2021-05-31-dealroom.co-The_State_of_European_Insurtech_50页_10mb

The State of European Insurtech Summary

Core Content

The report provides an overview of the European insurtech landscape, highlighting the industry's evolution, challenges, and opportunities. It emphasizes the role of venture capital in funding innovation, the growing importance of technology in transforming insurance processes, and the emerging trend of embedded insurance.

Main Points

• Insurance Industry Overview:

  • The insurance industry is a $6 trillion global market, characterized by a fragmented value chain and high costs due to limited digitalization.
  • Insurtechs are challenging traditional insurers by offering tech-enabled solutions that improve processes like pricing, underwriting, and claim management.
  • The industry is shifting from risk transfer to risk management and prevention, driven by data and emerging technologies.

• European Insurtech Landscape:

  • European insurtech is scaling rapidly and has the potential to support the emergence of multi-decadacorn companies.
  • The market is dominated by the UK, Germany, and France, which have attracted over 85% of the funding since 2016.
  • B2B SaaS solutions have become a significant part of the investment focus, despite only receiving 20% of total funding.

• Investment Trends:

  • The Alma Mundi Insurtech Fund, managed by Mundi Ventures, is a key player, investing in European-focused insurtech startups with support from international insurers.
  • Strategic investors are increasingly involved in insurtech rounds, with over 40% of rounds in 2020 and 2021 including at least one strategic investor.
  • The trend is shifting from distribution-focused startups to full-stack and SaaS providers, indicating a more comprehensive approach to innovation.

• Key Players and Their Evolution:

  • wefox: Evolved from a B2C broker to a full-stack insurtech, integrating into a single brand and expanding into embedded insurance platforms.
  • ELEMENT: A full-stack insurtech provider, focusing on SaaS and data analytics, aiming to offer embedded insurance solutions.
  • bsurance: An infrastructure provider for distribution and customer engagement, supporting MGAs and other players.
  • Synthesized: A data provider and analytics firm, emphasizing the importance of data in insurance.

• Challenges and Opportunities:

  • The insurance industry is highly regulated and capital-intensive, making disruption difficult.
  • MGAs (Managing General Agents) are becoming more prominent due to their agility and ability to underwrite risks with third-party capital.
  • Embedded insurance is seen as a promising trend, offering more relevant products and improved customer experience, though it requires a new technology stack and collaboration.

Key Insights

• Digitalization: The industry is undergoing a significant digital transformation, driven by the need to meet customer expectations and reduce costs.
• Regulation and Trust: Handling sensitive data remains a challenge, but can be mitigated with privacy-preserving technologies.
• Global Risks: Environmental challenges and climate change are among the top global risks, with a significant portion of climate-related losses remaining uninsured.
• Future Outlook: The report suggests that the next wave of insurtech exits may come from Europe, similar to the US, but with a focus on more niche and scalable solutions.

Notable Startups

• wefox: Evolved from a B2C broker to a full-stack insurtech, with a vision to increase direct premium to 50%.
• ELEMENT: A SaaS provider for insurance, offering tools for risk analysis and underwriting.
• bsurance: An embedded insurance platform, providing infrastructure and underwriting capacity for MGAs.
• Synthesized: A data analytics firm, focusing on providing data products for the insurance industry.

Strategic Investors

• Mapfre, Nationale Nederlanden, Mutualidad Abogacia: Key international insurers investing in the Alma Mundi Insurtech Fund.
• Mundi Ventures: A venture capital firm managing the fund, with a network of contacts and a global C-level executive network.

Market Growth and Exit Potential

• European insurtech companies have a combined enterprise value of €23 billion.
• The report suggests that the 2015-2016 cohort has attracted the bulk of funding, and major exits are expected in the coming years.
• The US has seen more successful exits, but Europe is catching up with a strong pipeline of potential unicorns.

Conclusion

The European insurtech market is on the rise, driven by technological advancements, changing customer expectations, and the increasing role of strategic investors. While the industry faces significant challenges, including regulation and the need for a new technology stack, it also presents substantial opportunities for innovation and growth, especially in the areas of embedded insurance and data-driven solutions.