• Insurtech has become a major area of investment and development in recent years, with high valuations and funding from both public and private investors.
• The economic situation is causing pressure on leading insurtechs to show signs of profitability as investor finance becomes scarcer.
• According to the publisher’s 2021 UK Insurance Consumer Survey, many consumers are still unwilling to purchase insurance from startups.
Insurance Technology (Insurtech) Market
The insurtech market over 2020-21 was marked by huge company valuations created through investments by both public and private sources. However, increasing interest rates and economic pressures have reduced incentives for investors, creating an uncertain outlook for the remainder of 2022 and 2023.
Impact on Insurance Industry
New technologies such as AI, blockchain, IoT, and big data have been adopted by startups, forcing incumbents to adapt their own processes in order to remain competitive. Share prices for publicly listed insurtechs have been decreasing, making it difficult for some companies to remain profitable without additional financing.
Deal Activity in Insurtech Sector
By mid-August 2022 there had been only 49% as many completed deals in the insuteche sector compared to all of 2021. Marmalade is the most well-known brand among popular insurtechs but only 12.9% of consumers indicated they had heard of them.
Consumer Attitudes Toward Insurtech Startups
According to a survey conducted in 2021 amongst UK insurance consumers, only 31% of those under 40 stated that they would be likely to purchase insurance from a startup – 51% overall were unlikely to do so.
The future prospects for the insurtech sector remain uncertain due to changing economic conditions which are reducing investor appetite and making it increasingly challenging for companies within the sector to stay profitable without external support or funding