Insurance as an industry has been one of the last to be reimagined in the Internet era. That’s all changing now: entrepreneurs and institutions are investing heavily to turn out the next generation of insurance companies from the ground up. Institutional capital is betting that this new class of insurance companies will make a dent in the multi-trillion insurance industry.
Industry experts like Santander’s Pascal Bouvier point to insurance tech as one of the last, and ripest, fields for investment capital in 2016. Indeed, in 2015, over $800 million of risk capital was invested into startups in the insurance technology, now called, insurtech, space.
Here’s a quick rundown on the state of fintech, investments, and the digital disruption of the insurance industry:
- The US insurance industry accounts for $1 trillion, or approximately 7 percent, of gross domestic product (US Treasury)
- At $831.5 million, investment in insurance tech this year is already up nearly 10 times what it was in 2010 (CBInsights)
- 1 in 4 insurance agents will be gone by 2018 (Insurance Business America)
- 47 percent of households couldn’t cover an emergency expense of $400 (Report on Economic Well-Being)
Insurance technology is a broad field that includes all different types of insurance, distributors, risk and regulatory managers, big data and enabling technology.
One of the things that makes this surge in interest and money backing insurtech startups is that it’s bring driven by outsiders. The same disruptive force emanating from Silicon Valley that’s changing transportation and logistics (Uber), music consumption and distribution (Spotify), and travel and lodging (Airbnb) is now turning its sights on one of the oldest and largest economic sectors: insurance. We’ve seen both industry insiders and talented outsiders enter the industry and expect that trend to continue.
We’ve compiled a list of the top 20 insurance startups worth keeping tabs on throughout 2016. Compiling top lists are tough — like in most fields, there are way more than 20 companies that deserve such recognition. The methodology we used in compiling this list included startups who’ve raised over $2 million, had a strong signal ranking on AngelList, and had a relatively robust Crunchbase profile. We also attempted to create a broad list that was inclusive of different approaches to impacting the insurance industry and therefore, we limited the number of startups doing something similar (say, direct distribution to consumers, for example). So, to that extent, this is a subjective list. For those that didn’t quite fit but were worth noting, we created an Honorable Mention category at the end of the list.