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InsurTech: Personal Lines
Overview
Novel insurance models are providing coverage for the connected consumer
Insurers are offering digitized personal line insurance products that are provided entirely through digital channels. They use new technologies and focus heavily on customer experience by providing personalized products that better reflect individual circumstances, allow instant coverage, and feature faster claim processing. They aim to overcome the pain points of traditional insurance, where policies are offered based on a one-size-fits-all approach.
This has largely been enabled by the emergence of insurance technology (InsurTech) solutions, which utilize technologies such as Internet of Things (IoT) devices, artificial intelligence (AI), and machine learning. These technologies automate insurance functions and help gather data in real-time, leading to more accurate pricing and faster claims processing. On the demand front, consumer expectations for more personalized policies and cost savings from digitizing insurance functions have created a strong demand for these products. Additionally, inadequate coverage provided by traditional insurers for non-conventional industries, such as ridesharing, has also paved the way for new opportunities for insurers.
Industry Updates
Market Sizing
The US InsurTech: Personal Lines market could reach USD 41.5 billion–50.7 billion by 2028
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Market Mapping
The InsurTech: Personal Lines industry can be segregated into companies offering digital-only personal line insurance offerings. These insurance providers consist of companies offering home, auto, health, life, personal belonging, and miscellaneous (pet and travel) insurance, as well as those providing comparison sites to assist individuals in comparing and shopping for insurance.
The auto insurance sector accounted for the highest number of startups offering usage-based insurance (UBI) using telematics data. Moreover, the majority of startups identified in this industry are in go-to-market or expansion stages.
Incumbents have also been quick to react to changing market dynamics, especially in the automobile space, where most companies have either developed solutions in-house or partnered with turnkey solution providers and vehicle manufacturers to offer usage-based insurance offerings. Vehicle manufacturers, such as Tesla, have also ventured into this space, leveraging data from their own connected vehicles.
Automobile
Homeowners & Renters
Life
Health
Personal Belongings
Miscellaneous
Marketplaces
The Disruptors
Personal line insurance startups offering digital-only personal line insurance cover operate either under a carrier model, where they control all aspects of the process and underwrite their own policies, or under an agency model, where the startups act as a Managing General Agent (MGA)—selling insurance to customers and providing the underlying technology, while larger insurers underwrite the policies.
The Automobile and Homeowners & Renters segments accounted for the highest funding, each amounting to USD 3.7 billion as of December 2023. This was followed by the Life insurance segment, which had accumulated over USD 1.5 billion in funding. wefox, a German digital auto and home insurer, was the highest funded startup, having raised close to USD 1.5 billion as of the same date.
Moreover, the industry has witnessed several startups such as Lemonade, Hippo, Root, and Foxo going public, as well as a few M&As. The most notable acquisition was Lemonade's purchase of Metromile in July 2022, in an all-share transaction valued at USD 145 million.
Funding History
Competitive Analysis
Incumbents
Traditional insurers are opting for a mix of in-house development and partnerships to provide novel products
Incumbents in this space mostly include traditional insurers who are increasingly moving towards developing their own digital personal line insurance products. Partnerships with digital insurance technology (insurtech) startups are common in instances where incumbents want to leverage the former’s technologies to offer new insurance products or bolster their own offerings. Cross-industry partnerships are also ubiquitous, providing a venue for these traditional insurers to market their product, with common examples including partnerships with auto manufacturers and ridesharing companies.
Most incumbents also have their own venture capital arms and accelerator programmes which provide guidance and capital for promising insurtech startups.
Tesla is an example of a vehicle manufacturer developing its own insurance product which leverages the data from the vehicle's systems. This also provides Tesla with a feedback loop which can then be used to alter its vehicle designs to mitigate common repairs in the long term.
Notable Investors
