The Road Ahead: 3 Big Insurance Trends for the Next 12 Months


and prognostication must be traits buried right in the genetic core of the human species. People’s desire to peer around the corner into what they can’t see and try to make sense of the shapes and shadows is almost a basic need.  It makes us feel smart, it provides comfort as a source of clarity, it lets us show off our expertise.

So, while I may be motivated by some weird base instinct to call the industry’s shots- I also genuinely think the next year will turn out to be unlike any the industry has ever seen. At the least, we’re beginning to see some tectonic shifts in how insurance does business as it starts succumbing to the inexorable forces of , customer demand, and most importantly, as it finally gives in to good old fashion evolution.

Here are the three big trends in insurance that I see taking shape over the next twelve months.

1.  Venture capital firms will start to pick leaders

There’s strong demand for insurance technology investments in the VC community right now. According to CB Insights, there was $2.65 billion in VC investments in insurtech companies in 2015, about three-and-a-half times the amount invested in similar companies the prior year. This makes sense too. Insurance is one of the remaining industries that hasn’t yet taken a huge, technology-based step forward and VCs are finally realizing the potential impact technology could have on how it’s bought, sold and administered.

So, while there has been a massive demand for insurance investments from the VC community, beyond employee benefits, the actual pace of investment has been relatively low due to an almost complete lack of investment opportunities with attractive business models, proven teams, and productive uses for their capital.  Even including benefits, while $2.65 billion is a lot of money, it’s a small percentage of the $128.5 billion in VC money that was raised last year.

Over the course of the next year, we’ll see a few strong financial models emerge from companies who took seed rounds over the last 18 months that will attract sizable Series A rounds to fund growth and establish leads in their market segments.  The noise and buzz around insurtech has already spawned a growing number of me-too copycats and business model clones but, as has happened with other formerly hot sectors for venture capital- the on-demand economy and marketplace lending- the benefits of scale and access to capital will accrue almost entirely to the innovative first movers. 

2.  Carriers will start more meaningful partnerships with startups to drive innovation

You can bet that all carriers are already having discussions about this in their boardrooms right now, it’s reflected in strategic VC investments even if not yet in meaningful operating partnerships, but over the next year we’ll see which carriers will actually pull the trigger on deals – be it acquisitions or partnerships – that lean on startups to help them jumpstart the pace of innovation inside the company.  We’ve started to see meaningful partnerships with technology companies from the large only recently, but there is reason to think that insurers will move faster.

Most of this activity will happen around finding new means of distribution, new ways to help claims adjusting, big data analysis for underwriting, and early efforts at incorporating the Internet of Things. It will be a fairly incredible thing to see for a couple reasons: first, it will be impressive to see massive companies realize that they can no longer “move at the speed of insurance,” and, second forward-thinking carriers who welcome technology to the fold will create sizeable business advantages against their more luddite rivals, and do so more quickly than ever before possible.

3.  Migration of talent from old guard companies to insurtech startups

As insurtech companies raise larger amounts of capital, more and more executives from established insurance companies will start to join their ranks. Lemonade’s hires from AIG and ACE and Embroker’s own recent addition of Tom DeMichael from Willis will be the first wave of a larger trend as property and casualty focused startups will by their nature require more industry expertise than the first wave of employee benefits startups like Zenefits.

As funding increases for insurtech leaders (see prediction No. 1), on-hand cash at these startups will allow them to lure top talent away from the industry giants, just as the massive carriers and brokers alike will be adjusting to the brave, new world of insurance by trying to cut bloated cost structures. Seasoned execs that are dynamic enough to thrive in the fast-moving startup environment will be in short supply, creating great opportunities for the available free agents and new entrants alike.

Each of these are trends that will be at play not only over the next 12 months, but for several years at least to come.  However, I expect now is when we’ll start to see real movement on each.  One thing is clear: the insurance industry – as well as the burgeoning insurtech market – will be an incredibly interesting space to watch.

[linkedinbadge URL=”” connections=”off” mode=”icon” liname=”Matt Miller”] is founder & CEO of Embroker and a version of this post first appeared in the Embroker Blog