The insurance industry is being reshaped by tech-driven innovation. The insurance value chain has been transformed by emerging technologies such as telematics, AI, machine learning, and automation, creating new and improved customer experiences. There is no doubt that insurtechs are driving the industry’s evolution, and investors are paying attention. Venture capital (VC) investments have grown faster than private equity or public markets. VC investments have grown faster than private equity or public markets. Capital is flowing into the market as private-equity investors look to invest sooner.
Maximise profits
The biggest challenge for insurtechs is driving a path to profitability once they have raised capital and acquired customers. As an insurer, it tends to be challenging at this stage for the startup to scale up its initial unit economics. Insurtechs successfully capture new revenue generation opportunities once they have built differentiated technologies and processes in their core markets. An insurtech company, for example, has decided to commercialize its technology platform and pivot from an agency to a B2B platform provider through the commercialization of its technology platform.
Boost investor interest
Public markets have traditionally been a difficult place for insurtech companies to thrive. Emerging insurtechs are often unsure if they should be assessed as insurers or tech companies, and the time needed to achieve profitability can be concerning. It’s imperative to refresh the investor story when share prices and growth expectations are under pressure. A data-driven hypothesis is developed, financials and operations evidence is gathered, and management is coached to articulate the story clearly. Completing this process can build investor and shareholder confidence and help insurtechs gain clarity and alignment on their strategic direction.
Strategy refresh
As insurtechs scale in their core markets, they tend to focus on new and attractive segments and geographies to unlock next-horizon growth opportunities. A complete strategy refresh needs to be done at this point, but it requires rigor in the analysis and a perspective from outside the company. Identify strategic M&A opportunities and enablers for a growth trajectory that will drive ambitious growth. After the strategy is in place, insurtechs can have a chance to expand the model to new geographies and be able to drive change on a global scale once the model becomes clear.
Source: Insurance CIO Outlook
