“investments in insuretech reached $496 billion in 2015; through early September of this year, they had already topped $480 billion.”
Where did you get your sources? Do you have any idea how far off you are with those numbers? $480 Billion!? 1500 investments and somehow you think that reached $480 Billion? yeah right. WRONG #Fail
“In all of 2015, investments in insuretech reached $496 billion in 2015; through early September of this year, they had already topped $480 billion.”
This should definitely be million not billion!
Other than that, an interesting article.
Fairly sure the hype will calm down when investors realize that it takes more than app-managed contracts, peer-insurance ideas, or claims management software to have sustainable ROI.
What changes substantially in the industry – what’s the feared disruption? Insurers need to be more efficient and need to do better risk selection to cope with low interest rates, fine. Brokers need to be more efficient, fexible and offer online access, ok.
But that’s about it.
Where in this equation is room for startups becoming the next Google, Uber oder AirBnB when really the old hands just need young solutions?
I want my insurance contract online, yes, maybe even in an app. But more importantly, I want peace of mind and hence want to trust that the intermediary will adjust my insurance where necessary, make sure a claim gets paid and is liable if something gets wrong (i.e. lack of cover). This is partially about trust. How can I trust in a startup that doesn’t know if they survive the next financing round, that I have nether had on the phone or met in person, and that provides me only a partial solution?
“Fairly sure the hype will calm down when investors realize that it takes more than app-managed contracts, peer-insurance ideas, or claims management software to have sustainable ROI.”
As the article makes clear, it is still very very early in the game. An entrenched old guard would like the Insuretech disruptors to believe that there is little need for disruption, and even if there were, that the technologists and VC’s are not qualified to make it happen. Wrong….most if not all of these disruptors, successful IPO or not, will have a profound impact on the insurance industry. It is clear from the number of insurance company attendees, as well as VC firms, that the forward-looking companies and smart money agree and see the opportunities.
Have you followed what has happened to the ROI in the insurance industry over the last 10 years?…The industry ROI is so low it simply can’t attract investor capital. The industry’s ROI has not been competitive for years. It is fortunate VC vultures are willing to invest the capital because up to this point no other investor group, let alone the insurance companies themselves, have been willing to do it. The VCs recognize there is a profit to be made in disrupting a struggling industry run on outdated business models. Further, did I miss the survey that indicated that insurance customers “Trust” the insurance industry…NOT!!
Peer to peer insurance, smart contracts, claims management software, not to mention block-chain technology, promise to bring transparency, accountability, peace of mind and lower costs to insurance customers while also serving to enhance the insurance industries risk selection, efficiency, Trust factor and ROI.
There will be winners and losers among this Insuretech group for sure, but there will also be a Google, Uber, AirBnB, or Amazon among them that will fundamentally change how the industry underwrites, distributes and services its customers.
Juice, you mention some interesting points to consider in the discussion. However, I think I fundamentally disagree with your implicit view that P2P, smart contracts and software solutions already are disruptions themselves. I much rather believe they are over-due developments or a natural evolution of efficacy and efficiency within an industry who’s business model is far from being outdated. It won’t take insurers and brokers long to copy paste those new smart solutions into their organizations. And that is why investors should probably watch out.
Re trust: this is more ambiguous than you imply. 1. I was referring to trust between end-customer and broker. 2. further differentiation is needed regarding trust of private vs. corporate clients of insurers.
Paying claims is trust building – but no matter how fancy a new start-up and its business model is, the iron rule or natural law of moral-hazard avoidance will remain an axiom of insurance.
Finally, and I give you that, it is hard to predict what block-chain will bring – but even here: wait for quantum computers to get involved and the security of this technology will be in question.
Just because VCs invest in these start-ups does not mean its a guarantee of success. I think it is fair to say VCs were proven wrong in the past before. Also there is so much fiat money flying around, some people are so desperately looking for investment opportunities that it should not be considered a great distinction these days to find VC.
“investments in insuretech reached $496 billion in 2015; through early September of this year, they had already topped $480 billion.”
Where did you get your sources? Do you have any idea how far off you are with those numbers? $480 Billion!? 1500 investments and somehow you think that reached $480 Billion? yeah right. WRONG #Fail
Their sources are cited and linked in the story. It confirms what others have found.
https://www.cbinsights.com/blog/insurance-tech-startup-funding-2015/
http://www.insurancejournal.com/news/international/2016/04/27/406629.htm
Embroker alone had $12 million and Lemonade had a big investment as well.
“In all of 2015, investments in insuretech reached $496 billion in 2015; through early September of this year, they had already topped $480 billion.”
This should definitely be million not billion!
Other than that, an interesting article.
Fairly sure the hype will calm down when investors realize that it takes more than app-managed contracts, peer-insurance ideas, or claims management software to have sustainable ROI.
What changes substantially in the industry – what’s the feared disruption? Insurers need to be more efficient and need to do better risk selection to cope with low interest rates, fine. Brokers need to be more efficient, fexible and offer online access, ok.
But that’s about it.
Where in this equation is room for startups becoming the next Google, Uber oder AirBnB when really the old hands just need young solutions?
I want my insurance contract online, yes, maybe even in an app. But more importantly, I want peace of mind and hence want to trust that the intermediary will adjust my insurance where necessary, make sure a claim gets paid and is liable if something gets wrong (i.e. lack of cover). This is partially about trust. How can I trust in a startup that doesn’t know if they survive the next financing round, that I have nether had on the phone or met in person, and that provides me only a partial solution?
“Fairly sure the hype will calm down when investors realize that it takes more than app-managed contracts, peer-insurance ideas, or claims management software to have sustainable ROI.”
As the article makes clear, it is still very very early in the game. An entrenched old guard would like the Insuretech disruptors to believe that there is little need for disruption, and even if there were, that the technologists and VC’s are not qualified to make it happen. Wrong….most if not all of these disruptors, successful IPO or not, will have a profound impact on the insurance industry. It is clear from the number of insurance company attendees, as well as VC firms, that the forward-looking companies and smart money agree and see the opportunities.
Have you followed what has happened to the ROI in the insurance industry over the last 10 years?…The industry ROI is so low it simply can’t attract investor capital. The industry’s ROI has not been competitive for years. It is fortunate VC vultures are willing to invest the capital because up to this point no other investor group, let alone the insurance companies themselves, have been willing to do it. The VCs recognize there is a profit to be made in disrupting a struggling industry run on outdated business models. Further, did I miss the survey that indicated that insurance customers “Trust” the insurance industry…NOT!!
Peer to peer insurance, smart contracts, claims management software, not to mention block-chain technology, promise to bring transparency, accountability, peace of mind and lower costs to insurance customers while also serving to enhance the insurance industries risk selection, efficiency, Trust factor and ROI.
There will be winners and losers among this Insuretech group for sure, but there will also be a Google, Uber, AirBnB, or Amazon among them that will fundamentally change how the industry underwrites, distributes and services its customers.
Juice, you mention some interesting points to consider in the discussion. However, I think I fundamentally disagree with your implicit view that P2P, smart contracts and software solutions already are disruptions themselves. I much rather believe they are over-due developments or a natural evolution of efficacy and efficiency within an industry who’s business model is far from being outdated. It won’t take insurers and brokers long to copy paste those new smart solutions into their organizations. And that is why investors should probably watch out.
Re trust: this is more ambiguous than you imply. 1. I was referring to trust between end-customer and broker. 2. further differentiation is needed regarding trust of private vs. corporate clients of insurers.
Paying claims is trust building – but no matter how fancy a new start-up and its business model is, the iron rule or natural law of moral-hazard avoidance will remain an axiom of insurance.
Finally, and I give you that, it is hard to predict what block-chain will bring – but even here: wait for quantum computers to get involved and the security of this technology will be in question.
Just because VCs invest in these start-ups does not mean its a guarantee of success. I think it is fair to say VCs were proven wrong in the past before. Also there is so much fiat money flying around, some people are so desperately looking for investment opportunities that it should not be considered a great distinction these days to find VC.