Emerging Business Models in the InsurTech Space
Emerging Business Models in the InsurTech Space
The aspirations and preferences of Gen Z and millennials have changed over the years. Deloitte’s 2023 survey on GenZ and millennials highlights the positive changes and their deep concern for their future. With this changing consumer behaviour, many old business models in one of the oldest financial services industries, like insurance, are starting to disappear. As information transparency has taken center stage, many new entrants and InsurTech startups are disrupting the industry with innovative business models. Let us discuss some of the emerging business models in the InsurTech space.
- Peer-to-peer business model
The peer-to-peer business model in fintech insurance companies refers to small groups with common interests, such as families, employees, or friends who club their premiums to avail of the coverage against the risk. The pooled money is used for compensating individuals during loss.
Unlike the traditional insurance models that follow centralized premium collection and claim settlement process, peer-to-peer is an innovative model that decentralizes the process by risk sharing method. It applies to a wide range of products like home, car, pet, etc.
Here are the benefits of a peer-to-peer business model:
Some of the InsurTech companies that follow the peer-to-peer business model are
| Company Name | Founded Date | Business Location | Estimated Revenue |
| Friendsurance | 2010 | Germany | $35.6 Million |
| Chapter | 2020 | US | $21.5 Million |
| So-Sure | 2014 | UK | $5.3 Million |
| Yulife | 2016 | UK, US, South Africa | $84.1 Million |
- Software-as-a-services (SaaS) business model
Software-as-a-service (SaaS) is one of the emerging business models in the insurance sector that helps insurance companies reap the benefits of the software or technology without bearing the cost of installation. That means there is no need to pay for software installation, licenses, and maintenance fees. As it makes functioning hassle-free, saving money and time for insurance companies, SaaS is emerging as the future of insurance.
Some of the Insure tech SaaS companies are
| Company Name | Founded Date | Business Location | Estimated Revenue |
| BitSight | 2011 | US | $100 Million |
| Guidewire | 2001 | US | $797.5 Million |
| SecurityScorecard | 2014 | US | $90.8 Million |
| AgentSync | 2018 | US | $23.4 Million |
- Aggregator/Marketplace business model
Aggregator and marketplace business model in the insurance business connects the insurance company, and customers through the insurance intermediary platforms. This robust digital system allows customers to compare various policies online and get quotes to compare and understand the features, terms, and conditions.
This not only eases the buying process but also helps customers to make cost-effective and informed choices based on their needs.
Some of the Insure tech companies that follow the aggregator/marketplace model are:
| Company Name | Founded Date | Business Location | Estimated Revenue |
| Cover Hound | 2010 | US | $24.9 Million |
| Policy Bazar | 2008 | India | $50 Million |
| Policy Genius | 2014 | US | $355.2 Million |
| Insurify | 2013 | US | $15.4 Million |
- Process improvement business model
Process improvement business models are used by many InsurTech companies to focus mainly on streamlining and enhancing operational efficiency. The main focus of this model lies in administering all the insurance contracts and tracking all the insurance policies in one place.
For example, an InsurTech company named Rentablo follows a process improvement business model that allows its customer to import all their financial details, and it manages the insurance portfolio.
Many digital insurance providers follow this model to enhance the customer experience, cost reduction, and convenience. It helps customers in getting the benefit of do-it-yourself wealth management service.
Some of the InsurTech companies following this business model are: to name is GetSafe, Wefox, FinanceFox, etc., which follow process improvement business models.
| Company Name | Founded Date | Business Location | Estimated Revenue |
| Rentablo | 2014 | Germany | $5.8 Million |
| GetSafe | 2014 | Germany | $112.2 Million |
| Wefox | 2014 | Europe | $273.1 Million |
- Direct insurer business model
The direct insurer business model is a business model in which the insurance company directly sells its insurance products to customers without the involvement of intermediaries. As it saves the intermediary charges/fees, it is cost-efficient for insurance companies and their customers. For example, a leading insurance company named BIMA which offers mobile-delivered insurance to low-income people follows this business model.
Some more insurance fintech startups are TROV, ROOT, NEOS, Metro mile, etc., which follow a direct insurer business model to enhance efficiency by leveraging the latest technologies.
| Company Name | Founded Date | Business Location | Estimated Revenue |
| BIMA | 2010 | UK | $21.8 Million |
| TROV | 2012 | US | $15.8 Million |
| ROOT | 2015 | US | $310.8 Million |
| NEOS | 2000 | Australia | $25 Million |
| Metro mile | 2011 | US | $108.3 Million |
- API-based business model
The API-based business model is an emerging trend in the insure tech space as many startups are keeping user/client acquisition as their key priority. This model is also known as B2B2C or open-source platform solution as it connects processes and people with the technology. This model allows customers to access insurance solutions from insurance channels, intermediaries, developers, and third-party apps without any manual intervention.
Here are the benefits of API based insurance model:
One of the best examples is the leading InsurTech company Lemonade which has launched the public API allowing anyone to distribute the insurance offerings of Lemonade through their apps and websites. Wakam is another example of a fintech insurance startup that follows an API-based business model.
| Company Name | Founded Date | Business Location | Estimated Revenue |
| Lemonade | 2015 | US | $149.2 Million |
| Wakam | 1829 | Europe | €650 Million |
- Collaborative business model
The collaborative business model refers to partnering with other businesses or employing the expertise jointly. For example, a traditional insurance company that enjoys a vast market presence collaborating with an InsurTech startup can become a great combination of traditional strength blending with digital enablers to adopt digital innovations. Such a collaborative model can bring good strength to the insurance industry.
Digital innovations have allowed the insurance industry to redefine its way of business. New fintech insurance solutions with innovative business models and customer-centric approaches are crucial in reshaping the industry.
