Covid-19 pandemic impacts insurtech sector

  • Changed world: a fairly unpredictable next 12 months of activity is expected in the insurtech space, according to the Willis Towers Watson InsurTech Briefing

    Changed world: a fairly unpredictable next 12 months of activity is expected in the insurtech space, according to the Willis Towers Watson InsurTech Briefing


Disruption and changes caused by the Covid-19 pandemic has created an unpredictable near-term for some fledgeling insurtech businesses.

There are questions about how much demand there will be for certain insurance technology ideas that had looked good before the pandemic, but were aimed at risks that now could be fundamentally changed.

And traditional insurance and reinsurance companies that have not made, or be in the process of making, digital transformations are in danger of becoming obsolete.

Those are thoughts presented in the latest Willis Towers Watson InsurTech Briefing.

The briefing is a collaboration between Willis Re, Insurance Consulting and Technology, and CB Insights.

Global funding of insurtech businesses and start-ups increased to $1.56 billion in the second quarter, an improvement of 71 per cent on the first three months of the year.

That figure involves 74 deals in the insurtech space between the start of April and the end of June.

Andrew Johnston, global head of insurtech, Willis Re, said: “Businesses in our industry are now either fully floating on the digital rafts they have been inflating for years or digitising increasingly and relying more and more on remote systems (increasingly cloud-based) that can support electronic quoting, policy binding and issuance, and claims paying technology, to name but a few functions.”

He said if a (re)insurer is still unable to digitally and remotely procure business, quote business, distribute product and service a living policy up until the contract ends or a claim is made, then it is leaving itself vulnerable to obsolescence.

Dr Johnston also said a development of the second quarter was the number of insurtechs obtaining or planning to obtain carrier status through acquisitions, “including Hippo’s acquisition of Spinnaker, Buckle’s acquisition of Gateway Insurance Co, and Pie Insurance’s $127 million round that earmarks $100 million to purchase licensed insurance companies”.

During this month, Lemonade becomes the first public US “insurtech unicorn”.

Dr Johnson said: “In addition to the speculation of short-term returns and survival speculation of some highly leveraged insurtechs, certain risks and their associated vectors have fundamentally changed — and could be changed for ever.

“Will the travel insurance industry ever be as buoyant again? Will we ever drive as much again? Will we all have offices in our home? The short answer is possibly yes, possibly no.

“As such, we anticipate seeing a fairly unpredictable next 12 months of activity.”

He added: ‘While insurtechs are probably much more adept at hibernating than their incumbent relatives, if the use case of a business has been lost for ever through fundamental change, or the prospect of ever ‘making it’ now seems (more) unlikely, then many founders may cut their losses and move on.”

You must be registered or signed-in to post comment or to vote.

Published Jul 29, 2020 at 8:00 am (Updated Jul 28, 2020 at 11:44 pm)

Covid-19 pandemic impacts insurtech sector

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    Today's Obituaries

    eMoo Posts