IS THE INSURTECH ERA OVER?

Originally published by Insurance Thought Leadership on May 6, 2024.

Max Drucker told an industry audience that the insurtech movement has fundamentally changed. "Insurtech is never going to be exciting again, " he said. "Companies like Carpe Data are going to be vendors to insurance carriers. Whether we're providing data, whether we're providing software, whether we're providing services, we're vendors." The numbers support his assessment: global insurtech funding fell to $912.3 million in Q1 2024, down 17% from the previous quarter and the lowest level in four years.

Insurance Thought Leadership writer Paul Carroll acknowledges Drucker's point about operational efficiency becoming the primary focus, particularly as carriers prioritize cost control and stability after turbulent years. Drucker noted that carriers are saying, "'The last thing I'm looking to do is really have to really engage in something big again because the last two years have been pretty rough, and so now we're really just trying to stabilize.'"

However, Carroll argues the insurtech story is far from over. Generative AI creates substantial opportunities for innovation, even if many early applications focus on efficiency improvements. The Internet of Things continues expanding into homes and businesses, enabling predictive and preventive insurance models. Additionally, softening interest rates may ease the funding constraints that have pressured startups toward immediate profitability.

Carroll also highlights research from Adrian Jones showing that five insurance companies founded in the past 20 years achieved multibillion-dollar valuations not through breakthrough technology but by identifying dislocated markets and deploying experienced management teams. While Carpe Data may position itself within the efficiency category, other technologies and innovation approaches can still drive profound industry transformation.

Read the full article at Insurance Thought Leadership.