It is a relatively nascent segment within the broader fintech sector, but investments in insurance-tech have soared in the first quarter of 2016. Is insurance-tech the next big thing?
According to CB Insights, the first quarter of 2016 saw early stage investments break all previous records for the same period in previous years. Over $55 million has been invested in insurance-tech so far this year.
Currently, there are around 130 insurance-tech startups being tracked by CB Insights that have raised a collective $3.5 billion from an assortment of venture capital investors, insurance carriers, and re-insurers.
CB Insights posted a breakdown by sub-sector here.
What exactly is insurance-tech?
Insurance-tech is not only private startup insurance companies and companies making insurance-related software for ie. analytical and administrative services. Many insurance-tech companies also make consumer insurance products such as mobile insurance management. Insurance-tech also includes innovation within insurance itself, such as the growing market of private p2p insurance, which some argue goes back to the very roots of insurance itself, and startups working on new insurance products that cover things like the burgeoning sharing economy.
Insurance-tech in the Nordics
The Nordic countries have been surprisingly slow to jump on the insurance-tech wagon, considering social insurance schemes in the region are standard, and characterized by universal coverage and high income loss compensations.
Although there is a strong emphasis on the role of the state, insurance models in the Nordics are predominantly individualistic in character, and therefore ripe for disruption.
The public sectors in the Nordics have also been open to innovation, with a high share of public organizations purchasing research and development or consulting services from businesses in connection with innovation activities.
In fact, welfare-tech, also strongly tied to the public sector and often closely related to insurance, is a growing startup industry cluster.
While interest has risen, and Startup Bootcamp brought their insurance accelerator to Copenhagen in 2015, only a few Nordic companies in this segment have made much impact, including Sweden’s Coface and Denmark’s Comparo.
But the tides may be changing. Recently, Oslo-based insurance-tech star Cloud Insurance, who offer a globally scalable platform for the insurance industry, raised 1,012,500 NOK to become the first Norwegian equity crowdfunding round by Invesdor.
Perhaps next year will see a new industry cluster arise.
Additional reporting by Andrew Woodman for Nexchange.