Insurance is a trillion-dollar industry, and it's only getting bigger. In order to keep up with the demand for insurance products, many companies have been turning to insurtech. As a combination of traditional insurance practices and technology-based solutions, insurtech has become increasingly popular in recent years.
According to a study conducted by Porch, there are three leading hubs for InsurTech innovation in the world. So, which countries are spearheading insurtech innovation?
The United States of America
The first is the USA, with 1,370 insurtech companies, where many have found success in insurance technology due to its competitive marketplace and entrepreneurial spirit. Holding 44 per cent of the global insurtech market share, the United States is also home to some of the biggest names in insurance technology. These include Lemonade and Hippo Insurance, both pioneering companies leveraging the most transformative technologies to redefine how people look at insurance.
According to Adam Kornick, President of the Insurtech division at Porch Group, "The US is the largest insurance market in the world and historically the leading incubator of technologies, making it a natural fit for insurtech. Similarly, the UK and Germany are advanced economies with large insurance markets and substantial technology capabilities. The significance is the scale and attractiveness of those countries for insurtechs."
The United States is both a tremendously appealing market and an insatiable one, accounting for at least four times the companies when compared with the second-largest insurtech hub.
The United Kingdom of Great Britain and Northern Ireland
The UK is the second hotspot for insurtech innovation, with 313 insurance firms established. The vast majority are located in London, which holds the record for having the most number of insurtech businesses in the world. This hub is led by disruptor brands like Zego and Bought by Many. These two forward-thinking insurers are utilising cutting-edge technology to offer personalised and actionable insurance products.
Colin Nabity, Co-Founder and CEO at Breeze, an insurtech focused on disability and critical illness insurance, said, "On a city-by-city basis, the most insurtech companies are in London followed by New York City and Berlin is fifth. Globally speaking, insurtech funding in just the first half of 2021 hit $7.4 billion, which already surpassed total insurtech funding from any other prior entire year. In Q2 alone, there were 162 insurtech funding deals, my company Breeze among them. No matter where you are on Earth, from Omaha to Berlin, it's an exciting time to be an insurtech."
In addition to being the second biggest insurtech hub in the world, the United Kingdom is also considered the birthplace of modern insurance.
The Federal Republic of Germany
Finally, Germany has risen as an innovator because of its highly educated workforce and dedication to technology. In fact, the country is currently the most connected place in Europe, with almost every home having internet access. With a total of 130 insurtech businesses operating across the country's major cities, Berlin has earned its place as an established hotspot for insurance technology innovation. Wefox and Getsafe are two insurtech brands making an impact in the country's competitive market.
Dillon Roher, CTO at Apollo Insurance, said, "I am unsurprised by the results of the survey because each of those countries are in the top five for revenues of premium writing countries internationally. I think the other top countries are in Asia, where the rollout of technology might be a little more privatised and obscured. What is exciting about what is happening in the Insurtech industry is that we are currently in the midst of technology finally revolutionising the industry, where in most other industries this happened decades ago."
Germany has a long-standing history as an industrial powerhouse and leader in technological innovation: it is home to some of the world's largest automotive brands such as BMW and Mercedes Benz. So it comes as no surprise that the country's insurance sector is also highly competitive.
Overall, the insurtech sector is doing well, and innovators in the countries listed above will undoubtedly continue to be ambitious. Nevertheless, perhaps the overall insurtech ecosystem will appear different one year from now.