Here’s What’s Most Exciting About Insurtech in 2024
We asked members of Munich Re Ventures’ Insurtech team the following question: What are you most excited about in Insurtech right now?
Here are their responses:
Jacqueline LeSage, Managing General Partner:
Lessons Learned, Lessons Implemented — We are seeing signs of a re-kindling of interest in the Insurtech sector as investors begin to gain confidence that the lessons learned from the hubris of Insurtech 1.0 have been implemented by the next generation of entrepreneurs. This is laying the foundation for strong and durable companies, especially commercial challengers and enablers founded in more recent years.
I’m most excited to see if the go-to-market momentum for enablers has truly done a 180 from the past to be a legitimate sales cycle, given the urgency to update tech stacks at incumbents and the switch to purchasing rather than building for some of the larger later-stage newcomers.
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Oshri Kaplan, Managing Director:
Generative AI Applications — I’m excited about the integration of generative AI technologies into vertical applications within the insurance value chain. We can expect to witness a remarkable transformation and automation in the insurance industry as generative AI revolutionizes underwriting, claims processing, and risk assessment. These AI-driven systems will not only enhance the efficiency and accuracy of data analysis but also enable insurers to personalize policies based on individual customer needs and risk profiles like never before. Moreover, we expect that orchestrating the right models for the right tasks will yield streamlined workflows, improved customer experience, and invaluable insights for strategic decision-making in the industry.
As the insurance industry (and others) continues to harness the power of generative AI, there are emerging risks associated with these new technologies being introduced — from biased models and unauthorized access to training data, to general privacy concerns around prompt engineering with confidential information. New companies and business models addressing these risks will emerge, giving us the opportunity to unlock the benefits of massive AI adoption while minimizing downsides.
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Matt McElhattan, Managing Director:
Innovative Climate Insurance and Modeling — I am excited about what Insurtech can achieve in terms of enabling climate risk reduction. There is no bigger risk category than climate, and billions (or even trillions) are expected to flow into capital projects and climate-friendly investments in the coming years.
The insurance industry has long been connected to climate in the context of traditional coverages (ie. flood, crops, fire, etc…) and reinsurance. Now, with new data sources, improved modeling capabilities, and targeted risk mitigation techniques, the industry is empowered to more dynamically underwrite new and existing climate risks, creating opportunities for carriers to re-enter markets previously considered too risky.
New categories of engineering and specialty risks may also push Insurtech into areas such as supply chain risk, carbon liability, carbon credit certification, and insuring new facilities (ie. for carbon sequestration, hydrogen production, etc…). These coverages could be key to enabling the deployment and operation of critical climate assets and infrastructure.
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Ian Sanders, Head of Portfolio Development:
Late-stage InsurTech Exits — Two things came together simultaneously to create uncertainty for challengers in recent years: First, an overall market decline fueled by a rising interest rate, persistently high inflation, and overall market uncertainty. Second, a realization that private technology-focused investors were looking for different metrics than public market insurance-focused investors.
The two issues combined, creating havoc for companies that exited, and uncertainty for the late-stage companies yet to exit. For those who didn’t exit, they have had the chance to learn and adjust — closely managing loss ratios, optimizing CAC/LTV, and maximizing book value. There are now several large Insurtechs that are both differentiated in their technology, and supported by disciplined insurance fundamentals. As the IPO markets gradually re-open, these companies will seize their moment, changing the narrative of what a venture-backed insurance company can become.
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Sidra Ahmed, Director:
Verticalization’s Moment — I think we’ve finally reached a point where verticalized Fintech and Insurtech products will start to stir, and dare I say shift, the specific markets they target. Digital distribution, embedded Fintech features, and payment rails for seamless customer experience is now table stakes. The market is ready for the next wave of Insurtech and Fintech products that solve the problems of today — high interest rates, rising debt, and a rising cost of goods and services. I am excited to meet companies building fully integrated new risk transfer products to solve the problems of their specific verticals.
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Ben Bergsma, Principal:
Enablers’ Day in the Sun — Enablers, or companies selling software solutions to carriers and brokers are not new. However, VCs have historically been cautious to invest due to long sales cycles, high customization with long implementation timelines, and a smaller addressable market than investors would like. This is all changing. Carriers are becoming better buyers of technology for several reasons. Many have completed their core transformations, opening up focus and budget to bolt on new functionality. New disruptive technologies such as GenAI are driving interest from boards and executives. And competition from new entrants and technologically sophisticated incumbents is raising the technology bar for everyone.
We now see several VC-backed enablers with significant market traction, many of which are founded by individuals with considerable Insurtech experience. I expect 2024 to be a banner year for these companies.
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Munich Re Ventures (MRV) is the venture capital arm of Munich Re Group, one of the world’s leading providers of reinsurance, primary insurance, and insurance-related risk solutions. With more than $1 billion in assets under management, Munich Re Ventures invests in the most innovative start-ups transforming the future of risk and risk transfer. MRV’s experienced investors are financially-driven while focused on the strategic interests of Munich Re and the broader insurance industry. MRV works closely with Munich Re Group businesses across the globe to fund and partner with the best emerging companies developing new technologies and business models — and risks — for tomorrow’s world.
