The Deal asks Partner Daniel Domberger for his thoughts on insurtech as the next big thing for investors.
The insurance technology sector, where global investment more than tripled in 2015, is becoming colonized by startups as big insurers drag their heels. Venture capital and private equity funding has already started flowing in, but can enthusiasm for “insurtechs” rival that for banking and trading-related fintech companies?
Insurtech startups, which some say are now doubling by number every six months, include both B2B and B2C businesses ranging from providers of software or data to brokers and insurers, to sellers of technology-backed policies to end-consumers.
Some advisers remain skeptical about the insurtechs – and it’s certainly true that the wider fintech sector hasn’t uniformly been a bed of roses. London-based Powa Technologies, which was considered a fintech unicorn, was placed into administration in February.
“Having previously had their fingers burned investing in fintech startups, investors are now cautious of over-hyped business models,” said Daniel Domberger, a partner with corporate finance Livingstone Partners LLP. “As a result, they no longer base their decisions on business plans that rely upon the overnight transformation of traditional industries…Most insurance tech companies have huge theoretical growth potential, but significant scalability and deliverability risk.”