IE is a big fan of new thinking in the Life sector. For decades there’s been a `sell it and forget it’ attitude within insurance, which doesn’t fit people’s mobile lifestyles, blended families, or their need to make a difference with some type of virtue signalling activity. In reality, the old pay monthly Life policy with a lump sum after 25 years doesn’t cut it anymore. Digitisation will disrupt the traditional life insurance sector in 2021 as Millennials and GenX embrace financial protection and ‘embedded insurance’ products, according to Nicky Cotter, Head of FinTech M&A at technology investment bank ICON Corporate Finance.
Embedded insurance is the digital first delivery of insurance within the purchase of a product or service and is designed to enhance the customer’s buying experience. Across financial services digital disruptors enableevery company to offer online payments. With Klarna every company can offer a buy-now-pay-later solution, and with InsurTechs every company can offer Life or P&C insurance.
Blazing a trail in the sector is Anorak, the world’s smartest insurance companion, which recently secured a £5m Series A funding. ICON Corporate Finance, which facilitated the funding-round, believes that embedded insurance services will pressure established insurance providers to innovate, partner or lose out to digital disruptors of Tech, Health, Life, P&C, Pet, and financial services. It predicts an abundance of funding rounds and acquisitions as a result.
In a market where life insurance has been ‘sold’ rather than ‘bought’, Anorak enables mass market customers to receive affordable, relevant, and personalised insurance advice. With 9m UK families at risk of financial catastrophe following the loss of a breadwinner, 53% of the population without life cover, and 50% of mortgages unprotected, the pandemic has focussed desire among individuals to protect their financial future. That is where Anorak and similar InsurTech solutions are set to cash in.
The fundraise enables the expansion of both Anorak’s distribution network and its advice platform, which provides automated and ongoing assessment of users’ financial vulnerability and cover requirements throughout their life. It is currently the only platform to provide a seamless omnichannel experience that also allows users the option to speak to expert advisers.
ICON’s Nicky Cotter commented: “Technology and innovation are reshaping the future of the insurance industry and demand for tech solutions has never been higher. There are still too many ways that insurance companies are difficult to do business with so finding ways to combine digital data with analytics can deliver powerful client experiences that are personalised, predictive, and proactive – which is a gamechanger for the industry. Anorak is a prime example of this.”
David Vanek, CEO & co-founder of Anorak said: “Our regulated automated insurance advice platform can be integrated into existing partners’ eco-systems so that people can access ‘whole of market’ life insurance recommendations while using everyday services such as digital banks, online mortgage brokers, investment platforms, digital money management service and challenger banks.”
ICON expects an uptick in deal activity throughout 2021 as consumer attitudes to life insurance shift. “We are already seeing unicorns in the Life space (privately held start-up company valued at over $1 billion) and that’s set to continue,” says Nicky Cotter.
Cotter adds: “Our role is to enable InsurTech start-ups to achieve significant growth in the shortest timeframe, through funding that not only accelerates growth, but adds value, by bringing the right funding partners to the table.”
ICON used its expertise in InsurTech Software and fundraising, to introduce insurance and LifeTech software focussed VC and CVCs from across Asia, Europe and the US to Anorak’s leadership team. It positioned the company as a future global software leader in the LifeTech insurance sector. ICON supported Anorak with financial modelling, the preparation of the investment deck, and investor interaction that led to a successful investment round with Tier 1 VCs, CVCs and super angels.
Anorak’s fundraising was led by Outward VC, with Triple Point Ventures, and existing investor Kamet Ventures, formerly Axa’s incubation fund. It was backed by angel investors including Nic Kohler, former CEO of Hollard Insurance; Paul Evans, Chairman of Allianz plc and board member of BUPA and Swiss Re Europe; Charlie Delingpole, CEO and founder of ComplyAdvantage; and Will Neale, founder of Fonix and Grabyo.
Chris Dyson, Partner in the corporate team at law firm Ashfords LLP and adviser to Anorak, commented: “The InsurTech market is evolving rapidly. Anorak’s success is a great example of eagerly-anticipated innovation and the opportunity available for the best InsurTech businesses to work alongside other disruptive FinTech companies, improving customer experience and accessibility.”