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InsurTech: Commercial Lines
Overview
How is InsurTech disrupting commercial insurance?
InsurTech: Commercial Lines startups focus on delivering tailored commercial insurance products entirely through digital platforms and bypassing traditional intermediaries. These startups leverage technologies such as AI, data analytics, and IoT devices and focus on small and medium-sized enterprises (SMEs), helping to address gaps in coverage left by traditional insurers who have often overlooked or inadequately served this segment.
The growth of InsurTech in commercial lines is driven by several factors, including traditional insurers’ lack of adequate coverage for SMEs and the rise of the gig economy requiring specialized insurance products. Furthermore, the emergence of new insurance models, including usage-based and on-demand insurance, reflects a shift toward more personalized and cost-effective policies. These models, particularly prevalent in the Commercial auto segment, utilize real-time data to tailor premiums based on individual risk profiles, potentially lowering business costs.
Industry Updates
Market Sizing
The US InsurTech: Commercial Lines market could reach USD 5.1 billion–7.7 billion by 2028
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Market Mapping
The Commercial InsurTech space includes players that offer commercial insurance directly to customers through digital platforms. The industry can be further segmented by the types of insurance offered. It primarily features business insurance policies, including business liability, workers’ compensation, and business interruption coverage. The sector also encompasses providers offering commercial auto insurance and commercial property via digital platforms.
Business insurance collectively accounted for the largest share of funding as of June 2024, having raised over USD 2.5 billion. This was followed by the commercial auto segment, which secured approximately USD 2.0 billion in funding as of the same date.
Established insurers such as Allianz, AXA, and American International Group (AIG) have also entered the Commercial InsurTech space by integrating digital capabilities into their product offerings and partnering with InsurTech startups.
Business liability
Workers' compensation
Business interruption
Commercial property
Commercial auto
The Disruptors
Disruptors in the Commercial InsurTech space are predominantly go-to-Market-stage startups. While many startups in the industry specialize in one segment, others like Next Insurance, Vouch, and Foxquilt have diversified into multiple segments.
As of June 2024, all startups were privately held, with Next Insurance leading as the highest-funded privately owned disruptor in the industry, having raised a total of USD 1.1 billion in funding.
Funding History
Competitive Analysis
Incumbents
Incumbents in the Commercial InsurTech space include established insurers such as Allianz, AXA, Chubb, and Aon. These companies have focused primarily on developing their digital capabilities to compete with products offered by InsurTech startups and partnering with startups to harness their technological expertise.
These incumbents are predominantly active in the business insurance sector. The business liability segment has seen significant activity among incumbents, who have entered by offering various liability-related products such as general liability and product liability, directly via digital channels.
M&A activity in the industry has been relatively limited, with Aon being one of the few players actively acquiring startups to integrate and enhance their digital capabilities to strengthen their product offerings.
Notable Investors
