High-tech companies like Lemonade stormed Wall Street promising to reinvent the staid insurance industry, but their plummeting share prices tell a tale of disappointment.
Incumbent insurers have for long been berated by insurtech pioneers for lack of innovation, resistance to change and vulnerability to disruption like Kodak, Blockbuster and Nokia. The truth is different as the linked article in the current Harvard Business Review explains.
I examine six key trends: -
- Many incumbent insurers will likely be as successful in 2025 as now
- Full-stack insurtech 'disrupters' themselves vulnerable to competition and acquisition
- Poor performing incumbent insurers likely to fall prey to top performing ones
- Technology partner insurtechs will only succeed if they prove scalable and many will not.
- The silver lining in the insurtech partner scene
- Caveats- the longer term trends that might just turn the tables especially 2025-2030 e.g. Di-Fi
First the timely article in the HBR leveraging research on the world’s biggest companies which shows that digital disruption is less destructive than you might think and reviews the best strategies to anticipate and avoid disruption.
We all know that the top publicly trades companies of 2106 have been replaced by Alphabet, Apple, Meta (Facebook), Amazon and Microsoft. And an auto OEM's competitors are as much Tesla, Foxconn and Google as other traditional OEMs ( see visual below). Things have changed dramatically but look at the HBR article below to see how many enterprises in the 1995 Fortune 500 are still active and growing.
And Amazon was once looked at as a bottomless pit of losses. Microsoft as loosing the plot.
All is not lost for incumbent carriers against disruptive insurtechs many of which are just reinventing the wheel. Doing things more efficiently but not necessarily changing business models. Trend #6 will have a sting in the tail for the complacent.
"In 2020, 198 of the firms that had made the Fortune 500 in 1995 were still on the list. Two hundred and fifty-six firms had dropped off it because they had merged with or been sold to other corporations or to private equity firms or were no longer big enough to qualify. Only 35 of the companies in the 1995 ranking went bankrupt. The 2020 list also contained 231 firms that were in existence back in 1995 and grew enough to get onto it. Another 54 were spin-offs and restructurings of previously existing businesses. And as we’ve noted, only 17 companies—among them, Facebook (now Meta), Google (now Alphabet), Tesla, Netflix, and Uber—were founded after 1995."
Julian Birkinshaw Harvard Business Review Jan- March 2022
You see a similar picture in the Fortune Global 500
So where on the continuum from cliff-edge disruption to living with evolutionary transformation do incumbent insurers lie? And in five years time will they go the way of Nokia, Kodak or Blockbuster or like most of the enterprises in the Fortune 500 and Global 500 still be surviving or even thriving?
Let's look at a parallel industry- banking. Fintech raised its head above the parapet before insurtech and neo-banks were predicted to disrupt incumbent banks with their legacy systems, outmoded business models and customers hooked on digital experiences. Despite everything how many banks have disappeared? Have Monzo, Starling et al outcompeted incumbents to the extent of extensive disruption? No.
Still dependent on legacy core systems, incumbents have transformed from analogue branch focussed banking to online banking. Most customers have stayed with traditional brands whether in the US, UK, Continental Europe or Hong Kong. In under-served markets and regions customers have found other sources of finance and making/collecting payments and you can see the same happening with insurance.
China is different and a boiling point of innovation compared with the West. The large working population and increasing wealth, leveraging WeChat for eCommerce, banking and insurance has fostered considerable innovation not least seen in Tencent and its insurance arm WeSure.
WeSure teams up with major domestic insurance companies rather than disrupts them to enable users to purchase insurance, make inquiries, and file claims through WeChat—a widely used messaging, social-media, and payments application in China.
"WeChat currently has 1.2 billion users, and one billion are monthly active users. To date, WeSure has served a total of about 90 million users with about 30 million currently active users. Because WeSure can easily reach out to customers and we are an inclusive insurance platform, we really want to become an insurance-services platform akin to a public utility."
Ren Huichuan, the senior adviser at Tencent Group
Full McKinsey interview at Insurance of the future: An interview with Ren Huichuan of Tencent
WeSure teams up with insurers (which is a good example for Western insurers) for the front-end of the relationship accessed so conveniently via WeChat. Whilst the big technology companies Amazon, Meta, Alphabet/Google, Apple could get into insurance why would they enter low margin, highly regulated business models when they can manage the customer and offer far more than just insurance? Incumbent insurers can collaborate with digital giants even if nervously.
Carriers have the insurance expertise to remain a core part of the insurance chain even if they team up with the highly branded companies embedding insurance in the sale/rental of products. Tesla currently has the most data of any auto OEM collecting driver and vehicle behaviour data from the auto technology stacks it has developed. It is at the forefront of software, data management, AI & deep learning and could become an insurer. Even so its vehicle parc is a small proportion of the global total and VW, Toyota, Daimler, GM and a host of smaller manufacturers are chasing hard with massive investments in EVs, SVs and software/data management/data science/AI etc.
Carriers, on the other hand, can address the insurance needs of all their customers whatever the make of vehicle and most multi-vehicle households have more than one make. Customers also have needs across all areas of life. Pet, travel, home and contents, motor, life and healthcare. They do not inly want to protect homes; they want to buy them and improve them. Insurers that can put together a portfolio of products offering value and utility and make it easier to manage all these through customer-friendly portals or dashboards. They can cross-sell, upsell and achieve economies of scale to be shared by the insurer and customer.
For many insurers, brokers/agents are still a vital sales and distribution channel and MGAs thrive offering this matching need between customers and insurers. This distribution channel can look after a wide range of needs, advise on cover and wording, highlight risks and help facilitate claims.
Interesting read: " Why Predictions That InsurTech Would Replace Agents Have Flopped ".
Other insurers thrive on direct sales for simpler products. Add to this insurance of motor and home has become trapped in price comparison/aggregator channels channels so the differentiator has become chained to price- heavy loss-making discounts for new/switching customers and higher premiums for loyal customers. That becomes a thing of the past in the UK with new legislation in place for 2022.
Insurers must find the optimal balance between better products and service and value-for-money. The classic disrupter either applies a different business model, cuts out uneconomic links in the value chain or delivers a new product that makes current ones obsolete. Every insurer has been harangued with the Blockbuster, Kodak and Nokia narrative where new entrants have consigned these companies to the dustbin of failed organisations. But we have seen already that these are a minority in the Fortune Lists.
Insurance beyond simple accidental damage is complex, more regulated and more capital intensive than the film/video, digital photography and smartphone markets that were disrupted.. Add to that motor insurance is a legal necessity and in reality there has not been a revolutionary new product cutting off traditional products at the knees or destroying current premium revenues overnight. There are evolutionary changes of course.
UBI has gained leverage as driving habits changed with lockdowns followed by hybrid work-from-home and office working. Metromile and Root introduced these but neither has threatened incumbent auto insurers. Metromile is in fact being acquired by Lemonade which itself still has limited market share and is still a loss-making business reliant on re-insurers to cover risk.
As Lemonade and Metromile grew their businesses they increasingly had to add the very analogue processes and workflows that were said to be the constraints of incumbents- recruiting adjusters and examiners to manage claims for example. Customers want a combination of automation and professionally skilled human engagement - even Gen X, Y and Z customers.
Embedded insurance is a growing market combining the convenience and ideal timing of selling insurance at the point of sale/rental or hire. Yet any carrier can partner with auto manufacturers, retailers, home developers, device manufacturers to add this offering in parallel with standalone insurance products. Many and maybe most consumers realise that the insurance offered by smart phone retailers is more expensive than that by specialist gadget insurers. So embedded insurance must offer value as well as convenience.
Parametric insurance is another product gaining attraction and by paying out automatically against pre-agreed measures and cover does not even involve a claims process. Once the water level reaches a certain level sensors trigger the agreed payment level which is automatically paid to the customer. Hence the success of FloodFlash. The same for delayed flights, fire and earthquake. This is not full-cover but a fast payment delivering cash to support customers when their operations and business are interrupted so a parallel product to traditional risk management of loss and injury rather than disruptive replacement. Again, incumbent insurers can chose to add these products to their portfolio or partner with parametric insurance specialists. Evolutionary rather than revolutionary.
The lessons that corporate leaders should take from this analysis are straightforward.
"First, don’t make generalizations based on anecdotal and high-profile examples. Everyone knows what happened to Kodak and Blockbuster, and we can learn from their stories. But they’re outliers. Some creative destruction has happened in technology, media, and retail. All other major sectors haven’t seen that much, thanks to a range of barriers to entry including high switching costs, economies of scale, trusted relationships, and regulation. It’s important to understand not only the logic of disruptive innovation but also the basics of industry structure and competitive advantage."
Julian Birkinshaw HBR.
Birkinshaw proposes four different ways to anticipate potential disruption
It is a defensive and yet valid strategy to re-trench and treat a successful business as a cash-cow for as long as the market values these current assets and products and the insurer exits the market as the right moment.
Many insurers talk about moving away from risk management to risk prevention but as Birkinshaw says this is challenging to pull off and what makes an insurer better able to do that than, say, an auto OEM like Tesla with self-driving software (autonomous vehicles and robotaxis) or Amazon with home security and monitoring solutions?
Doubling down concentrates on the current core capabilities/assets of the insurer but is a potential recipe for 'death by a thousand cuts' as niche insurers carve out low-hanging and profitable fruit leaving insurers with an un profitable rump of business. Pet insurance from BoughtbyMany or personal and commercial driver and fleet insurance from ZEGO addressing gig and hybrid working models are good examples. They draw premiums away from traditional insurance but in themselves will not put incumbents out of business. Still significant Unicorns by the way.
So what does fight-back entail? Birkinshaw in HBR:-
The default reaction to disruption, again, is to try to take on an insurgent at its own game. Examples include British Airways’ launch of the no-frills service Go, since sold to EasyJet; the New York Times’ creation of NYTimes.com; and the major carmakers’ moves into electric vehicles. Incumbents can go head-to-head against disrupters by setting up new units, making an acquisition, or entering a joint venture. Fighting back is appropriate if the new technology represents an existential threat to the firm, but that isn’t true very often. Moreover, it’s extremely hard to do well: While there have been some successes, established firms have a poor track record overall when it comes to beating upstarts at their own game. Microsoft, for example, has struggled to compete with Google in search, and GM’s attempt to take on Uber with its Maven car-sharing service went nowhere.
Incumbent insurers may well decide hat combining "Double Down with Fight Back the strategy to beat insurtechs to the disruptive punch. State Farm, Admiral, Generali, Allianz, Direct Line Group, are just a few that come to mind.
Mark Andrew, Altus Consulting Insurance Director ,recently published "Are insurtechs really coming to eat insurers’ Christmas lunch – or are the tables turning?"
Andrew used his companies DigitalBar to show that certain incumbent insurers are as digitally innovative as new insurtechs measuring 19 different attributes of digital maturity across the whole insurance field from Quote and Bind to Claims Settlement.
Take new full-stack insurtechs offering short-term car cover
Compare the digital maturity of incumbents offering traditional 12 month auto cover.
It shows how traditional insurers are leveraging technology and technology partners to innovate and transform. They are as able to sell and service UBI insurance as a potential disrupter and have the brand strength and market share of traditional 12 month cover products.
While it can be difficult to put an accurate figure on the size of the market for usage-based-insurance, it has typically been around 5% of the total UK motor book of business. It’s a growing market where flexibility is as important as price for attracting the types of customers looking for these policies. Getting a foothold early on in an establishing market is where the likes of Cuvva and By Miles, as well as fast follower LV launching Flow, have been hugely successful. By Miles reported a 75% growth during the early months of the pandemic in 2020 as customers moved away from traditional 12-month policies. The private motor market hit saturation point many years ago and has entirely been about price for 20 plus years, rather than proposition with vast marketing budgets needed to compete for customers that start-ups just can’t afford, hence why we see more of them focus on innovative propositions. Given that insurers have largely held firm in the face of insurtechs for the dominant markets in annual policies, what would happen if the tables were turned and insurers started to come after the insurtechs’ sprouts?
It will be interesting to follow the fortunes of Adiona in the UK which launches later this year "to offer insurance policies with premiums built on data / telematics, artificial intelligence and machine learning that provide fair and transparent pricing based on the driving habits of each insured customer"
It is partnering with Duck Creek - See "Duck Creek and Adiona team up to revolutionise UK Motor Insurance....." It has leverage the data science and software expertise of World Programming in parallel with Duck Creek to combine the products and claims service it believes will make it win market share from incumbent insurers. That focus may well make it a winner just like BoughtbyMany but maybe not a disrupter. After all, incumbent insurers can leverage Duck Creek and World Programming in the same way- or other technology partners.
Full-stack Insurtech disrupters or hype?
Two competitors that were trumpeted as being major disrupters have made little substantial impact on the market- leaders. Lemonade and Metromile. They operate at a loss and need to show that they can succeed with more complex insurance rather than simple renters and UBI motor insurance. Hippo and Root have both suffered dramatic falls in valuation.
Image from Insurtech Advisors in article "Lemonade buys Metromile for $500M. What you need to know".
Technology stocks in general have declined substantially on Wall Street in the past year, but for insurtech stocks, the decline has been a bloodbath. Lemonade, the best-known Israeli example, fell by no less than 78% over the past year to a current market cap of $2.3 billion, lower than at the end of its first of trading day in July 2020.
Hippo, founded by Israeli entrepreneurs in California, has also crashed 77% since entering the New York Stock Exchange through a SPAC merger last year. Its current market cap stands at $1.5 billion, which compares with $ 5 billion at the time of the merger.
But Israeli entrepreneurs are not alone in their troubles. US-based insurtech company Root, which specializes in car insurance and went public in 2020, lost 88% within a year. Metromile, another American car insurer that went public via a SPAC merger a year ago, lost 87%, and in November was acquired by Lemonade.
Oscar Heath (founded by Joshua Kushner, brother of Jared Kushner, US President Donald Trump's son-in-law), wants to change the US health insurance sector, but since its IPO last March, its share price has collapsed by 79%. Gil Arazi, co-founder of fintech and insurtech investment fund FinTLV Venture Capital, sums it up best: "Right now, there probably aren’t many insurtech company executives in the world sleeping well at night."
Ofir Dor en.globes.co.il Jan 16th 2022
The conclusion at this stage is that incumbent insurers are not under disruptive threat from full stack insurtechs. Rather that the hopeful disrupters will themselves prove vulnerable to acquisition by the very incumbents hey planned to disrupt. What better way to obtain innovative technology at bargain-basement prices?
These successful incumbents can combine traditional strengths with new technology to win premium growth, attack high margin niche markets and thus adversely impact the profitability of those incumbent insurers that lack the culture, ambition and resources to innovate. This is particularly the case for the bottom quintile of performers and a threat for the middle three quintiles of insurers. Hence disruption is me likely from the high performing incumbent insurers than new full-stack insurtechs
Poor performing incumbent insurers likely to fall prey to top performing ones
McKinsey published an interesting "power curve" on the profitability of insurance companies positing that only the top quartile of insurers make an economic return on capital employed and visualised below.
The full article is to be seen at "How to win in insurance: Climbing the power curve".
There is a caveat to add here: McKinsey want insurers to spend large amounts on their consulting services to climb the power curve but it is arguable that this is not a McKinsey special IP and nothing more than a normal S-Curve distribution. That does not taker away from the validity of the model just the option to spend a lot less with consultants focussed more on the practicalities than "big four" mumbo jumbo. For a penetrating analysis of the power curve, or normal distribution model as I have described it read "McKinsey’s Power Curve debunked" and make your own decision. My point is that good management is the answer to being in the top quartiles and it is not magic.
The valid point McKinsey makes is that to survive and thrive insurers must aim to be in the top two quartiles and if they are in the bottom two quartiles they are under threat of dying out. But is that by full-stack insurtechs, technology giants like Amazon or other top quartile insurers?
I believe that the threat is from incumbent insurers which have implemented overall transformation ( not just digital which is a means to an end) and innovation to anticipate customer needs and lifestyles. M&A will disrupt these poor performers rather than insurtechs. That is not to say that there are new competitors that are capturing specific market share from the generalist insurers. And they can steal a march on incumbents that seek growth via classic M&A strategies.
That is a silver lining for the unicorn innovators like BoughtbyMany and Zego that have free reign to innovate whilst incumbents face the challenges of acquiring competitors..
M&A is not easy for the acquirer or the acquired. It sucks up management time, energy and stamina not least because of the challenge of adding yet more legacy technology stacks. Add to that the challenge of merging different cultures, strategies and a natural resistance to change.
In the UK, L&G's home insurance purchase by LV= and LV= personal lines business acquisition by Allianz resulted in stagnation for the L&G business. That gives an opportunity for others to steal former L&G home insurance customers whilst that stasis freezes innovation. It make it more likely that insurers that placed books of business with L&G take it back in house. Allianz will not be disrupted but some business & premiums will go to others.
There has been little incentive for major change over the last decade. The reasons are well explained by Cole Sirucek who wrote: -
"A bold new world, same old insurance
The insurance industry has remained untouched by the information age for three reasons:
- Legacy products: status quo insurance offerings are unattractive to new entrants because they lack the core elements needed for viral growth. Existing policyholders are not connected in a community, influencers are non-existent, and the products are largely commoditized.
- Legacy systems: the industry is protected with regulations that increase time to market and require large sums of capital. This enables IT systems to remain in operation decades past obsolescence.
- Legacy mindsets: The industry is dominated by the questionable belief that ‘insurance is sold, not bought’. This has resulted in incumbents building and being held hostage by highly expensive manual distribution networks that, if required, would be difficult for new entrants to replicate.
A combination of the abovementioned factors has allowed the insurance industry to remain largely insulated from the cold winds of disruption. The primary competitive dynamic in the industry today is price competition among incumbents with little, if any, incremental innovation occurring.
This is clearly borne out in the numbers as measured by their investment in innovation and the satisfaction of their customers.
According to the Economist, no insurer ranks among the world’s top 1,000 public companies by amount invested in R&D. Insurers allocate an average of 3.6% of their revenue to computing technology — about half the share that is typical for banks. " Ref 
Full article link in references section at 
Technology partner insurtechs will only succeed if they prove scalable and many will not.
Or - "The Emperor without any clothes".
This is aimed at arrogant insurtechs and technology partners that have partial products and falsely proclaim that incumbent insurers lack the culture, leadership, resources, strategy and people to survive, never mind grow.
First a word or two from the Financial Times.
"Disrupting a highly regulated and conservative industry was never going to be easy. Insurtech companies have attracted much less investment than peers targeting other parts of the financial sector. But the pandemic has accelerated digitisation. Large sums are being pumped into would-be insurgents. .....
London-based insurtech Tractable, which secured unicorn status in June, uses ‘computer vision’ — a type of AI that trains computers to interpret the visual world — to perform ultrafast assessments of photos of car damage. San Francisco-based start-up Kettle uses deep learning and AI to better identify risks related to climate change. For the 2020 California wildfire season, the company claims its technology would have reduced insurers’ loss ratio — the losses to premiums earned — by 89 per cent. But there are challenges. Regulators are wary. AI-powered decisions need to be explicable. There could be unease about algorithms that make more people uninsurable, or force them to hand over more data as the price of eligibility.
Another symptom is the poor performance of many quoted US insurtech companies. The HSCM Public Insurtech Index, a basket of publicly quoted insurtech companies, has lost over a third of its value in the last year. In some cases, growth-hungry companies took on too many risky customers, too cheaply."
Read full article at "Insurtech: poor performance of pioneers will deter new money" In parallel read "What is behind insurtechs’ disappointing IPOs?" in the FT which reinforced Mark Andrew's case in "Are insurtechs really coming to eat insurers’ Christmas lunch – or are the tables turning?"
Many technology vendors and insurtechs are going to fail. Some, including those named above, have proven themselves as scalable and addressing real problems for incumbent insurers and consumers. Nothing new here- the constant flux of competition and competitive advantage weaning out losers. One of the seminal lessons from Geoffrey Moore's "Crossing the Chasm" is that founders of technology companies are often the wrong people to grow them into sustainable businesses. They never deliver complete products that address real problems and mistake interest from "Early Adopters" that are willing to try new technologies and risk failure as an indication of real market potential. They spend all their funding trying to convert these trials into real orders and run out of cash. Most fall in to the chasm never to re-appear unless acquired at bargain basement prices by successful insurtechs - or insurers.
Even those that scale up can fall into that potential trap.
Let's draw on the fable of the "Emperor without any clothes".
"In the great city where he lived, life was always gay. Every day many strangers came to town, and among them one day came two swindlers. They let it be known they were weavers, and they said they could weave the most magnificent fabrics imaginable. Not only were their colors and patterns uncommonly fine, but clothes made of this cloth had a wonderful way of becoming invisible to anyone who was unfit for his office, or who was unusually stupid. "
The Hans Christian Anderson Centre
The Emperor was persuaded to spend massive amounts content with reports from his officials that the weavers were producing these magnificent and inventive clothes. In fact they were doing nothing of the sort and spending the money on themselves. The officials could not see any cloth but did not want to admit to being stupid.
So they invited the Emperor to the final demo and he could see nothing! But, I cannot admit to being stupid so he accepted the non-existent clothes were magnificent, paid up the full amount owed and changing into his new outfits went parading in the streets to show of his new outfits.
All the populace cheered- they saw nothing but a naked Emperor but didn't every sound person say they were magnificent? Must be until a young boy spotted the truth as than parade passed .
"But he hasn't got anything on," a little child said.
"Did you ever hear such innocent prattle?" said its father. And one person whispered to another what the child had said, "He hasn't anything on. A child says he hasn't anything on."
"But he hasn't got anything on!" the whole town cried out at last.
The Emperor shivered, for he suspected they were right. But he thought, "This procession has got to go on." So he walked more proudly than ever, as his noblemen held high the train that wasn't there at all.
How many full-stack insurtechs are like the Emperor? How many insurtech partners seeking new investment and new customers like the weavers?
Barry Rabkin posts critical content on this topic one of which is "The Emperor Still Has No Clothes (Insurers Who Believe in VC-Driven Industry Disruption Are The Emperor)".
The sliver lining in the insurtech partner scene
I have bought and sold technology and have come across my fair share of technology weavers but also a good number of competent and innovative partners. So the truth is there is much hype and there are partners that have proven they address real requirements, future needs and are in there for the long term. They are scalable and will deliver. It is just a matter of finding out the right ones.
Andre Symes offers an interesting anecdote labelling the technology weavers as thinking themselves as the Formula One of the insurance world when they were more like the struggling teams.
“The insurtech sector keeps surprising us year on year,” noted Andre Symes ( co-CEO of the insurance software solutions provider Genasys in a recent IB Talk podcast. For while every year it is predicted that the bubble is going to slow down, in 2021 the sector broke numerous funding records - heading into 2022 having raised more than $10 billion in funding, up from $7 billion the year before. Therefore, it seems fair to say that the outlook is looking very optimistic for those people looking to use scalable technology to improve the insurance world.
Touching on the key successes and failures that the insurtech market yielded last year, he noted that perhaps the greatest success seen in the space was the realisation of its true purpose. Previously, he said, it seemed like a lot of the insurtech industry in-crowd thought of themselves as the ‘Formula One’ of the insurance world. While that may be the case, a lot of the investment was going into technologies that couldn’t be utilised at scale. So Symes believes the biggest win of 2021 was the growing understanding of the need to pull back slightly and not to innovate for the sake of innovation, but rather to see what innovation could be taken to the market at scale.
Mia Wallace Insurance Business UK full article at Insurtechs in 2022 – the challenges and opportunities
Symes continues: -
"Looking at what the next 12 months are likely to bring to the insurtech table, Symes highlighted that technology is continuing to accelerate at an exponential rate, which will lead to reductions in the cost of technology. His prediction for 2022 is that as technology costs reduce, more people will start adopting technology to improve their business. His use of the word ‘improve’ rather than transform is important to note, he said, as technology doesn’t transform businesses, it should just improve what they are already."
There are proven and scalable products that incumbent insurers have and are adopting to improve their business and not just survive but grow.
I have described typical examples in earlier articles like these: (not an exhaustive list )
Traditional core insurance platforms Guidewire, Duck Creek, Majesco, ICE, Pega, Innovation Group and so on. Good on breadth of functionality but sometimes lacking in specifics e.g., claim management. And traditionally involving Capex and high annual licensing costs though that is changing.
SaaS and Micro-service architecture core platforms EIS, Genasys, Duck Creek
Quote & Buy, MTA & Renewal Platforms like Go-Insur, HUGHUB, iptiQ that enable an insurer to allow a customer to interactively manage all their policies from one dashboard
Digital Claims Platforms Synergy Cloud, RightIndem, Snapsheet, ClaimsGenius, Salesforce Industries, Five Sigma, etc
Ecosystems Providers incl. telematics data exchanges: Verisk, CoreLogic, Lexis Nexis Risk Solutions, Mitchell International, CCC Intelligent Solutions and Arity
Point Solutions Tractable, Audatex/Solera, Shift, Friss Sprout.ai, Solera and many others
Telematics Service Providers: Movingdots, Octo, IMS, True Motion, Cambridge Mobile, Vitality Drive and The Floow
Shared Mobility Systems: Uber, Lyft, Enterprise CarShare, Zipcar, Car2go, GIG, Turo, Getaround
Combined claims services and technology providers Crawford & Company, Sedgwick, Davies Group, Claims Consortium Group. Control€xpert etc.
No-Code/Low-Code app building platforms from Unqork, Netcall…
Embedded insurance Wrisk, Qover, Wakam etc
Caveats- the longer term trends that could turn the tables e.g. Di-Fi
Never say never!
In his fabulous 1926 novel, The Sun Also Rises, Ernest Hemingway famously wrote that bankruptcy happens in two ways: “gradually and then suddenly”. Or as Bill Gates said " We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction."
There are massive tectonic plates of innovation shifting under the current exterior crust of change. Web3, smart contracts and blockchain, NFTs. Mutualisation of risk combined with Captive Insurance.
Decentralised Finance (DeFi)—and it is booming. From less than $10bn in early 2020, some $100bn-worth of tokens are now locked up in financial smart contracts for use on decentralised exchanges or deposited to earn yields. Demand for DeFi apps is driving up usage of the Ethereum blockchain. It settled $116bn-worth of transactions in early 2020, but that boomed to $2.5trn-worth in the second quarter of 2021, including payments and transactions to facilitate trading and lending. (Visa, a payments giant, settled about the same amount in the same period; Nasdaq, a stock exchange, traded six times as much.
DeFi may begin to merge with conventional finance. Assets typically handled by the financial system—houses, shares and bonds—might find their way onto a blockchain system. Previous attempts to do this using “enterprise blockchains” (run by a single institution) offered some efficiency gains, but missed out on many of the benefits of decentralisation, such as interoperability and transparency. By exploring ways to move assets such as shares onto an open-blockchain system, and to ensure that real-world outcomes can be enforced, DeFi could become more useful for all. (3)
See DeFi is now the arena where the most exciting innovation is occurring The World Ahead 2022 published by The Economist
This is where new business and insurance models will emerge and whilst incumbent insurers can be a part of that change they need to be engaged now. If not it leaves the opportunity for new players and that may well be where the current digital giants stride onto the pitch.
And whilst we looked at the vulnerability of Lemonade, Metromile, Hippo and Root it is not long ago that people said the same of Amazon. "Will they ever make money?"
These full stack insurers survive as much by the risk taking if reinsurers which themselves are investing in insurtechs. If the end goal and outcomes meet expectations the reinsurers just may let Lemonade et al reach their true global potential. On the other hand the top quartile of incumbent carriers are able to stop that by innovating across products, customer UX, services and ecosystems. Or, as I have said, buy up the insurtechs at bargain basement prices just like over-flamboyant and over-funded eCommerce Companies collapsed and provided software and hardware at knock-down prices after the Dot.com collapse.
There is a danger that section six is ignored by incumbent carriers too engrossed in current barriers to new entrants and disconnected to new perceptions, expectations and behaviours of new buyers. Cole Sirucek captures this well.
"The disconnect between current insurance experiences and consumer expectations is most pronounced among insurer’s core demographics — GenX, GenY, and GenZ. Millennials (Gen Y) represent the most underinsured generation and are set to overtake baby boomers as the insurers’ biggest customer base. While this generation expects instant, personalised services, industry data suggests that they are not receiving this from their insurers. Despite the highly manual distribution processes endemic in the insurance industry, the products themselves are generic. Perhaps this explains why Gallup concluded that 69% of millennials are fully disengaged or indifferent to their insurer." 
Nevertheless- if the leadership, vision, strategies, resourcing and powers of execution are top class incumbent carriers, or at least the top quartile and possible second quartile in the McKinsey power curve examined in section three, can stay as modern, competitive incumbents.
References and further reading
3) DeFi is now the arena where the most exciting innovation is occurring The World Ahead 2022
5) Digital Maturity of UK Carriers by Altus DigitalBar
6) Market Intelligence on Global Insurtechs by Sonr.Global
While many believe that technological disruption has been rampant for decades, the internet has actually caused much less creative destruction than people think. An analysis of the Fortune 500 and the Global 500, in fact, reveals that most sectors have been surprisingly stable over the past 25 years. Very few firms on those lists today were launched after 1995. What else is misunderstood? The best response to disrupters. The default is to fight back with a new digital unit or a transformation. But there are three other viable strategies: doubling down on your existing strengths (as Disney did); retrenching to ensure your survival (as banks are doing); and moving into new opportunities (as Fuji did). Each strategy has benefits and risks, and your circumstances determine which one you should pursue.