Something very interesting happened to insurtech in 2018, according to Deloitte:
“While the number of InsurTech startups has decreased in the last year, investment and acquisition activity has continued to surge for established InsurTech companies..”
This is an intriguing phenomenon, considering how much focus (digital ink, video clips, analyst reports, etc.) insurtech receives – the word “insurtech” has practically become an industry buzzword.
Most of this buzz is well-deserved. Insurtechs have brought many worthwhile innovations to the insurance industry and they are certainly helping to accelerate digitalization and an improved customer experience, among other achievements. Some insurtech companies may literally help revolutionize the insurance industry.
But if we look with a more critical eye, we’ll quickly realize that not all insurtechs were created equal. Many of them eventually fail, unfortunately, which is why the Deloitte report I quoted above refers to a narrowing of new insurtech launches:
“Many of those interviewed (including insurance companies, InsurTechs and accelerators) indicated that the ‘gee whiz’ investment stage has likely passed for most InsurTech areas at the moment, with capital providers focusing instead on giving an additional boost to those showing real progress rather than just potential.”
Karlyn Carnahan, head of the Americas in the Property & Casualty division at Celent, similarly wrote in an article from 2018:
“InsurTechs are incredibly creative and have tremendous potential to fundamentally transform the business, which is why we see so many startups in the space, and so much money being poured into them. But those who want to survive must find a way of gaining industry expertise, conserving cash, and avoiding the temptation of ‘dumb money.’”
Knowing that the insurtech world is inherently an unstable one, how can insurers benefit from the innovation without getting burned? One way is to trust the experts.
Sapiens is a global organization with over three decades of extensive experience in insurance innovation and technology. We seek out and identify the most relevant, advanced and innovative technology solutions for the insurance market. We then connect insurtech solutions to our Sapiens PartnerHub, from where we make these offerings available to insurers for their own use, and for the use of their customers.
Insurers can connect themselves and their customers to a range of third-party providers, including infrastructure, insurtech and more, without having to do the hard work of researching and selecting which insurtechs are worthy of partnership.
At the same time, insurtechs benefit from Sapiens’ insurance market expertise and global presence, which enables them to optimize their value proposition to better serve market needs. This improves their chances of success in a market that becomes tougher as it moves from hype to business reality.