Insurtech Industry

•  Insurtech companies are technology-focused organizations who offer insurance products and services, and leverage new technologies (e.g., micro insurance, peer-to-peer insurance, artificial intelligence, blockchain, robo-advisory, IOT) to deliver innovation in the space.
• A 2017 McKinsey study noted that 75% of insurtech companies focused on the retail sector, with targeting toward younger segments via online and mobile channels.
•  Value drivers in the industry include 'growth' (increasing customer experience, upselling, and cross-selling), and expense reduction. Increasing the customer experience was cited by 22% of insurtech companies as part of their value proposition, while 22% of insurtech companies said their value proposition was based on a reduced acquisition cost.
•  Investment in Insurtech companies was estimated at $2.6 billion in 2016, and projected to be $5 billion in 2019.
• A Grandview industry analysis estimated the size of the global insurtech industry at $1.5 billion, with a 43 percent CAGR between 2019 and 2025. North America dominates the global insurtech market, due to the presence of technology providers in this region, as well as demand for fintech solutions.
• Insurtech is still a relatively small fraction (~.2%) of the entire insurance industry, which is estimated at $1.2 trillion in 2019.

Advertising/Marketing

• A Duke University study found that companies with less than $25MM in revenue spend 11% of their revenue in marketing. A rule of thumb for fintech is suggested at 10% of revenue.
• Deloitte found that tech software spent 15% of their revenue in advertising, while insurance companies spent 8% of their revenue on marketing.
• A Gartner group survey found that 21% of the overall budget is spent on advertising, with 2/3 of this budget focused on digital channels.
• Based on this information, we can make an assumption that insurtech companies likely spend around 10% of their revenue on marketing. Assuming a global market size of $2.2 billion in 2019 ($1.5 billion in 2018 X 1.43 CAGR), we would estimate that approximately $220 million is spent on marketing in the insurtech industry.
• An increase in customer acquisition via social media is projected by Grandview.

Consumer Purchasing Insights

• In 2018, between 30-35% of insurance customers were willing to purchase from an insurtech company, nearly double that of 2015 (15-20%).
• BIMA sold more than 30 million policies since its inception in 2010, as of this study in 2018. This translates to 3.3 million policies per year (30 million/9 years). Their revenue is estimated at $11.5 million, which is .5% share of the market, assuming $2.2 billion market size in 2019.
• Applying a .5% share to 3.3 million policies, we estimate a total of 66 million policies (3.3 million/.005) for the insurtech market (globally). This number could potentially be somewhat understated, if we assume the growth of the market between 2010 and 2018.

Conversion Insights

• Conversion rates for eCommerce are 2.63% in the United States. B2B conversion rates for professional or financial services average 1.0%. The average Facebook conversion rate for tech is 3.2% and for financial services is 9.09%.
• Given that insurtech appears to leverage digital in its marketing and offers a tech-based product, it may be reasonable to assume that, depending on the source of the lead, conversion rates between 1-3%. A conservative estimate, based on lead generation for life insurance, may even be lower, at .4%.

Lead Generation Insights

• Some insurtechs operate primarily as lead generation providers and lead generation plays a key role in distribution in this industry.

•  Platforms for lead generation in the insurtech industry offer ways for insurtech companies to drive awareness and showcase their solutions.
• This "Disruptive Finance" article indicates lead generation for fintech startups may cost between $50-$100 per lead.
• This insurance industry resource indicates that lead generation in the insurance industry may cost between $20-$50 per lead. It may be reasonable to assume that technology-enabled lead generation and digital focus of insurtech companies would place cost/lead for these companies on the lower end of this scale.

Summary of Early Research Relevant To The Goals

• In this additional hour of research, we were able to provide some insights surrounding the key statistics for the insurtech industry, including market size and growth. The other statistics were not publicly available, though we provided some general insights and information (derived, based on assumptions provided above), to provide an indication of marketing spend, costs associated with lead generation, potential conversion rates, and policy growth (as well as number of policies).
• We leveraged information from related industries when not available specifically for insurtech (fintech, insurance, tech/software, and eCommerce).
• The information we uncovered was generally related to the global market, and therefore, we recommend further research focus more broadly than the US market.