Is InsuraGuest Technologies Inc. (TSX.V: ISGI) the Next Insurtech Unicorn?
InsuraGuest is a pioneer in the fast-developing insurtech sector of digitized insurance products that reduce operating costs and increase customer satisfaction. The company has already launched a hospitality policy that offers hotel owners and vacation-rental operators a way to increase property revenue and decrease risk and claims profiles while protecting their guests. Now, ISGI is turning attention to other niches in the mammoth insurance marketplace; this impressive start-up could be the next Unicorn in the insurtech space.
In the same way fintech disrupted financial services, insurtech is revolutionizing the staid insurance industry. It’s an industry badly in need of disruption, with many of its practices and products outdated and change slow in coming. For example, some maritime contracts such as bottomry and respondentia date back to ancient Babylon, circa 2000 BCE, and yet were still quite common in the nineteenth century. The development of digital technologies has made the industry’s timeworn operations seem even more antiquated. But these technologies also provide ways to make insurance protection more accessible, affordable, and better tailored to individual needs.
Many corners of the insurance industry are ripe for reinvention. Some are already in upheaval, with upstart digitech insurance providers laying claim to niche after niche, sometimes with amazing results. One such provider, Lemonade, founded just five years ago, is now worth $2 billion – according to Forbes (http://nnw.fm/w2JwX) – after the company raised $300 million. The company uses behavioral economics, artificial intelligence, and chatbots to deliver renter’s and homeowner’s insurance policies at greatly reduced prices.
Another provider — Root Insurance — also targets homeowners. Root first ventured into the car insurance marketplace with a novel product that bases the policy premium on the motorist’s driving behavior. After its latest funding round in September 2019, the company was valued at $3.65 billion (http://nnw.fm/7Lyog). And Next Insurance, which offers general liability coverage to small business, is now the nation’s latest insurtech Unicorn, according to PitchBook, crossing $1 billion in valuation after reinsurance giant, Munich Re, ploughed $250 million into the start-up (http://nnw.fm/75A5j).
Munich Re’s investment in Next Insurance is not surprising. A major driver of demand for digitization has come from traditional carriers as they move to simplify transaction processes and improve customer service. These establishment insurers and brokers are turning to insurtech start-ups to help update their legacy systems and increase market responsiveness, reports a recent Boston Consulting Group (“BCG”) study. The reasons are obvious. Digitization is expected to significantly improve the insurance industry’s core business of risk measurement and management, which in turn should allow more consumers to enjoy basic insurance protections at less cost than is currently available.
InsuraGuest’s Hospitality product called Hospitality Liability offers coverages that protect hotels and vacation-rental properties, addressing covered claims from guests during their stays. The vacation-rental market looks particularly promising. In recent times, it has expanded by around 6.9%, a growth rate that tops regular hotel bookings. Market revenues are estimated to have reached $57.7 billion at the end of 2019, driven by the prodigious 115,000 vacation-rental companies operating globally, 23,000 of which are based in the United States. Undoubtedly, many of these companies will see InsuraGuest’s Hospitality Liability coverage as a way to add value to their offerings.
As insurtech continues to grow and disrupt the insurance industry, InsuraGuest Technologies has stepped into the insurtech/fintech space offering a tremendous amount of value with powerful new digital insurance products. That begs the question: could InsuraGuest Technologies be the next Unicorn to watch out for?
For more information, visit the company’s website at www.InsuraGuest.com.