The non-life insurance sector is leading the way for investment in insurance start-ups in 2019 after overtaking life cover and distribution channel. Key products in the sector are being revolutionised by challenger insurers offering simple, digital, and often on-demand policies to consumers, which has resulted in funding.
GlobalData statistics, analysed in the Digital Challengers in Insurance – Thematic Research report, show that the highest number and value of deals have occurred in the non-life sector. Motor, home, and travel products have all seen a rise in innovation – and interest from investors – since the start of 2018.
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By GlobalDataInvestment in non-life insurance has been led by motor and home products. The key trends are digitalisation and simplification, with startups that offer instant quotes and easy sign-up processes thriving. Among a series of high-profile deals completed in 2019, two are particularly notable. Root Insurance is a motor insurer in the US that utilizes telematics and a smartphone app to offer instant and preventative cover. Its policies can be bought in one minute without forms or phone calls, and the customer’s driving behavior is measured through the app. The company received £350m of funding in August 2019.
Meanwhile, US-based Hippo received $100m in July 2019 due to it taking a similar approach to home insurance. It capitalises on two key themes seen in digital household insurance in recent years: automating the sign up process to provide almost instant quotes and the inclusion of smart tech in the home. This brings its overall funding to $209m – a clear sign that digital start-ups are becoming increasingly valuable.
These two sizeable deals are part of a trend in the non-life sector. Insurers continue to target millennials, aiming to offer them the same level of service they have become accustomed to from other industries. Incumbents have responded. Aviva launched its AvivaPlus policies for home and motor, which are flexible, can be cancelled at any time, and are paid for on a monthly subscription basis. Digital challengers are beginning to shape the insurance industry, especially non-life products, as they continue to introduce innovation and improve choice and service for customers.
