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August 02 2019 | Mark Breading

Say what you will about the InsurTech movement; it still seems to be chugging along quite nicely.  InsurTech has had its ebbs and flows since emerging out of the FinTech movement in the 2012/2013 timeframe. And at various points, pundits have been eager to pronounce the movement dead. But as Mark Twain famously said, “The rumors of my death have been greatly exaggerated.” There are endless reports and analyses on a daily, monthly, and quarterly basis regarding the state of InsurTech. By most measures, the levels of funding, partnerships, POCs, and real results have continued to grow over time. So, we can see what InsurTech is doing in 2019. But what might it be like in 2025?

InsurTech 2025There are several possibilities (which I will enumerate before making my prediction) for the future of InsurTech. These possibilities include:

  1. InsurTechs fade into oblivion. In this scenario, the majority of the 1500+ startups from the past few years will have ultimately failed, and new entrants will slow to a trickle. More importantly, there will have been little lasting impact on the insurance industry.
  2. A few InsurTech startups prosper, grow, and have an important impact on the industry.
  3. InsurTechs assimilate. If this occurs, we won’t be using the term InsurTech anymore and will likely be back to a more traditional level of new startups each year. But many InsurTechs will have become successful; they will either have been acquired by larger players or have started to be considered “legacy” players in their own right, subject to targeting by new entrants. Via assimilation, the InsurTech movement will have played a major role in the reshaping of the industry.
  4. InsurTechs dominate. In this future, there is a whole landscape full of unicorns, some of which have caused the demise of some major tech or insurer players that were the incumbents of the 2019 scene. The insurance industry will look dramatically different, in large part due to the impact of InsurTech.

Perhaps asking whether InsurTech will fade or dominate is going in the wrong direction. My prediction is that InsurTechs will assimilate. Assimilation is already in the early stages, with the orientation shifting from disruption to partnering. In addition, there have already been important acquisitions of InsurTechs by existing tech firms or even by insurers in a couple of cases.

Most importantly, what will this mean for the insurance industry as a whole? It is difficult to imagine that the insurance industry could remain virtually unchanged six years from now. InsurTech has already been a catalyst for change, spurring significant amounts of innovation, investment, and bold strategies across the industry. The current energy and activity aimed at transformation will certainly bear fruit, resulting in a “new” insurance industry by 2025. The magnitude of that change is up for debate, but the fact that change is occurring and will continue is a certainty. And InsurTechs will be a major part of that change and transformation in almost any scenario that can be imagined.

For more information on the InsurTech trends, please read the research report, 1H19 InsurTech and Transformational Tech Snapshot.

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Mark Breading
Strategy Meets Action