Insurtech Industry

Direct Answer

Insurtech companies use software, data and direct digital sales to underwrite and distribute insurance, often in auto, home, health and small business lines. Many are young and judged on loss ratios, growth and path to profit.

Industry Overview

Insurtech sits within the financials sector. The first numbers to compare across companies here are gross written premium, loss ratio and combined ratio and policies in force. The outside forces that move them are listed under Primary Macro Drivers.

Key Industry Metrics

• Gross written premium: Total premiums written in a period, before sharing with reinsurers. It shows growth, though rapid expansion may come from underpricing risk.
• Loss ratio and combined ratio: Claims as a share of premiums, and the combined ratio adds expenses. A combined ratio above 100 percent means an underwriting loss that investment income must offset.
• Policies in force: Number of active contracts. It shows the customer base, and is more useful with retention and premium per policy, so growth is not just cheap discounts.
• Customer acquisition cost: Marketing and sales spending per new policyholder. Compare it with lifetime premium and retention, since high costs can take years to recover.
• Reinsurance share: Share of premiums passed to reinsurers. A high share lowers volatility and capital needs, but also lowers retained profit and can mask weak underwriting.

Primary Macro Drivers

• Underwriting data advantages: Data models and automated underwriting can price risk more finely, lowering loss ratio relative to rivals if they work. Watch loss ratio and combined ratio.
• Reinsurance costs: Reinsurance cost sets how much risk can be kept and the margin on each policy, shown in reinsurance share and the combined ratio.
• Interest rates on float: Premium float is invested, so higher yields add income that offsets thin underwriting margins, though it is secondary to underwriting results.
• Customer acquisition channels: Online ads, partners and embedded sales channels decide how cheaply policies are won, shown in customer acquisition cost and policies in force.

Major Risks

• Catastrophe and claims volatility: A storm year or a rise in claim costs can wipe out a small book that lacks spread. Watch loss ratio, combined ratio and catastrophe exposure.
• Reinsurance dependence: If reinsurers cut capacity or raise prices, the carrier must retain more risk or shrink. Watch reinsurance share and renewal terms.
• Cash burn: Growth funded by outside capital stops when funding dries up, if underwriting losses continue. Watch cash and the path to profit.
• Regulatory rate approval: Regulators must approve rates in many states, so price changes lag cost increases. Watch rate filings and the loss ratio against filed rates.

Industry Characteristics

Companies Associated with Insurtech

The SEC's Standard Industrial Classification has no code that describes insurtech as a group, so there is no complete list of its filers. The companies below come from Swoopr's SEC dataset and have operations in or next to the industry. Each is classified by the SEC under its own main business.

Source: each company's own annual report as filed with the SEC (XBRL data), figures in U.S. dollars. Listing here describes a business relationship to the industry, not a recommendation. To find more companies, use the company directory and the financials hub.

Where to Go Next

The Insurtech guide describes how the industry earns money, what to measure and what can go wrong. To see how it compares, read the neighbouring industries in the same sector, then apply the same checks to a specific company.

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