If new insurance ventures are anything to go by, it looks like entrepreneurs are finding more promise in the life sector than in general insurance.
Analysis by digital home insurer Policy Expert shows that non-life is lagging when it comes to business creation in the UK, with only 195 general insurance (GI) start-ups registered with Companies House between January and August 2019. The number represents a mere 3% of the 5,703 active GI firms.
Life insurance, on the other hand, has seen 256 business registrations in the same period. This translates to 9% of the market’s 2,884 active enterprises.
“The insurance start-up market continues to grow in 2019 with life insurance new business ventures outnumbering their non-life counterparts by almost a third,” stated Policy Expert co-founder and chief operating officer Adam Powell (pictured). “The founders of these new ventures need to be optimistic, but realistic about their future prospects.”
The comment comes after Policy Expert also found that of all the insurance businesses incorporated in 2017, 28% are no longer active.
“Establishing an insurance start-up is a completely different prospect to scaling it into a fully-fledged business that becomes a permanent fixture in the landscape,” noted Powell. “While 2019 has seen plenty of new ventures come to market, it has also witnessed the failure of some high-profile names in the insurtech world.
“New insurance companies are fighting one another for scale. They have to apply their technology, acquire and maintain customers, and drive growth just to remain competitive. Often, insurtech start-ups fail because they are unable to be agile and flexible – both in their approach to technology and how best to apply it, but also distribution.”
In addition, the COO drew insights from Policy Expert’s own experience.
“As we have found on Policy Expert’s journey from start-up to scale, there is ample opportunity to disrupt stagnant areas of the insurance market and deliver better customer propositions,” he said. “But ultimately, good ideas run the risk of a premature end unless they are backed by a realistic growth plan to achieve success.”