InsurTech in 2023: Volatile Yet Packed With Opportunity
The insurance industry is in a period of unique transformation. Global unrest, climate change, cybercrime, and so many other factors mean that insurers have to innovate fast to retain the confidence of consumers and stakeholders.
For InsurTech startups, this could provide opportunities to bring innovative solutions to the table—but only with the right research, marketing, and pitching expertise to source funding in a struggling marketplace.
A Risky Global Environment
Insurance is always impacted by increased risk, and risk factors across the globe have increased significantly over the last year or so. Clyde & Co's mid-year report highlights multiple contradictory conditions impacting the industry. For example, a rise in cybercrime provides opportunities for insurers to provide additional services, but it also increases risk. The report also notes a belief that InsurTech is still booming in some areas, although AI, while potentially powerful, isn't being adopted at the expected rates due to concerns around a "lack of substantive regulations."
Historically, insurance has been a top industry in terms of job security. Recent turmoil, however, has led to some larger insurers laying off alarming numbers of employees. In September 2023, for example, health insurance specialists Centene let go of 3% of their workforce.
Climate change and associated weather phenomena mean some insurance companies simply won't operate in certain areas, such as California or Florida. Fires, floods, and inflation combine to make an increasing number of successful insurance claims unsustainable for some organizations. While larger companies hedge their bets, this could be a winning situation for smaller, local insurers and tech providers who can provide the right services for both consumers and insurance firms.
InsurTech Funding Has Slowed
With the insurance industry in disarray, it's true that funding has slowed overall for InsurTech startups. However, it's worth noting that the biggest drops are all at late-stage funding. Latter-stage funding is down 60% while early-stage funding dropped 30% but then seemed to stabilize.
Despite the drop in funding, the overall industry continues to grow, albeit at a slightly slower pace. InsurTech could be worth $166.7 billion by 2030, a figure potentially driven by future adoption of AI, advanced data analytics, IoT, and other advancing technologies.
Underfunding Creates Opportunity
Could the fact that InsurTech is currently underfunded be a winning situation for some tech startups? Yes, for those willing to innovate specifically in line with the current global and industry challenges. Tech solutions for connecting consumers to insurers, assessing risk, analyzing granular data, or improving user experiences could all be transformative in the current space.
Reports suggest that unicorns do indeed still exist, with InsurTech innovators in pet insurance, ethical life insurance, and business benefits enjoying continuous, significant funding.
Final Word
Successful startups thrive in challenging environments. Sometimes, you just need a little help getting noticed. Book your 15-minute introductory call with Arch Collective and discover why so many InsurTech and FinTech startups trust us to provide marketing and growth support.
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