Insurtechs navigating the coronavirus crisis: an overview
Digital Transformation Accelerates in Insurance Sector Amidst Pandemic
A new report, the Insurtech Radar 2021, reveals that the coronavirus pandemic has significantly accelerated the growth and digital adoption among insurance companies in Germany, Austria, and Switzerland. The crisis has acted as a catalyst for the insurance sector's profound digital transformation, forcing companies to innovate rapidly and expand their digital offerings to meet changing customer expectations and operational requirements during the pandemic.
According to the report, 31% of B2C providers have reported a quantitative increase in users since spring 2020, while 80% of surveyed Insurtechs report increased usage of digital offerings during the same period. This surge in demand for digital insurance services is evident in the rise of self-service portals, online interactions, and digital revenue streams.
The transformation trend is echoed in the broader industry context, with greater reliance on digital platforms, telematics, and online claims processing becoming more prevalent in the region. This shift has been catalysed by pandemic restrictions and heightened health awareness.
The Insurtech Radar 2021 examined the business developments of 149 German, 16 Austrian, and 44 Swiss companies. The total number of Insurtechs in the DACH region remained stable at 210 in 2020. Notably, some Insurtechs in the region have been in existence for ten years, demonstrating the sector's maturity and longevity.
Startups in the Insurtech sector have also reported a favorable financing environment, with young companies increasing their technical depth, allowing them to handle more complex business models. A Berlin-based Insurtech company named Wefox recently completed a financing round, raising 650 million dollars.
Looking ahead, Insurtechs are expected to focus on solutions for sustainable insurance in the medium term to drive the ongoing paradigm shift. The ESG theme will be important for both young and old insurers in the future.
The report also highlights that worldwide capital investments in Insurtechs slightly increased from approximately 7.1 billion USD in 2019 to approximately 7.2 billion dollars in 2020. After a brief respite in mid-2020, investors are now more active than ever in the Insurtech sector.
The Insurtech Radar 2021 was created by strategy consulting firm Oliver Wyman, Insurtech expert Nikolai Dordrecther, and secondary market trader Policen Direkt. The report underscores a pivotal point in the sector's modernization and growth trajectory, marking a significant shift towards a more digital and sustainable future for the insurance industry in Germany, Austria, and Switzerland.
- In the insurance sector, the shift towards digital offerings is evident as 31% of B2C providers have reported a rise in users since spring 2020, indicating a growing reliance on technology.
- The favorable financing environment has enabled Insurtech startups, like Berlin-based Wefox that raised 650 million dollars, to bolster their technical depth and handle complex business models, which could potentially lead to advancements in sustainable finance.
