Investors are having a new-found love affair with the insurance business. Unfortunately for traditional companies, however, they are not the target.
A bevy of insurance startups, from policy-comparison platforms to technology-based brokers, have sought to “disrupt” the long-staid industry and venture capitalists are responding. According to data gathered by CB Insights, insurance startups have raised a full $1.39 billion since the start of 2014. 2015 is already the biggest year on record for those startups, and eight more insurance tech companies are scheduled to launch this year.
The most popular areas? Health and auto insurance.
The Affordable Care Act has ushered in opportunities for consumer health insurance providers. At the start of 2010, more than half (56%) of all insurance startups have focused on the health insurance industry. Zenefits, the employee benefits provider that has recently attracted so much controversy, raised $500 million in one round in 2015.
As for auto insurance, the most highly commoditized product in the industry, everything from comparison sites to direct sellers have taken off in the past five years.
Other startups focus on different approaches to insurance. Trov, which just completed a Series C funding round that gained $25.5 million., asks users to input the makes and models for their positions, from televisions to musical instruments, and generates a quote from a carrier partner in the region.
Altogether, the companies have changed the face of tech-based insurance. Since the start of 1020, more than 290 different investors completed a deal in the space – up from fewer than 20 in 2010.
And investment figures themselves are nine times what they were in 2010.
Geographically, most of these startups are in California and New York. The Golden State claimed 40% of insurance-tech deals since 2010, while New York startups were responsible for 16%.
Massachusetts fell in third with 7% of deals to US insurance-tech startups, and 6% went to Minnesota and Tennessee.
