demand insurance, lifestyle engagement and business-to-business (B2B) insurtech.
One option is to capitalise on the growing prevalence of on-demand mobile services, enabling consumers to search, choose and buy insurance with the press of a button.
A number of mobile insurance apps have entered the market recently, offering everything from short-term car insurance to health-insurance and travel-insurance through smartphones, but there's no reason to say you can't launch a service in competition with these businesses.
London-based Cuvva is an app that allows users to buy short-term car insurance in under 10 minutes, simply by registering their details, taking a photo of the vehicle and listing how long you need cover for.
While insurance broker Worry + Peace is seeking to reduce the stigma and mistrust often levelled at the insurance industry by redesigning the entire process for digital customers. Likewise, Brolly’s personal insurance management app and broker allows users to manage all your insurance policies in one place.
Companies like Buzzmove, which secured £6m in super-seed funding last year and took part in Startupbootcamp’s Insurtech accelerator, are disrupting the home moving sector. Buzzmove claims to be the UK’s only price comparison and booking platform for moving-related services, allowing consumers to create a digital inventory of their belongings to be matched to a suitable service.
Other companies have recognised the increasing importance of data in the world of insurance and are taking advantage of it with their insurtech business ventures.
Sherpa is one such company doing just this. A digital start-up that provides personal risk management in the insurance market by analysing a customer's risk profile, Sherpa claims to “not be in cahoots with the insurer” and helps consumers find the right insurance at the best price.
The common theme between all these start-ups is their consumer-focused approach. Digital customers are looking to buy products that work for them and they don't want to feel like they're actively being ‘sold' to.
Chris Kaye, CEO of Sherpa, commented on insurtech as a business opportunity:
“There are 8.1 million ‘affluent’ households in the UK who spend £21bn a year on insurance. These families are forced through complex applications to hand over lots of personal data, only to be sold complicated products.
“If you ask a room of people if they are confident their insurance needs are met and they are fully covered, most people cannot say ‘yes’. Herein lies the problem, data is being collected to hinder and not help the consumer.
“This means traditional insurance companies need to rethink the opportunity of data to create a transparent and personalised service to meet the demands of the connected consumer. We have already seen new players emerge across the US and Europe – Lemonade, Spiixi, Trov & Cuvva – just to name a few. However, the one stop insurance shops must take note and change their archaic thinking.
“Within other financial services, such as banking we have already seen a significant shake up to the traditional business model with the introduction of disruptive startups Atom Bank, Aldermore and Monzo. The insurance industry now needs to wake up to providing a service that also puts the consumer first.”