Insurtechs Offering Life Insurance See Boost In Sales During Pandemic

During the height of the COVID-19 pandemic, many fintech companies saw a boost in usage as people were forced to work and play at home.

However, not all companies were so lucky: Some startups saw their stocks fall over 50 percent after the virus outbreak, with private fintechs experiencing a loss in funding, a drop in usage, and a slash in valuations. Insurance fintechs (insurtechs), for example, saw fundraising fall by 54 percent during the first quarter of 2020 as a result of the crisis, compared to a record high in Q1 of last year.

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Fortunately, data shows that life insurance application activity in May rose 5.2 percent year-over-year—after activity decreased 2.2 percent YOY in March and fell 2 percent in April.

“There absolutely has been a significant uptick” in demand for life insurance and annuities, explained John Yackel, Envestnet’s head of strategic initiatives.

Many are taking a closer look at insurtech. While the traditional process for finding and applying for insurance can be complicated and time-consuming, digital platforms allow for faster and more convenient options.

More than a dozen institutions have signed up for the Envestnet Insurance Exchange, a new insurance network that integrates insurance solutions into the wealth management process on the Envestnet platform. Carriers on the platform include Allianz Life, Brighthouse Financial, Global Atlantic Financial Group, Jackson National Life Insurance Company, Nationwide, and Prudential Financial—all offering a variety of variable, structured, fixed, and indexed annuities to advisors.

In addition, insurance sales from advisors on insurance technology company Covr are up 70 percent, while sales from self-directed clients, who access Covr through a bank website, are up 300 percent.

The global insurtech market revenue was valued at $5.48 billion in 2019 and is expected to reach $10.14 billion by 2025, growing at a CAGR of 10.80 percent during the 2019-2025 period. Analysts expect that VCs will once again look to fund up-and-coming insurtech startups.

“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,” said John G. Bruno, Chief Operating Officer (COO) at Aon plc and Chief Executive Officer (CEO) for Data & Analytic Services. “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.”