Sponsored by Prima uses technology to offer best value car insurance to UK drivers Learn more Fintech/Insurance/Analysis/ Insurtech in 2023: Where the sector’s going and why it’s ripe for expansion The cost of living continues to be a dominant trend for insurtechs, but how will they confront it? By Kirstie Pickering 3 February 2023 Nick Ielpo, UK country manager at insurtech Prima Nick Ielpo, UK country manager at insurtech Prima Sponsored by Prima uses technology to offer best value car insurance to UK drivers Learn more Fintech/Insurance/Analysis/ Insurtech in 2023: Where the sector’s going and why it’s ripe for expansion The cost of living continues to be a dominant trend for insurtechs, but how will they confront it? By Kirstie Pickering 3 February 2023 With challenging conditions expected to continue this year for startups across the board, the world of insurtech is still primed to continue its disruption of the insurance industry while tackling the daily struggles that so many of its customers face. Worth $8bn in 2021, the global insurtech market is expected to be worth almost $30bn by 2026. “Insurance remains a trillion-dollar market, dominated by incumbents with poor technology,” Rob Moffat, partner at Balderton Capital, tells Sifted. “2022 was a brutal lesson for many early insurtechs: the history of these incumbents gives them profitable back books and long experience in refining underwriting and managing claims, while many end customers remained most comfortable buying through brokers, rather than direct. “Looking ahead to 2023 and beyond, the insurtechs that do well will be those that can show they can consistently deliver a great loss and combined ratio, while maintaining strong growth.” So, what can we expect from insurtechs in 2023 and what are the biggest issues they need to address? Putting customers front and centre After dominating the headlines in 2022, the cost of living crisis will remain the standout trend for insurtechs to tackle this year, according to Nick Ielpo, UK country manager at insurtech Prima. “When there’s a roll out of new products and services, it’s important to do so in a way that can translate quickly into savings for customers” “In what’s going to be a tough year for business, insurtechs need to be really focused on providing value to the cost of living challenge,” says Ielpo. “When there’s a roll out of new products and services, it’s important to do so in a way that can translate quickly into savings for customers.” With over 2.5m active customers in Italy as of June 2022, Prima says it holds the largest market share (25%) of the Italian online motor insurance market and has experienced over 70% year-on-year growth. In October 2022, the company expanded into the UK, where within four months Prima says it gained 15k users and now has a staff of over 75. He notes three key factors that will guide Prima’s actions in 2023: using technology to drive down overheads, taking a data-driven approach to signpost the business towards what the best outcomes or products to develop are, and investing in talent because, while wanting to keep overheads low, Ielpo acknowledges the importance of hiring people that are high quality and able to make the right decisions to give customers what they want. “We believe there will be an increased focus towards finding ways to drive cost savings and better value to customers,” he says. “The businesses that will be successful will be the ones that are able to do so without compromising on quality — particularly in insurance — without compromising on peace of mind because the product still needs to come across as something that consumers can trust.” Humans and technology But, human connection is still an important part of the customer service experience for the insurance industry. “It’s important to find a way to use technology that’s combined with a human touch” Despite being tech-led, Prima invested in creating UK-based customer service support and claims management for its UK launch. This was because the company knows that in stressful times, customers want to speak to people. “It’s important to find a way to use technology that’s combined with a human touch,” says Ielpo. “This is so that when customers are stressed about the cost of living challenge and want to understand things properly, they know they have a customer service channel to discuss these things fully.” Rewarded for simplicity Ielpo notes his awareness of insurance typically being seen as a grudge purchase and something that people have to do, either because they’re legally bound to — like with car insurance — or something they think they should do. “Insurtechs serve the underserved” However, new technology has made it faster and simpler to become insured, and is helping to remove the stigma attached to the traditional insurance industry. “Insurtechs serve the ‘underserved’ — people who previously did not have insurance and became first-time insurance buyers since the experience of getting covered has become easy, fast and digital,” says Yael Wissner-Levy, VP at insurtech Lemonade. “Gone are the days of endless paperwork and fine print,” she continues. “Together with low monthly payments, products such as renters’ insurance are becoming a no-brainer for people needing protection at a small monthly cost.” When it comes to pricing, insurtechs have a technological advantage that could, in theory, help keep prices low and fair for consumers due to increased efficiencies, automated processes and access to extensive data. “Should an event happen that requires a claim, the speedy resolution and payout that insurtechs are often capable of also plays an important role for any customer,” adds Wissner-Levy. Disruption continues And insurance companies are losing supremacy over one of their most important factions for production: data and statistics. According to Wissner-Levy, traditional insurance was the bastion of data for centuries but in recent years, not a single insurance company dominated data and statistics. Instead, the spotlight has shone on tech companies and non-traditional insurance businesses. “Insurtechs have a massive chance to accelerate their market penetration and reach given that cost and affordability is so significant in the market” “Insurtechs are architectured on technological infrastructures,” she says. “Perhaps most noticeable has been the consumer experience; AI-powered chatbots selling personalised policies, user-friendly apps to help navigate policy needs, and an often painless claims experience. These changes better align with the increasing demands consumers have come to expect from companies.” Internal processes such as fraud detection, claims processing and systems management have become more automated and efficient, all while generating copious amounts of data to make those systems faster, cheaper and more precise. “Insurtechs have a massive chance to accelerate their market penetration and reach given that cost and affordability is so significant in the market,” says Ielpo. “We think 2023 is a year where these trends can strongly accelerate.” Sponsored by Prima uses technology to offer best value car insurance to UK drivers Learn more Related Articles The secretive figure behind some of the world’s biggest fintechs By Isabel Woodford Click here to read more Startup employees are using company benefits to pay for electricity By Miriam Partington in Berlin Click here to read more ‘A new paradigm’: Six lessons on fintech interoperability By Sifted Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? 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