Is insurance ripe for disruption?

Many giants of the insurance sector are making significant investments as they look to keep pace

Insurance News

By Paul Lucas

Insurance is ripe for disruption with investors rushing to fund insurtech ideas.

That is the verdict of a new Financial Times report, which points out that a host of backing is coming from traditional venture capitalists who view insurance as fertile territory.

“There have been more investors in the past year than there have in previous years,” Matthew Wong of CB Insights, told the publication. “You are seeing investors that have entered the VC ecosystem that weren’t around a few years ago. There are also fintech-focused investors such as Nyca Partners.”

Some of the larger insurance companies are also a significant source of funding, according to Wong who points out that “quite a few of them are forming venture arms” and that insurtech offers a “financial opportunity” with “strategic benefits”.

Among the notable major insurers in the US that have established venture arms are American Family, Transamerica and MassMutual; while several non-US insurers have also established venture arms including Allianz, AXA, XL Catlin and Ping An of China.

2016 has proven to be a busy year, too. This year, they are on track to make 79 investments – a leap from 61 in 2015 and just 27 in 2014. Indeed the investments have also changed in their nature too – in the past they were fairly evenly split between early and late-stage funding but this year, early stage funding has dominated with insurers particularly enthusiastic for companies developing technology for connected devices, according to CB Insights.

Last week we told you about Allianz putting money into digital wealth manager MoneyFarm, and it is not the only notable investment in recent weeks – with Munich Re partnering with Trov, which develops on-demand insurance products; and AXA backing Gasolead to develop a virtual assistant that can help insurance brokers generate more digital leads.

Clearly, with telematics, data analysis, blockchain and cyber insurance as hot topics the question for insurers is how quickly can they have appropriate technologies in place. The race is very much on.

Related Stories:
Allianz swoops for stake in MoneyFarm
Aviva and Founders Factory searching for “the next big thing”


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