Why insurance brokers like us have a leg up on insurtechs

While insurtechs may be trending in the news based on their tremendous valuations and self-proclaimed ability to shake up the industry, overlooking established brokerages and their impact on technology would be a mistake.

Similar to start-ups, brokerages (like us) and financial firms are providing digital solutions by creating tech-driven initiatives to meet the needs of today’s consumers. However, there’s a clear advantage that brokerages have over start-ups: deep industry knowledge and solid businesses from which to build and evolve these technology solutions.

Established insurance companies are oftentimes better suited to offer tech-driven solutions than start-ups. With many having access to more than 500 carriers in the U.S. and Canada versus less than 10 for start-ups, a strong foundation ensures stability of market placement for customers. Without that, you have little to work with, and even less to offer clients.

As one of the largest brokerages in the world, we are showcasing exactly how game changing established firms can be in the technology space. Built upon the strength of HUB International’s large, knowledgeable, and experienced roster of insurance brokers, we recently launched VIU by HUB, a digital platform offering home and auto insurance with the benefits of choice, efficiency, price transparency, and brokerage advice. This launch is a major step toward simplifying the insurance understanding and buying process as well as elevating the digital consumer experience – and it’s all the more powerful because it’s being done by a broker.

Meanwhile, the future of insurtechs remains unknown. While they may have been touted as the next best thing for the insurance industry, some companies are struggling. In some cases, stock prices have plummeted as much as 95% and large layoffs have taken place. Many companies have been acquired and their technology integrated into legacy systems at larger public companies. Others may go by the wayside.

Add to that the fact that insurtech funding is declining from its peaks. Following a record-breaking spike in Q4’21, insurtech funding fell 58% in Q1’22 to $2.2 billion, according to CB Insights. This represented a 15% year over year decline from Q1’21. Q1’22 was also the lowest quarter for funding in almost two years. Meanwhile, insurtech deals remained flat quarter-over-quarter at 143.

Insurtech funding decreases 58% QoQ from an all-time high

While this isn’t great news for insurtechs, it’s definitely not the end of the digital revolution in the insurance industry. Customers want choice and to shop for insurance the way that best fits their lifestyle. With VIU, they get both tech-based coverage and trusted risk and insurance advice from experienced brokers. To us, the advantage of a brokerage-backed digital personal insurance platform is clear.

Need an insurance partner that can help deliver timely solutions to customer challenges? Let’s find a time to talk.