Neo-Insurers Riding the Digital Wave

The convergence of technology and fluctuating consumer preferences in the insurance industry has led to a slew of neo-insurers being created: licensed insurance carriers that have begun to offer customers an end-to-end digital service to manage all their insurance-related needs.

Traditional InsurTechs may operate as a managing general agent, relying on other companies for their license and underwriting capital. This arrangement has drawbacks, including expensive fees, little autonomy in decision-making, and licensing contracts that could be terminated with little notice. As a licensed carrier, neo-insurers can write policies independently, giving them more freedom over setting prices, underwriting, and configuring policy wording.

On average, neo-insurers, like regulated insurance carriers, must maintain cash reserves equal to at least a third of revenue and require time to launch and capital to grow. The payoff, however, can be rewarding in the long run: neo-insurers can now focus on identifying customer preferences and develop products and services to meet their constantly evolving needs.

In contrast to incumbents who rely on a manual interface, ne ...

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