Insurtech Global Outlook

2024

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INSURTECH 2024

1. Wave One: Digital Insurance

PATH TO PROFITABILITY

Disruptors

Novel standards in customer experience, claims processing, and pricing strategies. Powered by digital platforms and AI technologies, it challenged traditional insurance models in terms of efficiency, accessibility, and customer centricity.

2. Wave Two: Connected Insurance

BEYOND CONNECTED ECOSYSTEMS

Enablers

Insurtechs played an enabling role in the insurance ecosystem by leveraging emerging technologies like IoT and data sources to drive innovation and efficiency across various segments of the insurance industry.

3. Wave Three: Generative Insurance

THE NEXT BIG THING

Catalysts

Transformation in high stakes insurance, in response to emerging risks and opportunities associated with climate change, generative AI and cyber risk. There is a proactive approach to driving change in industry evolution in the present AI era.

Wave One: Digital Insurance

PATH TO PROFITABILITY

Disruptors

Wave Two: Connected Insurance

BEYOND CONNECTED ECOSYSTEMS

Enablers

Wave Three: Generative Insurance

THE NEXT BIG THING

Catalysts

Highlights

The insurance industry, like many others, has a concentration on the most promising businesses with the largest insurance stakes. This fact inspired this study to separately analyse what happens in the top tier and bottom tier between the period before and after the peak in 2021.

The exploration of insurers' follow-on investments reveals a comprehensive understanding of industry dynamics, emphasising innovation, operational efficiency, and a broader vision of insurance integration.

Highlights 2024

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CEO Talks

Descartes

Tanguy Touffut, CEO & Co-founder: “Addressing climate change is a multifaceted challenge, as there is no one-size-fits-all solution. Parametric insurance, however, stands out for its potential to revolutionize how we navigate these risks. It's not about making assumptions but recognizing a powerful tool in our arsenal.”

Qumata

Luca Schnettler, Co-founder & Group CEO: “Revealing Qumata's strategic stance, we explained our conscious decision to steer clear of wellness-related initiatives. This decision was grounded in the perceived low barriers to entry within the wellness space and a growing industry trend where insurers prefer the internal management of such programs.”

LULA

Matthew Vega-Sanz, CEO: “The introduction of GenAI in insurance is set to transform mundane tasks and reduce overstaffing, marking a significant shift towards more efficient and customer-centric operations. It's a move that enhances, rather than replaces, human efforts.”

Mind Foundry

Selim Cavanagh, Director of Insurance: “Grounded in principles of transparency, human-AI collaboration, and continuous meta-learning, is at the forefront of deploying AI in high-stakes insurance solutions. Our focus is not just on innovation but on creating transparent and collaborative AI applications that enhance human work and trust in the insurance sector.”

Bolttech

Stephan Tan Group Chief Strategy Officer and CEO, Insurance Solutions at Bolttech: "We aspire to be the go-to platform for anyone looking to sell insurance, globally. Our strategy revolves around a combination of soft skills, regulatory expertise, technological innovation, and a bold vision for the future. This multifaceted approach positions us to enable global insurance landscape from the outset."

Waves reshaping the insurance industry

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Wave 1: Digital Insurance

Insight 01

Path to profitability

Lemonade has shown a steady revenue growth and gross margin improvement with an increase of 2M customers (+21% than the previous year) and a revenue growth of 55% YoY, demonstrating a great ability to gain more customer base and boost the revenue. This growth has been strongly connected with marketing efforts due to their focus on profitability.

But they have seen higher than expected growth in the first quarter with a clear cost moderating goal. The loss ratio has been a focal point of financial performance, with a reduction of over 10%, standing at 83% compared to 94% in Q3 2022.

HSCM Public Insurtech Index

Insight 02

Implementation Strategy

In the thriving capital markets, hypergrowth was driven by a large amount of capital injection. However, in today's landscape, investors and emerging enterprises are changing their priorities, placing a premium on sustainable and profitable business models.

Public Insurtech companies are restructuring their financial frameworks to increase cash flow, facilitating business expansion. The growth prospects of public Insurtech are fueled by rising revenue streams, expanding asset portfolios, and robust market demand.


Business Line	Multi line (P&C + Life)	H&L	P&C
Revenue	Steady Growth	Steady Growth	Steady Growth
Gross Margin	Steady Growth	Appears seasonality	Volatile
Cash in hold	Peak in 2020	Steady Growth	Peak in 2021
Assets turnover rate	Steady Growth	H&L	Remain unchanged
EBITDA	Signals of improve	Signals of improve	Signals of improve

Insurtech enablers

"Over the past decade, we've witnessed a strained relationship between insurers and insurtechs, characterized by a misguided belief among incumbents that technology development is straightforward and a corresponding assumption among insurtechs that insurance is an easily solvable puzzle. This dynamic has created unnecessary tension. To move the industry forward, insurers must recognize the value of collaborating with insurtechs, while insurtechs should actively involve insurers in their initiatives."

Matthew Vega-Sanz, CEO at LULA

Insight 04

Lessons learned

Customer Delight Focus: User-friendly and quick claims processes, enhancing customer satisfaction.
Diverse Product Offering: Expanding product offering, diversifying revenue streams. Increase in customers and premiums.
Strategic Growth: Focus on growth and marketing efforts, demonstrating its ability to turn profitable.
Tech-Driven Approach: Commitment to innovation, fostering industry evolution.

Retention Rate: Despite becoming the first insurance company for young customers in the U.S., Lemonade retention rates and higher churn impact long-term value.
CAC: Companies still struggle with acquisition costs impacting their ability to turn a profit.
Funding Dependency: Relying on external funding raises questions about long-term sustainability. Tech investors could pressure other actors to prioritise growth over profits.
Competition: Disruptors now face competition, with more prepared incumbents and other Insurtech players.

1. Digital Insurance

Insight 01

Path to profitability

HSCM Public Insurtech Index

Insight 02

Implementation Strategy


Business Line	Multi line (P&C + Life)	H&L	P&C
Revenue	Steady Growth	Steady Growth	Steady Growth
Gross Margin	Steady Growth	Appears seasonality	Volatile
Cash in hold	Peak in 2020	Steady Growth	Peak in 2021
Assets turnover rate	Steady Growth	H&L	Remain unchanged
EBITDA	Signals of improve	Signals of improve	Signals of improve

Insurtech enablers

Matthew Vega-Sanz, CEO at LULA

Insight 04

Lessons learned

Customer Delight Focus: User-friendly and quick claims processes, enhancing customer satisfaction.
Diverse Product Offering: Expanding product offering, diversifying revenue streams. Increase in customers and premiums.
Strategic Growth: Focus on growth and marketing efforts, demonstrating its ability to turn profitable.
Tech-Driven Approach: Commitment to innovation, fostering industry evolution.

Retention Rate: Despite becoming the first insurance company for young customers in the U.S., Lemonade retention rates and higher churn impact long-term value.
CAC: Companies still struggle with acquisition costs impacting their ability to turn a profit.
Funding Dependency: Relying on external funding raises questions about long-term sustainability. Tech investors could pressure other actors to prioritise growth over profits.
Competition: Disruptors now face competition, with more prepared incumbents and other Insurtech players.

Wave 2: Connected Insurance

Insight 01

Beyond connected ecosystems

Persistent high inflaction, the growing impact of emerging risks and the adoption of new technologies are bringing opportunities in the investment's growth based on new risk management methods, new auto insurance models like UBI, and wellbeing and employee benefits platforms.

These three facts are creating the current platform ecosystem models that are capturing all the market attention.

Main Growing Business on Top-Tier

Insight 02

Winning models

The selected models, stemming from prominent Insurtech and strategic insurance bets, are embracing competitive advantage and innovation, respectively: In the U.S., Telematics is undergoing a significant surge, with a noteworthy 30% of new auto policies sold incorporating telematics capabilities.

Embedded Insurance is a trending topic. Wave 2.0 is pushed by this vertical that is potentially worth $700 billion in Gross Written Premiums by 2030. The emphasis on prevention aligns with the dual objective of delighting customers and minimising costs. Claim(less) solutions are on the rise for top-tier insurtechs.

	Smart Mobility	Healthy living	Home safe home	Business Shield
Beyond Insurance (Tech+Insurance Model)	UBI / Connect Car Telematics Embedded Insurance	Wellbeing EHR/Wearables/Scoruings Employee Benefits	Prevention model Computer Vision Claimless Model	Parametric Insurance Cyber Risk Management
Insurtech & New Entrants (Enablers)
incumbent (Winners)
Main Purpose and Business Models	Incentivise drivers for a better driving behavior with lower claims and better prices	Influence customers leading healthier lifes preventing illness and building long-term profitability	Enhance safety and secure peace of mind by leveraging data to tailor converage and elevating insurance experience	Educate customers with simple and transparent products with a faster response and higher resilience

Insurtech enablers

"A commitment to innovation and pioneering products and features to address climate change means actively working to create a win-win situation among insurers, brokers, and other stakeholders. Consensus is essential in building a win-win ecosystem to ensure financial viability for all parties involved and find sustainable solutions to better finance mitigation actions in the face of an ever-evolving risk landscape."

Tanguy Touffut, CEO DESCARTES

Insight 03

Drivers

Shrunk Market Margin

With economic development and saturated competition, all entities are adopting different methods to decrease costs and increase revenue streams.

New entrants everywhere

The entrance of new tech players is bringing opportunities outside the core business. Embedded models can effectively increase revenues without a significant impact on costs.

Impact of Data and AI

Advanced techs like AI are enabling the establishment of new capabilities, including UBI, augmented underwriting, parametric insurance or prevention models.

Emerging Risks and Digital Born Generations

Consumers are getting used to and even feel more comfortable with digital service and liquid customer experience. As a result, the whole market is moving from product-oriented to customer-oriented.

2. Connected Insurance

Insight 01

Beyond connected ecosystems

These three facts are creating the current platform ecosystem models that are capturing all the market attention.

Main Growing Business on Top-Tier

Insight 02

Winning models

	Smart Mobility	Healthy living	Home safe home	Business Shield
Beyond Insurance (Tech+Insurance Model)	UBI / Connect Car Telematics Embedded Insurance	Wellbeing EHR/Wearables/Scoruings Employee Benefits	Prevention model Computer Vision Claimless Model	Parametric Insurance Cyber Risk Management
Insurtech & New Entrants (Enablers)
incumbent (Winners)
Main Purpose and Business Models	Incentivise drivers for a better driving behavior with lower claims and better prices	Influence customers leading healthier lifes preventing illness and building long-term profitability	Enhance safety and secure peace of mind by leveraging data to tailor converage and elevating insurance experience	Educate customers with simple and transparent products with a faster response and higher resilience

Insurtech enablers

Tanguy Touffut, CEO DESCARTES

Insight 03

Drivers

Shrunk Market Margin

With economic development and saturated competition, all entities are adopting different methods to decrease costs and increase revenue streams.

New entrants everywhere

The entrance of new tech players is bringing opportunities outside the core business. Embedded models can effectively increase revenues without a significant impact on costs.

Impact of Data and AI

Advanced techs like AI are enabling the establishment of new capabilities, including UBI, augmented underwriting, parametric insurance or prevention models.

Emerging Risks and Digital Born Generations

Consumers are getting used to and even feel more comfortable with digital service and liquid customer experience. As a result, the whole market is moving from product-oriented to customer-oriented.

Wave 3: Generative Insurance

Insight 01

Insurtech Funding Shift

The challenge period for the Insurtech sector created in the last year a significant change in terms of the stage of funding investors are focusing on.

In North America, excluding Mexico, the largest increase was in pre-seed stages, coming from 11% of the total number of deals in 2022 to 17% in 2023. In the initial stages in the U.S., three categories are dominant. Claims, Climate and Cyber are the main invested companies in the initial stages in the U.S.

Insurers Investments by funding type

Insight 02

Cutting-Edge Technologies

The primary divergence between the two is in the realm of technology. Emerging Insurtechs harness cutting-edge technologies to address specific challenges across various business sectors, with AI playing a pivotal role.

AI has emerged as one of the most influential and critical technologies for insurance companies, enabling the execution of new business models and fostering innovation.

Bottom Tier: Growing Technologies

Insurtech catalysts

"We don't typically get involved in customer service applications and marketing applications that have less impact on the individual. We're focused on the thing called high-stakes applications. These are areas of business globally that affect either individuals to a high degree or at the scale of populations. Something you implement or do affects a whole population."

Selim Cavanagh, CEO MIND FOUNDRY

Insight 03

Superior Business Model Strategy

Higher Uncertainty: Identify Gold Use Cases and Kill Bad Projects. Discover potential high-stakes Areas and gather evidence to understand patterns and behaviour.

“Reducing time to policy for new Insurance programs from months to days.” — LULA

Medium Uncertainty: Test and iterate the first traces of evidence gathered in the previous stage, killing projects with no recurrent evidence and continuous learning with a regular review of the evidence.

“Cancellation rate in UBI models is high an improvement between 2%-4% impacts profitability directly.” — MIND FOUNDRY

Lower Uncertainty: Execute projects and define the budget and time to be implemented following the objective and key results defined.

“The enhanced ability to investigate the most likely cases of fraud first, as well as interrogate the data behind the ML predictions, increased fraud detection by 120% and reduced indemnity spend by 4%.” — MIND FOUNDRY

3. Generative Insurance

Insight 01

Insurtech Funding Shift

The challenge period for the Insurtech sector created in the last year a significant change in terms of the stage of funding investors are focusing on.

Insurers Investments by funding type

Insight 02

Cutting-Edge Technologies

AI has emerged as one of the most influential and critical technologies for insurance companies, enabling the execution of new business models and fostering innovation.

Bottom Tier: Growing Technologies

Insurtech catalysts

Selim Cavanagh, CEO MIND FOUNDRY

Insight 03

Superior Business Model Strategy

Higher Uncertainty: Identify Gold Use Cases and Kill Bad Projects. Discover potential high-stakes Areas and gather evidence to understand patterns and behaviour.

“Reducing time to policy for new Insurance programs from months to days.” — LULA

“Cancellation rate in UBI models is high an improvement between 2%-4% impacts profitability directly.” — MIND FOUNDRY

Lower Uncertainty: Execute projects and define the budget and time to be implemented following the objective and key results defined.