Trends Report

Insurtech Unicorns Have Inflated Valuations But Shouldn’t Be Feared: Use Them To Guide Your Digital Insurance Road Map

March 26th, 2020

Summary

Venture capital firms have invested $33 billion in insurtech since 2009, raising valuations and creating seven insurtech unicorns (privately held startups with a value of over $1 billion). Insurtech unicorns fall into three categories — digital insurers, digital agencies, and insurance marketplaces — and have focused on digitizing insurance buying and servicing. Huge advertising spend has fueled the growth of US insurtech unicorns Lemonade and Root, but this isn’t sustainable long term. The sky-high equity valuations of Lemonade and Root don’t reflect their low market share and profits, as investors are pricing them as tech companies rather than insurance carriers. Carriers and intermediaries shouldn’t fear insurtech unicorns: They highlight the opportunity that digital technology provides across the insurance value chain, so use them as a guidepost for your digital roadmaps.

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