The Lloyd’s Lab insurtech cohort continuing on and actively focusing on pandemic solutions is undoubtedly a positive for the insurance industry. Lloyd’s Lab is one of the most prestigious incubators for start-ups in the insurance sector, and is essential in an environment where insurtech deals are significantly down so far in 2020. Indeed, the total value of global insurtech deals has fallen by 80% due to COVID-19. Start-ups could be essential in providing the innovation to help recovery.
The dramatic fall of global insurtech deals in 2020 is a shock after growing by over 100% in both 2018 and 2019 as per GlobalData’s Deals by themes Dashboard. The 2020 figure is just up to July, so the scale of decline will be reduced by the end of the year. However, GlobalData still expects 2020 to show a substantial reduction on 2019 in the wake of the COVID-19 pandemic.
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Lloyd’s said the final 10 companies were selected from 140 applicants all offering solutions to the pandemic, which highlights that new ideas and innovation are still present in the insurance market despite trying conditions.
All 10 start-ups are looking to offer digital solutions and data analytics, as opposed to being consumer facing. While insurers may not be looking to invest large sums at present due to pressure on profitability, insurtechs that prove successful could help increase incumbents’ process efficiency and gain better insights from the wealth of customer data they hold.
Insurtechs merging with incumbents, as opposed to challenging them, is a recurring theme in insurance, and it seems this is set to continue. Start-ups would struggle immensely to underwrite premiums, especially in the current climate, but their digital and analytics expertise could be priceless to larger companies looking to advance their capabilities.
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