Insurtech Is NOT Dead

Originally published by Insurance Thought Leadership on August 10, 2024.

The insurtech sector faces a wave of pessimistic narratives, from declining funding levels to high-profile failures like Wefox. But industry strategist Matteo Carbone argues these developments represent healthy Darwinian selection rather than an industry collapse. The real insurtech success stories are unfolding quietly inside major carriers' operations.

Progressive stands as the prime example. Over the past decade, as the carrier expanded its usage-based insurance program and refined pricing sophistication, it achieved loss ratios consistently 10 to 15 percentage points better than competitors. By 2023, with telematics penetration increasing and surcharges for risky drivers reaching 60%, Progressive's advantage exceeded 20%. Even Berkshire Hathaway's insurance chief acknowledged in 2021 that Geico had "missed the bus" on telematics.

Beyond telematics, other carriers are achieving concrete results with IoT-based risk prevention. Hanover and other U.S. commercial property insurers report saving more than three dollars in expected losses for each dollar invested in prevention programs. Some carriers now show double-digit IoT penetration in targeted portfolio segments. Meanwhile, Unipol Gruppo's beyond-insurance division generates €1.6 billion in annual revenues, and Vitality's behavioral programs deliver 180% ROI for health insurance clients.

Carpe Data spoke at its recent event about the end of insurtech's "Golden Age, " but Carbone sees these market corrections as natural evolution. AM Best research shows highly innovative personal auto carriers achieving better combined ratios and faster growth since 2018. As Chubb's CEO recently stated, insurers are fundamentally data companies now.

Read the full article at Insurance Thought Leadership.