Insurance Startup Spotlight 2022
Insurtech has been a mixed bag in 2021. While there has been significant funding rounds by the likes of wefox, Brought By Many, and Embroker, IPOs of the most well known insurance startups have been disappointing. Oscar Health has seen a ~74% price drop since its IPO while Lemonade will end the year with a -40% ROI for Day 1 investors. While there has been some disappointment in 2021, the insurtech sector still expects at CAGR of 34.4% between 2021–2027 and also saw a near-record $5.3 billion for the 2021 Q3 over a total of 472 deals.
As we move into 2022, funding will continue to pour into startups looking to digitalise and optimise insurance products across the industry to the benefit of customers. Here are a selection of startups to keep an eye on going into 2022:
DigiSure
What do they do?
DigiSure is building micro-insurance products for Millennial and Gen Z customers who rely more on car rentals and alternative mobility options like rideshare, scooters and bicycle.
Why are they interesting?
A main challenge for insurance companies within Mobility-as-a-Service (MaaS) is the ability to provide immediate coverage for different vehicles at the specific time of need. DigiSure are applying machine learning and AI to manage large amounts of data in real time, resulting in more nuanced risk assessments, better pricing, and profitable insurance policies. MaaS is forecasted to grow by 30% over the next five years and insurance is a key enabler to its growth.
Why should you care?
Transportation needs for social, domestic and pleasure are starting to move away from the idea of owning/leasing a single mode of transport for all transport needs towards a MaaS model. Often times this involves shared mobility and understanding risk is much more reliant on the user profile vs the vehicle of choice. By using technology to remove the bad actors and improve claim estimations, this can turn unprofitable products like micro vehicle insurance into a desirable product for rated insurance carriers to cover.
Continuity
What do they do?
Continuity is an AI tool for Underwriters in the SME space that analyses insurance contracts to detect invalid or outdated policies.
Why are they interesting?
Through processing 500,000 contracts worth more than €1.5 billion to date, they have been able to identify 10–15% of contracts which have put SMEs at risk through inaccurate initial underwriting declarations.
Why should you care?
Continuity have already proven a 10–15% error rate with existing underwriting tools. This is a major concern for insurance firms with large claim costs or reject a significant amount of claims from customers. While SMEs are facing tougher economic climates and reduced cash flow, having the right insurance protection will be essential for long term survival meanwhile insurance firms will continue to look for an improvements to their claims ratio to appease investors.
Trellis
What do they do?
Trellis allows consumers to check auto insurance prices within just 30 seconds and have recently launched an embedded insurance product with fintechs that will allow them to sell insurance within their own apps.
Why are they interesting?
Embedded insurance is a much discussed topic and Trellis is starting to allow US fintechs the ability to become financial super-apps for it’s customers. Consumers will be able to switch insurance providers without having to deal directly with the companies or complete large amounts of additional paperwork. The sharing of data between fintechs and insurers also brings about lots of interesting possibilities for both parties.
Why should you care?
Insurance is often viewed as a necessary evil that is administrative heavy, expensive and not tailored to specific needs. Partnerships with fintechs will help improve the overall customer experience as well as plug insurance companies in at the exact point of need for a consumer. Fintechs that provide autoloans will now be able to enable customers to see and compare insurance products within the same customer journey.
These are three interesting startups across the insurance stack. Which startups have I missed off this list?
Adam Butler is an MBA graduate from Imperial Business School with experience in innovation for Financial Services, Insurance and Transportation.
*Views are my own
