I came across an article in P&C Specialist entitled, “Rot at the Top: InsurTechs’ Woes May Have Something to do With Tech Culture“. My first thought was, “That title seems a bit harsh.” My second thought was, “Oh, that should go over well with the IT departments in most insurance companies.” But it turns out the article had nothing to do with IT departments or insurance companies. Rather, it had to do with so-called insurtechs.
Insurtech, of course, is a term dreamed up as a substitute for insurance technology by people who wanted other people to think insurtech meant something other than insurance technology. It doesn’t. It never did. More specifically, insurtech is a term dreamed up as a substitute for insurance technology by people who wanted other people to think insurtech meant something other than insurance technology for the purposes of selling whatever they’d dreamed up to unsuspecting insurance companies that thought insurtech meant something other than insurance technology. The substitution was intended to produce reactions like this: “Holy shit! I better buy me some damn insurtech!”
Well, the bloom may be falling off the ruse. (No. That’s not a typo.)
Where’s the Beef?
As evidence of the fact that insurtech may be losing its shine, the P&C Specialist article notes this:
CB Insights found that investment in InsurTechs fell 53% to $8.4 billion in 2022, while the volume of deals in the market declined by 17% to 579 … Strategy Meets Action found that InsurTech investment and partnerships are leveling out this year, with 5% of insurers set to move forward on these tie-ups, the same as in 2022.
Okay. That might have been predictable. Given the number of insurtechs pouring into the market in the past several years — and given the rates of failure (I once heard it said 80 percent of insurtech market entrants fail) and consolidation — we might have expected the amount of investments being made and the number of deals being closed would diminish.
“Yeah. But I thought ….”
Maybe it’s because I’ve worked in and around the insurance industry since 1982 and have seen more stuff than I can remember come and go. But predictable became downright obvious here:
The entire InsurTech movement has been driven by people with technical and entrepreneurial mindsets who don’t have insurance backgrounds.
Those people with technical and entrepreneurial mindsets were heedless of the old maxim, “If it were easy, everyone would do it.” By and large, they were young, as yet convinced the world (or at least the insurance industry) was waiting to be re-made in their own image. They weren’t familiar with this Peter Drucker quote, “In business school classrooms they construct wonderful models of a non- world.” They didn’t know what they didn’t know. They didn’t much care. And here we are.
Since insurtech is still with us, it may only be a matter of time until we see an ad like the one below. And some insurance company may actually buy RealDeal Insurware.
I dearly hope I’m wrong.