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What does the future hold for Insurtech?

  • Cars Explained
  • Xavier Sabastian
  • 4 minutes

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Covid-19 accelerated the transition to digital ways of working, but the most significant adjustment for the car insurance industry after the pandemic could be cultural. Insurtech’s future is about more than just technology.¬†

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Thanks to Covid-19, insurtech has had a bumpy ride since 2020. Insurtech start-ups received nearly $4 billion in 2015, bolstering the belief that there were significant opportunities to transform how car insurance was organized and marketed. After five years, it’s evident that the existing insurers aren’t going to give in to disruption anytime soon, if at all. The question now is whether the digital change we’ve seen with Covid-19 will spark a new wave of creativity or stifle it.¬†


It was trendy to predict that we would have a business run on blockchain within five years. Underwriters would be replaced by artificial intelligence. We would be purchasing all of our insurance on an iPhone with three taps when the word insurtech was coined late in 2015. All of this seemed plausible at the time, but nothing has improved in any of these places. No one would have believed it if someone had told them in March 2020 that the entire car insurance industry in the United States might lock up their offices, leave them deserted, and move to a completely digital remote working existence in a matter of days. 

Effects of COVID-19 on car insurance companies 

As the cost of client acquisition became too high to maintain, many well-known car insurance companies became white-label platform providers last year. Many others have quietly gone out of business or been acquired by large car insurance companies struggling to innovate internally. Successful start-ups in this field aim to have insurance for niche or underserved markets. They’re easier to get into, but the payouts are smaller.¬†

It is not as easy as many people assume to change the way insurance is delivered. To succeed in core markets car insurance, a newcomer must have access to hundreds of millions of dollars in financing to develop the requisite technologies and marketing muscle. The notion that people will begin purchasing insurance from an app on their computer, one item at a time, has proven false in most cases. 

What next for insurtech companies 

Now that we have all had to channel our once-diverse working lives into the digital world, shouldn’t insurtechs reap some benefits? As it becomes more difficult or impossible for insurers to do it the old way, it seems that technological transition has now become a priority. It’s not just at the corporate level; everyone from the call center operator to the CEO now needs to work from home using only laptops and mobile phones.¬†

Investors are well aware that some of the start-ups they fund would fail, but they have become more concerned about companies in their portfolios taking longer than anticipated to deliver in the last few months. 

¬†The insurtech CEOs are under pressure to spend investment dollars rapidly improving technology, building a team, and expanding the top line. Staff headcounts are being reduced behind the scenes, and more challenging questions about consumer conversion and indisputable proof of sustainable sales are being raised. That isn’t to suggest that all sources of funding have dried up. The prominent venture capital firms still have money to invest in new insurtech companies that can show they can sign up new customers.¬†

In most cases, change does not occur in a vacuum. A sizable external shock that forces a new way of doing things is often needed for the industry- or life-changing developments.  

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Covid-19 has undoubtedly contributed to the acceleration of already-existing phenomena. Still, it does not appear that it would compel significant reform, except for a fundamental rethinking of whether and how pandemics can be provided as an insurance cover. The market already drives creativity and does not need a shock to do so. 

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