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What is an Insurtech?
An Insurtech is an insurance company (whether carrier or intermediary) which utilizes technology as a key differentiator, whether it is automating quote functionalities or using machine learning in their pricing algorithms, to facilitate insurance transactions. Some well-known examples of Insurtechs include Lemonade, Hippo, and Root. Research by CB Insights showed that global investment in Insurtech was up from $348M in 2012 and reached $4.15B in 2018. Investment in this sector will only continue to grow, as Insurtechs expand to fill all elements of the insurance supply chain. However, there are multiple categories of Insurtechs, and we include them below to give you a better understanding of the companies in this growing space.
Digital MGAs and Full-Stack Insurance Distributors
These companies either sell directly to the consumer or allow retailer access to a quoting platform focused on a specific line of business, e.g. general liability, workers compensation, cyber, etc. While some of these companies are simply MGAs dressed up as fronting carriers, other companies are able to write on their own paper and have become full-stack digital insurance carriers. As an added effect to the growth of these companies, digital aggregators, such as Semsee and Tarmika, have also begun to pop up online for all lines of business.
Insurtech Software as a Service
From insurance pricing companies to loss data providers which can integrate with an MGA’s platform, Insurtech SaaS is here to stay. For example, the French company Akur8 offers AI-driven pricing automation and optimization services to various insurance carriers on a cloud-hosted platform. In addition, Genasys, a policy administration and claims management software platform, offers a variety of services to power insurance services in the marketplace. These are just some of the many companies focused on the SaaS aspect of the insurance distribution chain.
Insurance/Infrastructure as a Service (IaaS)
This is perhaps the most challenging sector of the insurance industry for Insurtechs as entrants and developers in the space. A classic example of IaaS is Boost Insurance, a fully compliant platform with full-service, automated policy management workflows, claims administration, and comprehensive data analytics. Our very own BindHQ is a pioneer at the intersection of SaaS and IaaS, relying on a SaaS pricing model with IaaS capabilities and customization to power the digital capabilities of our clientele.
The incredible technological transformation which is happening in the insurance industry is only set to reduce barriers to entry for newcomers into the space, and enable additional Insurtechs to enter and compete in the marketplace. As the market continues to grow, Insurtechs will facilitate the complete digitalization of the industry, and will become the services of choice for consumers and companies seeking to appeal to a consumer which is seeking the fastest, most reliable way to make decisions about the protection of their assets. Undoubtedly, the integration of some of these services will also demonstrate the need for highly specialized Insurtechs are able to innovate much more quickly than traditional insurance companies, and which rely entirely on data analytics to decide on the best path to move forward in the industry.