This is what we said a year ago. I think we got the overall trends right and there were many great ventures launched that illustrated these themes. 2016 was a year when Insurtech was hot for early stage investors. 2017 is the year when Insurtech has to deliver on at least some of the promises.
#1 Small M&A Exits.
We will start to see exits as Insurance carriers buy startups. These will be either a) reducing operational cost eg in claims processing or risk management b) Robo Agents that enable carriers to sell direct, reducing their CAC and enabling them to compete with startup carriers. These will be small, quick wins for investors and entrepreneurs that will make it harder for the big full stack startups to get traction (as the incumbents will catch up to their innovation).
#2 P2P Insurance does not (yet) live up to its promise.
We will see many drop out, leaving one or two well positioned to win big in 2018 and beyond. The term P2P Insurance will fall into the slough of despond.
#3 Blockchain POC for Claim to Cash in a few days emerges
This will come from the B3i consortium and so may be launched by multiple carriers at the same time. This will a) justify the blockchain hype and b) slow VC funding into Insurtech as it becomes obvious that the incumbents are agile and aggressive.
#4 Open Insurance Platforms emerge
At least one Insurance or Reinsurance carrier launches as an Open Insurance Platform (using Open API) for Insurtech startups to innovate on top of. This enables lots of smaller startups to thrive but makes it harder for a real breakthrough Challenger Carrier to emerge.
#5 GAFA and BAT move in aggressively
GAFA (Google Amazon Facebook Apple) and BAT (Baidu Alibaba TenCent) change the game in the comparison and discovery layer, commoditizing the Robo Agent space.
#6 Breakthrough Challenger Insurance in the Rest
In China, India, Africa and Latin America (the Rest), the market is wide open as so many consumers will be getting their first insurance and they have no legacy to overcome. This will enable a Breakthrough Challenger Insurance venture to scale.
#7 Augmented Intelligence rejuvenates old agents
There will be lots of talk of Robo Agents and AI machines replacing humans but the practical success, probably from a startup using an AI platform from a Big Tech vendor, will enable older human agents to win by empowering them with vastly improved data, models and personalization. This could be a highly profitable B2B2C play.
#8 New markets open doors to Challenger Carriers
This will be in areas such as Sharing Economy and e-commerce and cyber security. As the customer needs are so new, Challenger Carriers armed with better data and models will be able to break into the market.
#9 Auto Insurance will see fierce competition
This will benefit consumers as direct to consumer carriers (such as Geico and Progressive) battle for share with Challenger Carriers.
#10 Life Insurance will morph fully into Wealth Management
Already Life Insurance is used as a Wealth Management tool. As new agile capital pools move into Reinsurance, we will see a lot of innovation in this area.
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