“The insurtech sector keeps surprising us year on year,” noted Andre Symes (pictured), co-CEO of the insurance software solutions provider Genasys in a recent IB Talk podcast. For while every year it is predicted that the bubble is going to slow down, in 2021 the sector broke numerous funding records - heading into 2022 having raised more than $10 billion in funding, up from $7 billion the year before. Therefore, it seems fair to say that the outlook is looking very optimistic for those people looking to use technology to improve the insurance world.
Listen now: The future of insurtech
“[An area] that makes me personally quite excited, beyond the level of investment in the insurtech space, is the shape of that investment,” he said. “During the infancy of insurtech, we saw a lot of investment going into customer acquisition, front end developments, it was almost like a gold rush to ‘let’s see how quickly we can get as many customers on board as possible?’. But as the sector is starting to mature, we are seeing some of that investment move into the servicing of those customers.
“And we see that with some of the really good deals that were done last year - Bought By Many Zego, CFC - all of them really good investments. They are just looking after their customers better and you can see that they’re utilising the investments to actually create a better customer experience, rather than simply just trying to get as many customers as possible.”
Another area that indicates that the market is maturing is the different investment routes that businesses are taking, with some insurtechs opting for an IPO approach while others are looking to go to market via SPAC listings. This is indicative of that maturation process, Symes said, and an exciting hint of how this may continue to unfold.
Touching on the key successes and failures that the insurtech market yielded last year, he noted that perhaps the greatest success seen in the space was the realisation of its true purpose. Previously, he said, it seemed like a lot of the insurtech industry in-crowd thought of themselves as the ‘Formula One’ of the insurance world. While that may be the case, a lot of the investment was going into technologies that couldn’t be utilised at scale. So Symes believes the biggest win of 2021 was the growing understanding of the need to pull back slightly and not to innovate for the sake of innovation, but rather to see what innovation could be taken to the market at scale.
“I think that some of the biggest failures, we’re going to see realising in the next 12 to 24 months,” he said. “Some of the valuations that insurtechs are raising capital at are simply unrealistic and unsustainable. And I think we’re going to see ourselves in a perpetual cycle of continuous raising to try and meet some of the expectations of shareholders. Some of the valuations really are too high to be sustainable, and someone’s going to have to end up paying for that sooner or later.”
With 2022 now well underway, Symes sees no indication that this state of play is going to change in the short term. He believes the market is moving in the right direction and seeing a very natural maturation. People are now looking to adopt technology to solve a business problem rather than for its own sake, he said, which is often the case at the peak of a hype cycle as people become excited about the buzz surrounding certain terminologies such as AI, blockchain, big data or telematics. It all swings around until the pendulum settles on something that is genuinely usable.
“I think 2022 is going to be very much 2021 times two,” he said, “but potentially with a sprinkling of more technology flavour on some of the other areas. Particularly in the B2B space, we’ve now got the customers coming to insurtech. Insurtechs are challenging the incumbents on customer acquisition, now it’s going to be about how do the businesses and the ecosystems in the insurtech space start supporting each other to maintain the customer experience through the policy lifecycle.”
Looking at what the next 12 months are likely to bring to the insurtech table, Symes highlighted that technology is continuing to accelerate at an exponential rate, which will lead to reductions in the cost of technology. His prediction for 2022 is that as technology costs reduce, more people will start adopting technology to improve their business. His use of the word ‘improve’ rather than transform is important to note, he said, as technology doesn’t transform businesses, it should just improve what they are already.
“I do think that, without going down the buzzword bingo route, we are probably going to see quite a bit more artificial intelligence and machine learning coming into play,” he said, “because there’s a lot of focus on that. It is one of the areas where there’s exponential development in tech that can be consumed and adopted in existing businesses rather well.
“I’ve also said for quite some time, that we’re probably going to be seeing a little bit more collaboration with big technology. And we are seeing that with some of the FAANGs coming into the space, collabing a bit more, some of them launching their own insurance. We’re seeing that with the likes of the self-driving car, of people in some of the EVs, [facing] some of the new risks that are coming out of that space, and creating their own covers as they understand the risks better. So, there’s nothing fundamentally different but I think that sums it up quite nicely.”
Find out more about what 2022 has to hold for the insurtech sector from Andre Symes here.
