Emerging Business Models In InsurTech
Emerging Business Models In InsurTech
Introduction
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.
1. Peer-to-peer business model
The peer-to-peer business model in fintech insurance companies involves small groups, like families or friends, who combine their premiums to get coverage against risks. The collected money is then used to compensate members in case of a loss.
Unlike traditional insurance models that collect premiums and settle claims centrally, peer-to-peer insurance is a new approach that decentralizes these processes by sharing risks. It can be applied to various products like home, car, and pet insurance.
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 |
2. Software-as-a-services (SaaS) business model
Software-as-a-service (SaaS) is an emerging business model in the insurance sector that allows companies to use technology without the costs of installation. This means no expenses for installing software, licenses, or maintenance fees. By making operations easier and saving money and time, SaaS is becoming 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 |
3.0 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 |
4. 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, Rentablo is an InsurTech company that helps customers manage their insurance by allowing them to import all their financial information.
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 |
5. Direct insurer business model
The direct insurer business model involves insurance companies selling their products directly to customers, without intermediaries. This approach reduces costs for both the companies and their customers. An example is BIMA, a leading insurer that provides mobile insurance to low-income individuals using this 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 |
6. 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 great example is Lemonade, a leading InsurTech company that offers a public API for anyone to share its insurance products on their apps and websites. Wakam is another fintech insurance startup that uses an API-based business model.
| Company Name | Founded Date | Business Location | Estimated Revenue |
| Lemonade | 2015 | US | $149.2 Million |
| Wakam (formerly La Parisienne Assurances) | 1829 | Europe | €650 Million |
7. Collaborative business model
The collaborative business model involves partnering with other businesses or sharing expertise. For instance, a well-established insurance company working with an InsurTech startup combines traditional strengths with digital innovations. This collaboration can greatly enhance the insurance industry.
Conclusion
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.
