Which insurtech startups are set to thrive?

TechCrunch explored the changing state of the insurtech market last week, diving into category wins and losses from recent quarters and what’s ahead for the sector this year.

Insurtech companies had a simply amazing fundraising year in 2021, setting records in both dollar and deal terms. But at the same time, the value of public insurtech companies fell sharply, with many recent sector IPOs managing to delete the vast majority of their market worth as the year ticked by.

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Our notes from Friday detailed the bad news. Today we’re flipping the coin. Despite the changing valuation conditions for some insurtech startups – the neoinsurance subcategory, essentially – the damage has been somewhat localized. So which insurtech startups are set to thrive? And could we see the market find space for still-private neoinsurance companies to avoid the same trap as their public predecessors?

Venture capitalists and founders that we spoke with indicated a general optimism about tackling the insurance market: It’s too big, too valuable, and too out of date to not wind up on the receiving end of a shovelful of technology, the argument goes.

But that doesn’t mean merely more neoinsurance companies like Root or Lemonade. There are other models as well. The Zebra (online insurance marketplace) shared some growth data, for example, and TechCrunch has covered AgentSync (data APIs for the insurance industry) repeatedly in the last few years during its rapid ascent from small startup to unicorn.

Let’s talk about potential winners!

Neoinsurance?

If you’ll allow us to quote ourselves, our one-line prediction in part one was that among insurtech startups, “the big winners this year should be those that can prove they are tech companies and/or are enabling the digital transition of insurance incumbents.”

Let’s unpack what “enabling the digital transition of insurance incumbents” means, with help from Florian Graillot at Astorya.vc.

“I strongly believe insurance cannot be the only industry worldwide not to embrace digital [and] mobile,” he told TechCrunch. Because of this, he explained, “a lot of insurtech solutions enabling incumbents are gaining momentum, everywhere alongside the value chain.”

The need for insurance to go digital also explains the success of several neoinsurers, at least when it comes to acquiring users.

Noting that neoinsurers can be both brokers or full-stack insurance providers, Graillot pointed out that “several of them are clearly gaining momentum beyond fundraising.” He gave several examples from across Europe and the U.K.: Bought By Many, Getsafe and Luko, which all boast hundreds of thousands of customers.

Whether strong customer bases will be enough for private neoinsurers to thrive when their public counterparts are tanking remains to be seen, but there’s a case to be made for it — and NEXT Insurance CEO Guy Goldstein is making it:

“We don’t think that the current market condition has any effect on the value of what insurtechs can deliver, and how they can support those they serve remains robust. There is no doubt that the market sees the value insurtechs bring to the broader insurance industry as they mature.”