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Will COVID-19 Disrupt the InsurTech Movement?

New SMA Blog by Mark Breading, Partner, Strategy Meets Action

If there is one thing that we have all learned with the spread of COVID-19, it is that there is virtually no industry that is immune to its impact. The global pandemic is disrupting the daily lives of individuals, the operations of businesses, the activities of governments, and even the approach of cherished institutions like museums, universities, and religious organizations. The P&C insurance industry, like many others, is reeling from the implications of the virus. Amid the rapid changes that are taking place, it is important to assess the impact of COVID-19 on the InsurTech movement. After all, InsurTech has always been touted as the ultimate disruptor of the insurance industry. But, might COVID-19 prove to be a disruptor to InsurTech?

First, it is essential to recognize that the ultimate impact will depend largely on the duration of the virus. If the US and the world at large gain control of the virus in the next 6-8 weeks, then there will be short term pain for all (including InsurTech). But there is likely to be a sharp rebound – the V-shaped recovery that economists are talking about. If the spread accelerates and the fight goes on for months or years, then it becomes a whole different scenario. Let’s look at several dimensions of InsurTech and how they may be affected in the short term and long term, with the understanding that the implications for InsurTech insurers, distributors, and tech companies may be very different.

  • Full Stack Insurers: Companies like Root, Lemonade, and Next should be well-positioned to thrive when the virus subsides. As digital-native companies, they have the opportunity to capitalize as the world accelerates transformation to online, digital, and mobile engagement. In the short term, there may be fewer claims on the auto insurance side as the roadways are empty. The offsetting factor is that fewer people will be buying new cars, moving into new apartments, or buying/building homes – at least in the short term.
  • Digital Distribution Players: Like the full stack insurers, the digital agents, MGAs, comparison platforms, and others in the distribution space stand to succeed as more people gain experience with moving their personal lives online. Of course, individuals and businesses can still call their agents or brokers or use their web capabilities, but generally speaking, the InsurTech digital distribution players have more advanced capabilities. Like the full stack insurers, they will be impacted by fewer “changes” requiring insurance – fewer car and home purchases, less likelihood that business will be expanding fleets, etc. Then again, maybe there will be more shopping around to try to cut expenses.
  • Tech Companies: InsurTechs that offer new capabilities for underwriting, claims, or internal operations may face a more mixed future. Those that offer digital capabilities to interact with agents, prospects, customers, and claimants will likely be okay, especially if the economy is starting to recover within 10-12 weeks. Self-service, DIY, mobile, and virtual capabilities will all be elevated in importance – not just for the period when people are sheltering in place and businesses are closed or at limited capacity – but for the long run. Any insurer that has not already focused on the importance of digital transformation via these types of capabilities is sure to pick up the pace when the storm passes. Fortunately, most InsurTechs provide the types of capabilities that enable a digital transformation. On the downside, the ability for InsurTechs to be in the market meeting with insurers, increasing their brand visibility, and building their pipeline will be reduced. Of course, marketing and sales can be done digitally. But in the case of InsurTech, the physical presence is important. In addition, conducting pilots and POCs may be more difficult as they often require individuals to be onsite with the insurer. Finally, some insurers may be reluctant to sign new contracts in the short term.

One factor affecting all of this is that the funding picture is fuzzy. Up through the end of 2019, there was great momentum for InsurTech around the world, and funding levels were continuing to increase. Now, capital is already starting to tighten up. And the longer the COVID-19 virus continues, the more reluctant investors will be to fund new ventures.

Considering all these factors, will InsurTech be disrupted? Over the next couple of months, the answer is most certainly yes. And there will most certainly be failures as some InsurTechs run out of cash over the next few months. Another implication is that M&A might accelerate. InsurTechs that have been reluctant to sell may be willing to cash out at lower amounts and acquirers are already out seeking bargains.

If the pandemic accelerates and lasts for a long time, all bets are off. If business starts to return to normal by summer, then most InsurTechs will be very well-positioned for success as insurers look to accelerate their digital transformation and inject even more innovation into their business.

About The Author

Mark Breading, a Partner at Strategy Meets Action, is known for his insights on the future of the insurance industry and innovative uses of technology. Mark consults with insurers and technology companies on forward thinking strategies for success in the digital age. His inventive methods and his ability to incorporate InsurTech and emerging tech into business strategies are unparalleled. Mark also leads SMA’s research program, has overseen the publication of over one hundred research reports, and directed custom research projects for insurer and tech clients. His thought leadership in the areas of InsurTech, emerging technologies, customer experience, and digital strategies has earned him rankings as a “Top Global Influencers in InsurTech” by InsurTech News and Onalytica and a place in the 10 finalists for the “Top Global IoT in Insurance Influencer Award.”

Before joining SMA in 2009, Mark spent 25 years with IBM, where he co-developed IBM’s Account Based Marketing program and led the global project office to implement ABM across all industry verticals worldwide. Mark has held both technical and business roles in sales, consulting, marketing, and business strategy and has advised insurers around the world for almost 30 years.

He is a frequent speaker at industry events; an InsurTech mentor with the Global Insurance Accelerator; and a frequent contributor of articles to Insurance Thought Leadership, Insurance Networking News, LOMA Resource, and many other industry publications.

About SMA

Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at

SOURCE: Strategy Meets Action (SMA)