1. What is Insurtech?
In the ever-evolving landscape of the insurance industry, the emergence of Insurtech has ushered in a transformative wave of innovation and disruption. But what exactly is Insurtech, and how is it reshaping the world of insurance? How do cutting-edge digital technologies play a role in this transformation? What challenges do Insurtech companies face, and what separates the thriving ventures from those that struggle? And what exciting developments are on the horizon? Insurtech, a portmanteau of «insurance» and «technology,» represents a dynamic sector where cutting-edge digital technologies are harnessed to restructure and revolutionize the insurance ecosystem. Insurtech encompasses a wide spectrum of technologies, from artificial intelligence and big data analytics to blockchain, telematics, and IoT devices. These innovations have introduced novel ways of assessing risk, enhancing customer experience, streamlining operations, and ultimately redefining the traditional insurance business model. This blog is structured to provide a comprehensive overview of the Insurtech landscape, discussing its evolution, current state, and future potential in relation to Spain.
2. Global Context of Insurtech
In the backdrop of geopolitical turbulence, energy crises, inflation, and growing climate change concerns, the year 2022 marked a year of significant global instability. These factors affected the insurtech market, causing a temporary decline in investments. Nevertheless, the Insurtech sector displayed resilience, attracting over €8 billion in investments through 470 deals in 2022, making it the second-best year for total investments.
Source: 2023_Insurtech_report_Mundi_MAPFRE_NN Group_Dealroom
The global insurtech landscape is dynamic and diverse, with North America historically leading in insurtech investments. However, Europe is narrowing the gap, as European insurtech firms expand into lucrative markets and innovative lines of business. However, Asia is still growing the most, particularly India and China remain prominent in insurtech investments. In Latin America, countries like Brazil and Chile have also embraced innovation in the insurance sector.
New trends are emerging in the insurtech industry, including telematics, Internet of Things, artificial intelligence, machine learning, virtual reality, augmented reality, and insurtech-as-a-service platforms. These trends are transforming the way insurance products are delivered and managed, adapting to changing lifestyles and societal commitments to sustainability and responsibility.
The transformation of the insurance sector is driven by collaboration between traditional insurers and insurtech companies. Startups, with their technological and innovative DNA, have played a crucial role in this industry’s evolution.
3. Insurtech in Spain
a. Successes
Spain has emerged as a dynamic player in the global insurtech arena, with a thriving landscape characterized by diversity and innovation. According to the 2023 report conducted by dealroom alongside BBVA , the Spanish tech ecosystem is now worth €93B, up 3.6x since 2018. Spain experienced its second best year on record for VC investment, with €4B raised in 2022.
Spain is home to over 340 insurtech startups, with approximately 195 actively involved in creating novel insurance products and coverage options. These startups cover various domains such as automotive, housing, life, travel, and senior care. The «Health, Well-being, and Wellness» sector, with 43 startups, highlights Spain’s commitment to enhancing the customer experience through innovative solutions.
About 98 startups in Spain focus on providing specialized services and technologies to enhance internal business processes within the insurance sector. These innovations contribute to operational efficiency, demonstrating Spain’s commitment to technological excellence.
Spain has 54 startups dedicated to the distribution and commercialization of insurance and related services, including homegrown and foreign companies. Platforms and marketplaces are major players in this sector, reflecting Spain’s push for advanced distribution models.
b. Future of Insurtech – Spain
Position on the Global Stage: Spain ranks as the eighth nation in terms of investments in insurtech. While the United States and the United Kingdom lead the global investment rankings, Spain maintains a prominent position, demonstrating its commitment to the insurtech industry’s growth and evolution.
Evolution of Insurtech: Spain has experienced steady growth in the insurtech sector, with the number of startups increasing from just over ten to over 180. Notable years of investment include 2017 and 2022, characterized by significant funding rounds. The sector has displayed resilience and adaptability, positioning Spain as a significant player in the global insurtech arena.
Investor Participation: Over 50 national and international entities, including investment funds, venture capitalists, and corporate ventures, actively invest in insurtech startups in Spain, reflecting the thriving state of the sector within the country.
The future of insurtech in Spain looks promising, with continued growth, innovation, and an active ecosystem of startups and investors. Spain’s commitment to fostering innovation and embracing technology within the insurance sector positions it as a key player in the global insurtech landscape. As the insurtech revolution continues, Spain is poised to play an increasingly influential role in shaping the industry’s future.
Future of insurtech – Global
The European insurtech landscape is at a crossroads. After years of navigating macroeconomic and geopolitical challenges, the industry is poised for significant growth. However, this growth is not uniform, and a clear bifurcation is emerging. Some insurtech companies have thrived, achieving unprecedented success in a tumultuous environment, while others have struggled to establish sustainable business models. According to an analysis carried out by mckinsey they revealed that nearly 10 percent of insurtech ventures founded between 2015 and 2019 have shuttered their operations, shedding light on the industry’s inherent challenges.
A noteworthy shift in focus is the move towards intermediated distribution. Five years ago, insurtech primarily centered around direct online distribution. Yet, insurtechs in Europe are increasingly targeting intermediated channels, recognizing that a significant portion of consumers still prefer personalized advice and interaction with agents or brokers. The direct-insurance model, which once dominated, has stagnated and struggles to expand its market share, especially in North America and Europe.
One of the most exciting developments is the adoption of generative AI (gen AI). This transformative technology offers insurers opportunities for automating underwriting processes, detecting fraudulent claims, and predicting customer behavior. Start-ups and incumbents are actively exploring applications of gen AI, including personalized risk assessment, claims management, and customer engagement. The agility and flexibility of insurtechs give them an advantage in rapidly iterating on gen AI use cases.
In the ever-changing landscape of the insurance industry, the rise of Insurtech has been nothing short of revolutionary. It’s a dynamic sector where cutting-edge digital technologies are harnessed to reshape and redefine the traditional insurance model. From artificial intelligence to blockchain, Insurtech has introduced innovative ways of assessing risk, enhancing the customer experience, and streamlining operations. As we’ve explored the global context of Insurtech, we’ve seen how it’s resilient in the face of geopolitical turbulence and evolving trends, with new technologies like AI and IoT transforming the industry.
Spain, in particular, has emerged as a prominent player in the global Insurtech arena. With a thriving landscape of startups covering various insurance domains, Spain is at the forefront of enhancing the customer experience and improving operational efficiency. The commitment to technology and innovation in Spain is evident, with a growing number of investors and startups actively participating in the sector. To learn more about how you could benefit from the opportunities that insurtechs have to offer or to take your insurtech global click here .
