InsurTech firms have been issued with a “rallying cry” for action and innovation from the COVID-19 pandemic according to a leading broker.
John Bruno, (pic) Chief Operating Officer, Aon plc and Chief Executive Officer, Data & Analytic Services, has said the opportunities the drive for greater digitalisation of the insurance process that have been driven by the fallout from the pandemic has put InsurTech at the top of the list for many investors.
However, the flip side has been the economic uncertainty caused by the virus has also given some investors pause for thought as the length and true impact of the global pandemic has yet to be accurately assessed.
“The insurance and risk management industry must embrace innovation if it is to stay relevant to clients following the dislocation created by the novel coronavirus (COVID-19) pandemic,” Mr Bruno explained. “It’s become clear that new technologies – and specifically, advances in digitalisation – represent the obvious launch pad for innovative solutions that will help our clients better manage risk and close the protection gap. As a result, InsurTech has fast moved up alongside FinTech for investors and they are flocking to start-ups in increasing numbers.”
“But could InsurTech’s march be slowed by COVID-19? Investors across all industries are in a ‘wait and see’ mode,” he cautioned. “While we expect a short-term impact on funding while investors wait for greater certainty, I don’t anticipate that COVID-19 will impact the macro growth trend for InsurTech. VC companies are drawing their credit lines down because they want the start-ups, they’re invested in to have sufficient cash to continue ‘inventing’ through the crisis. Importantly, they recognize that the crisis can potentially stimulate innovation that increases resilience and promotes recovery.
“Of course, COVID-19 is going to have an effect on the economy and on business sentiment. But it’s also an innovation rallying cry to InsurTech entrepreneurs and investors.”
Mr Bruno continued: “Notably, Aon proactively scouts for minority-owned start-ups – that represent the diversity of our technology community – to seek opportunities for proof of concepts that respond to the needs of our clients.
“The global pandemic crisis is going to trigger another digital pivot – one that will see the InsurTech space attracting renewed VC and CVC investment flows. The resulting solutions will help resolve the many dislocations created by the COVID-19 outbreak and will ultimately re-imagine how consumers and businesses interact with risk transfer solutions.”