Once the joke sibling of a thriving fintech sector, insurtech is now one the warmest regions in the market for a hilarious enterprise.
This is evidenced by the $150 million valuations of Zego’s one-cornered valuation in March, a rumored rental incoming round for WeFox, and a number of IPOs and SPACs in the United States. It is not difficult to see why. The insurance market is huge, but the sector has suffered from the experience of notorious customers and has been slow to adapt to large responsibilities.
Fintech has set an example of explosive growth that can be achieved with advanced customer experience with the help of modern technology. And the epidemic has put the spotlight on high-potential sectors, including health, mobility and cybersecurity. It has begun to create a perfect storm of conditions large European insurtech exits. Here are four trends for several European IPOs and looking for a red-hot M&A market as an industrial force in the next few years.
Several early insurtech success stories began life by managing general agents (MGAs). Unlike brokers, MGAs handle claims and underwriting but unlike a traditional thimble insurer their balance sheet puts third party insurers or re-insurers at risk.
MGAs provide a great way for customers to acquire and compose policies for new brands that don’t actually require a complete balance sheet. It is, however, a business model with thin margins, so MGAs are increasingly trying to internalize risk exposure vertically within a “full-stack” insurer in hopes of improving their unit economy. This framework is prevalent in the United States, successfully implement this costly growth strategy with a view to rewarding some of the biggest US insurtech IPO successes (Lemonade and Root), SPAC (Clover and MetroMile) and more incoming listings (Hippo and Next).
This framework is prevalent in the United States, successfully implement this costly growth strategy with a view to rewarding some of the biggest US insurtech IPO successes (Lemonade and Root), SPAC (Clover and MetroMile) and more incoming listings (Hippo and Next.