Dear Clients and Friends,
Marlin & Associates (M&A) is pleased to share our latest report on the Insurance Technology (InsurTech) sector.
In today’s Covid-19 environment, the urgency for finding and implementing technology-based solutions to insurance industry pain points has never been higher. This pandemic has simply exposed many critical gaps to more insurance companies – and, by extension, to investors and acquirers.
A 2019 study from Celent noted that improved customer / channel experience is the top reason for insurers to digitize their operations. But it is certainly not the only reason. We should add the need to improve the process of selling and underwriting insurance policies as well as processing claims to those reasons for continued digitization. If this pandemic spurs the insurance industry to move faster to embrace technology (and we believe it will), it will help bring the insurance ecosystem in line with other providers of financial products.
According to Willis Towers Watson, more than 3,000 InsurTech firms were founded over the past ten years, including at least 760 that have raised funding. They all are looking to solve pain points across the insurance value chain.
As you will see in the following report, we divide these firms into three broad categories:
(i) firms that provide Data & Analytics / IoT for Pricing, Underwriting, Marketing, Distribution and Claims Processing;
(ii) firms that provide Distribution / Marketing Solutions; and
(iii) firms that provide Policy, Claims and Payment Automation software.
As you also will see in the report, market values for publicly traded firms in all three of these sectors have rebounded in recent weeks – with the rise in value for distribution firms far out-pacing the others – as well as broader market indices.
We all know that financing activity as well as m&a dropped precipitously in March. It remained low in April and May. But there is light at the end of the tunnel. We are already beginning to see renewed interest in investment activity and consolidation. The insurance industry has clear and present challenges. InsurTech firms have solutions. We anticipate a significant uptick in transaction volume in Q4 and beyond.
Our full report is here.