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2019: Insurtech in Review

Happy “National Science Fiction Day” to all of you that enjoy reading a great SciFi book or had a chance to see the latest Star Wars entrant.  I hope you had a great holiday season with family and friends.  As I reflect on 2019, I’ve been blessed to work and interact with amazing people like yourself.  I am forever grateful for this.  Here’s to the next year and decade together.  May it be filled with only great things, health, success, and happiness for you and your family.

2019:  Insurtechs take hold (but will they hold?)

In last year’s email, I started off with the fact the Everquote had gone public in 2018 and was down 80% since its IPO.  What a difference a year makes.  As of the end of 2019, Everquote was up 700% YTD.  Too bad I didn’t invest Jan 1st 2019!  They are just one example of where Insurtechs and start-ups have started to gain traction.

Personal Auto

It’s much easier to track the growth of the Insurtechs within the personal auto sector.  Four Insurtechs: MetromileRootClearcover, and Noblr have collectively raised $875M and they have created traditional full-stack insurance carriers as compared to acting as an MGA.  Thru the 3rd quarter in 2019, they had written over $450M in combined premium.  Root itself, in 2018, was the 107th largest private auto writer in the country.  Not bad for a few years in business!  One entrant, HiRoad which was founded by Statefarm and only writes in Rhode Island has written just under $20M in their first year.

An interesting fact: in 2018, HiRoad wrote $12M in coverage while their parent Statefarm only wrote $18M in Rhode Island

While these carriers have seen significant premium growth, they all struggle when looking at their combined ratio (and especially their loss ratio).  I found it ironic that HiRoad had the highest combined ratio, given its roots in Statefarm.

Renters and Home

In the Renters/Home-owner spaceLemonade wrote $97M in premium in the first 9 months of 2019.  Hippo Insurance (which is an MGA and doesn’t report directly) wrote close to $170M in premium.  Lemonade has certainly tamed their loss ratio however; they are still just above a 100 combined ratio.

Another niche Insurtech is TypTap which sells flood insurance online.  In the first 9 months of 2019, they wrote about $37M in premium with a combined ratio of 96%.

Small Commercial

In the small commercial spaceNext Insurance continues to expand and has formally created a full-stack insurance carrier.  While it has only reported $1k in premium through 3Q19, they have probably written over $40M YTD.  Intrepid Insurance (which is part of WR Berkley) is a startup focused on selling directly to niche small business categories such as franchises and auto repair shops.  They have written $13.7M through 3Q19.  Pie Insurance, which sells workers compensation insurance online as written about $27 (through Sirius America Insurance).  This doesn’t include the likes of HiscoxbiBerk, and Chubb’s small business marketplace to name a few of the legacy carriers upping their focus on small business.

A Natural (and low) Ceiling

We all read and followed the collapse of the WeWork dream.  It was a dream.  Billions of dollars poured in with little evidence of a workable business model.  The Insurtech world suffered much of the same.  Many companies were funded without a clear vision for profitability.  Coverager just published a report on ~175 of these inactive startups.

Will this change.  Not a chance.  There is too much investable money out there.  With T-bills at historic lows and some European countries with negative interest rates, Investors are chasing any potential return.  What will change though is the exit strategy for the Insurtechs.  They will have to have a profitable product or provide something of value to a Carrier (who would then acquire them).

Another barrier to growth is brand recognition.  Whether you are B2B or B2C, you need brand recognition to grow.  For the Insurtech carriers (and MGAs) to truly grow they will have to start to spend advertising dollars that most likely exceed their raised capital.  The top 10 Insurance advertisers spend just under $5B annually.  Will Hippo, Lemonade, or Next spend 10s of millions on advertising?  Unlikely, but it’s anyone’s guess.  WeWork did some crazy illogical things.

Source AdAge 2019

2020: To Enable or Not?

Perhaps the area that I see of greatest potential is around Insurtechs providing a service to the legacy Carrier community.  Rather than treat Insurtechs as just a new type of vendor, successful Carriers collaborate with or even acquire the Insurtechs.  This allows the legacy carrier to quickly benefit from the entrepreneurial culture and technical creativity of Insurtechs, while the founders at the Insurtechs benefit from the industry’s market expertise, capital, and brand recognition.  It’s a win-win!

We surveyed Insurance Carrier CEOs this past summer as to what Insurtech areas they were exploring, and what POCs they ran and what was successful.  The highlights are below.  If you want to learn more, please reach out!

There are plenty of enabling Insurtechs to discuss, but I’ll leave that for another post.

Happy New Years and I very much look forward to staying in touch.

About Insurtech Advisors

Insurtech Advisors is dedicated to helping regional insurance carriers plan for the future today.  We help you identify and partner with Insurtechs.  This enables you to thrive and continue to meet the needs of your members, employees, and independent agents.

Insurance agents should partner with Insurtechs
Could InsurTech Startups Be Friends—Not Foes for the Insurance Agent?

FacebooktwitterlinkedinmailI recently wrote an article about how Insurance Agents can benefit from the Insurtech Ecosystem.  The Insurance agent or broker should look to partner with appropriate Insurtechs, thus bringing their insurance industry enhancements into their Agency and giving them a competitive advantage.

You can read more @IndAgent:  Could insurtech startups be friends not foes?

Insurtech Advisors helps connect small and mid-sized insurance carriers and agents to the advances occurring in the Insurtech space.  We do this by working individually with each partner to help them understand how to innovate and implement some of these external Insurtech ecosystem advances into their current processes in a cost and resource efficient way.  Additionally, we strategically invest in early stage Insurtech startups, where their offerings can benefit our member insurance carriers or agents.  For more information, please contact us at: info@insurtechadvisors.com or +1.929.282.2031.

3 Reasons Why Smaller Insurance Carriers Need to Leverage Insurtech Advances

FacebooktwitterlinkedinmailInsurtechs can help improve efficiency

Effective customer relationship management (CRM) is key to successful business, especially when it comes to smaller insurance carriers where the focus is on the client relationship. No matter the carrier size, speed, efficiency and effective delivery are the keys to running a successful insurance business. However, in reality, the smaller insurance carriers are falling behind on the efficiency and speed spectrum, and the innovative digital and larger insurance carriers who employ the latest tools and techniques, ranging from utilizing new data sources, robotic process automation (RPA), advanced data analytics such as machine learning and cognitive computing, to IoT (Internet of Things), are gaining market share.

These tools and techniques are increasing the digital and larger carrier’s speed, underwriting prowess and efficiency.  For instance, in one area alone, their speed in delivery of quotes (whether Personal or Commercial Lines) can be real-time and they allow binding and paying online.  Although small and mid-sized traditional insurance carriers are still in existence, to stay market relevant, and increase their growth and profitability, they need to partner with new start-ups also known as Insurtechs and firms providing technological infrastructure to insurance firms. Here are three reasons why this is necessary:

  1. Competitive-Edge:

Insurtechs have a natural competitive edge over traditional insurance carriers, because of their lack of legacy systems and typically narrow focus.  This leads to a much quicker service delivery model. What customers have expected traditional insurance carriers to deliver in weeks; Insurtechs are now delivering in minutes or hours.  So, in order to reduce the efficiency gap in service delivery models, insurance carriers can partner with Insurtech startups to yield innovation and overall total efficiency.

  1. Internal Efficiency

Legacy insurance carriers are slow in execution because the internal processes are slow, i.e. the long cycle between brokers, carriers, underwriters and customers, and lack of digitization of customers’ requirements or customer files.  If all the file work is still actually on paper and not digital or in the cloud, then it means searching for and acting on information does not take seconds but takes minutes or even hours. Thus, in this scenario the larger and more digitized carriers win again.  The small and mid-sized insurance carriers can overcome this gap by strategically partnering with Insurtechs in a very cost-effective manner.

  1. Effective and Improved Service Delivery

To compete with Insurtech and key insurance players in the industry, the smaller insurance carriers need to have an effective service delivery model, which reduces the dependence on long communication channels, and is completely customer oriented. In order to do that, and to compete with digitized larger carriers and Insurtech startups, traditional smaller carriers need to show a willingness to adapt and innovate.

Insurance service delivery models are changing, and to deliver per the changing environment, smaller insurance carriers need to start by identifying and then partnering with start-ups who are providing services to help insurance carriers adapt and work on improving their service delivery model.


Small and medium sized insurance companies should start to track investments and advances that are emerging within the Insurtech community and consider partnering with Insurtechs. Partnering with Insurtechs and other digital service providers will enable these carriers to transition from a traditional service delivery model to an innovative customer-centric and technologically enabled model. Partnering with Insurtechs will not only jump-start the carriers’ digital transformation but will prove to be a mutually beneficial alliance for both sides — the carrier will benefit from new techniques and digital infrastructure such as cloud based services in a very cost efficient manner thus improving their speed to market, while the Insurtech will benefit from the carriers’ legacy customer base and industry knowledge which will ultimately improve profitability/Return-on Investment for both partners.

Insurtech Advisors helps connect small and mid-sized insurance carriers to the advances occurring in the Insurtech space.  We do this by working individually with each member carrier to help them understand how to innovate and implement some of these external advances into their current processes in a cost and resource efficient way.  Additionally, we strategically invest in early stage Insurtech startups, where their offerings can benefit our member insurance carriers.  For more information, please contact us at: info@insurtechadvisors.com or +1.929.282.2031