Chris McCann from Greylock Partners gives a deep and detailed overview of the insurance startups market, draws the market map and observes the main players. It's a must-read to stay updated with the main trends in insurance startup ecosystem
Author: Chris McCann, Community Lead at Greylock Partners, the leading venture capital firm based in Silicon Valley. Previously founded StartupDigest
The original post first appeared on Greylock Partner's corporate blog on Medium and is published on InnMind with the author's permission.
Insurance Startups - Market Ecosystem Map
Last night, Sarah Tavel and I hosted a small dinner for founders and builders of insurance startups, and I was fascinated by this market. I wanted to dive deeper into this space and share some market observations.
Some caveats before we dive into the analysis.
This ecosystem map is not designed to be 100% comprehensive. It’s to understand all the different startups within the insurance space. This space is developing quickly so take this into consideration.
Graphic is above and a full list of all of the companies on the market map is below.
Insurance today is typically sold through agents, which creates a steep customer acquisition cost for carriers — ~90% of premiums were sold through independent agents or affiliated agents of the insurer.
Two of the largest forms of insurance are conscripted: you must have auto insurance if you drive a vehicle and under Obamacare you must have health insurance. Getting consumers to care about other forms of insurance is no easy task.
What is changing in the insurance space (why now)
Most of the startups in the ecosystem are taking advantage of one or more of the major forces in the market today.
New channels (web/mobile) — Currently the bulk of insurance is sold through agents in-person or over the phone — however the next generation of consumers is used to purchasing goods directly online. Through mobile we now have the ability to sell insurance directly at the point of need, in real-time, and in shorter durations.
New sources of data (big data, machine intelligence, wearables, connected cars) — We now have the ability to collect more data which potentially could better inform the insurance risk models we use today.
Potential for new types of insurance — sharing economy (where people are both providers and consumers), self driving cars (no need for personal auto insurance), internet of things (both a new data source, and a new attack vector), cyber-security (a new form of major risk)
Potential for new structures of insurance (P2P, lowering the barriers of self insurance) — Some startups are trying to reinvent the entire model of insurance and apply new models to the business of insurance.
If you are building a startup in the insurance space, a key question you should ask is:
Are you innovating on the sales channel of insurance or are you innovating on the product level (aka. trying to create a next-gen carrier)?
Both are viable but depending on your end goal, you will have very different considerations on how you enter and compete in the market.
If you are looking to learn more about the insurance space, I highly recommend you check out this four part series written by Kyle Nakatsuji:
Quilt — Next-gen home insurance, still in stealth.
Super — Raised 3.6M, Next-gen home insurance for home services, appliances, or your entire home.
Lemonade — Raised $13M, P2P insurance company, still in stealth.
Gather — Building a P2P insurance model for SMB insurance.
Friendsurance — Raised $15M, P2P insurance, based in Berlin.
Guevara — P2P auto insurance, currently up and running offering P2P car insurance (Thanks Roland Cassirer for pointing that out)
Inspool — P2P auto insurance, not launched yet.
Jointly — P2P auto insurance, not launched yet.
BoughtByMany — P2P health insurance.
WorldCover — Was part of YC, building a P2P insurance product for crop insurance in emerging economies.
Trov — On demand insurance for individual products. Creating a new type of insurance.
Jetty — raised $4M, next-gen property and casualty insurance. Not launched yet.
Cover — Part of YCombinator, offers product insurance (phones, pet, jewelry, etc) all through taking a picture on your phone.
SimpleSurance — Raised $11.5M, provides product insurance (electronics, bikes, appliances etc) — based in Berlin.
Asurion — Not a startup, but Asurion dominates the $7.8B protection plan market for cell phones.
I wanted to keep this market map mainly U.S. focused but there is an insurance company in China — Zhong An — which we can learn a lot from.
Zhong An — raised $934M dollars in funding and was jointly launched by Alibaba, Tencent, and the insurance company — Ping An. Zhong An operates a pure 100% online full stack carrier which offers 100 different insurance products from health, auto, travel, etc.
I hope this landscape sparks a conversation and if you have any feedback feel free to tweet @mccannatron or email me — especially if you feel I am missing any other categories of companies. I’m still learning about the space so would welcome any feedback. I’m also happy to connect with anyone working on a new insurance company — feel free to reach out anytime.
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