Rostock, 28 March 2024: The growth of the InsurTech sector over the past ten years has been impressive. But as the market volume increases, so does the competition. A look at Germany shows that only a few companies have benefited from the economic growth so far.
The status quo - Germany is no longer the European champion
The German InsurTech sector is actually on the right track. Although InsurTechs have grown steadily in recent years, the number of companies is falling again, according to a report by Capgemini. The historically low startup rate of just four companies in 2022 is striking, compared to 35 in the previous two years.
When comparing the total number of InsurTechs and investments, Germany ranks third behind the UK and France. Germany also misses out on pole position in terms of InsurTech unicorns. According to the InsurLab report, large amounts of investment are flowing into German InsurTechs, but these are limited to a few companies.
Competition is growing
Berlin-based WeFox, for example, has been able to secure a large amount of funding over the past few years and has achieved unicorn status. Clark and GetSafe, on the other hand, are established management and comparison tools. As one of the few risk carriers, Element Insurance AG can operate in all EU countries and is an independent insurance company with no group affiliation restrictions.
Most German InsurTechs focus on distribution within the insurance value chain. As enablers, they target established insurers with their products and services. Tools for digitalisation or automation as well as data analysis and the integration of AI are popular.
Many German InsurTechs are therefore in direct competition with each other. If you want to be successful, you need to diversify your offering. Trends such as the digitalisation of the customer interface could be the key. Insurance companies need to be accessible on all channels. Ideally, communication should take place in real time to meet customers' needs.
The customer journey of the future
This paves the way for innovative business models. Embedded insurance is an emerging area. According to the study "Europe Embedded Insurance Business and Investment Opportunities", the market in Europe alone is expected to grow by 19.4% per year to USD 28.5 billion by 2029. The Rostock-based insurtech underscores the potential of embedded insurance with its successful EUR 10 million funding round last year.
While a few years ago the focus was on the digitalisation of insurance products, today it is important to be an "invisible insurer" wherever the customer buys. InsurTechs such as hepster have recognised that consumers do not want to deal with insurance policies. Many customers want to insure individual products as they choose, without having to deal directly with the providers. Embedded insurance would then be seamlessly integrated into the customer journey - and the customer would have nothing to worry about.
Christian Range, CEO and co-founder of hepster, emphasises the focus on the customer experience: "The need for more customer centricity, loyalty and increasing customer retention is palpable. The market is constantly changing in this respect and is an important indicator of whether the industry can grow and develop sustainably with the right focus".