5 Trends That Shaped The Insurance Industry in 2021

By Matteo Pisani Published on Jan. 13, 2022

With 2021 coming to an end and the start of a new year, we at Plug and Play, one of the most active early-stage investors worldwide, have identified the five most prominent trends that shaped the insurance industry in the last year and what we can expect from 2022 and beyond.

Distribution Tech and APIs Ability

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Within the industry, you may have heard many times “insurers are dying for distribution” and that they are looking for new alternative ways to embed their products within more customer-facing channels. It’s fairly known that insurers cannot boast a frequent relationship with customers and policyholders. Insurance is increasingly becoming an offering that is frequently embedded as part of another transaction.

For most of the products in the market, distribution is actually becoming more hybrid every day. Customers are sometimes researching online and then purchasing offline, or the other way around; these are trends of the hybrid distribution that define the new needs of customers and are not exclusively insurance-related.

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Connected with the front-end automation topic, which also involves the enablement of new distribution channels through API capabilities, we have the relatively new wave of distribution tech. We say “relatively new” because the distribution tech trend has been around for many years; in Europe, especially new MGAs who target specific business lines, with better capabilities of what insurers have to offer, have been entering the insurance market already for some time. In fact, the COVID-19 pandemic gave a further boost to solutions in the distribution space to be again under the spotlight of incumbents.

Startups such as Penni.io, Weecover and Nucliclore are helping our clients in insurance to implement standardized APIs to embed insurance within new distribution channels.

At the same time, alternative distribution channels solutions, such as ZenOwn have been approached by insurers to leverage their channel to sell insurance to end customers.

Customer Insights

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The poor leverage of data at scale is a well-known problem within the insurance industry. Incumbents are failing in the digitalization strategy because they are not capable of leveraging the amount of transactional data (structured and unstructured) that are recorded in their systems. Information is often stored in different silos that do not communicate and interact with each other; this results in inadequate data management that is strongly limiting the capabilities of AI solutions.

The mix between a low customer interaction, which reflects the nature of the insurance business and a lack of ability to use the high amount of data collected over time, result in a very limited understanding of customer needs (ex. Missing on cross-sell/upsell opportunities).

Zelros, a portfolio startup of Plug and Play, for instance, helps insurers get better insights on customer needs and provide the best advice regarding policies’ content.


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Climate change phenomena and new regulations have grabbed the attention of insurers as well. Insurers could be indeed at the forefront of the climate revolution because of their position as risk-takers. Insurers are forced, as market risk-takers, to contribute to the green transition that the world has to face; one way to do so is by fostering prevention activities and tools that can avoid or mostly prevent catastrophic events and their natural consequences. At Plug and Play we have explored sustainability insurance from many angles:

  • Footprint measurement and reduction: Measuring how many tons of carbon dioxide is emitted per year per business by making an assessment based on three different scopes. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company's value chain. Plan A is one of the startups in our Batch that is currently engaging with our partners in insurance to address this topic.
  • ESG, Sustainable and impact investment: ESG is an evaluation of a firm’s collective conscientiousness for social and environmental factors. In the last 20 years, the ESG movement has grown from a corporate social responsibility initiative promoted by the United Nations to a global phenomenon. Insurance firms that were proactive in inglobating sustainability issues in the 2000s are now considered the leaders, whereas firms that are only superficially engaged will either be forced to comply or face negative financial and brand consequences. Clarity AI has been working with Manaos (tech subsidiary of BNP) to get insights to facilitate the production of analytics and regulatory reports with sustainability insights and services.
  • Climate risk assessment: this involves on one hand prevention of economic costs and financial losses from the increasing severity and frequency of extreme climate change-related events; and on the other hand to avoid negative financial impact e.g. reduced economic activity, lower income, savings and increased stress on financial assets and markets.

Insurers want to achieve these results by Incorporating climate impact data on acute (floods, fire, heat, drought, cold, wind, and hail) and chronic (rising temperatures, expansion of tropical pests and diseases into temperate zones and an accelerating loss of biodiversity) physical climate risk into risk modeling.

One of our portfolio startups, Zesty.ai, is working together with MetLife to profitably underwrite properties on the US west coast.

SMEs Insurance

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SMEs make up the vast majority of businesses worldwide, for example, enterprises employing fewer than 250 people represent around 99% of all businesses in the EU. In fact, their access to insurance is limited and their spectrum of product choices always looks limited. The current European SME insurance market is tedious, non-transparent and offline.

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One of SMEs insurance is definitely a transversal topic that touches upon multiple business lines of the business. When investigating this trend with our partners, we have identified multiple areas that could develop new offerings around the SMEs space: to attract new clients and to prevent risks for existing policyholders and potential new ones.

The areas we have analyzed together with our partners are the following:

Eventually, we have identified three key areas that can be considered horizontal within insurance:

The Back-End and Front-End Automation

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The COVID-19 Pandemic has heavily affected the way organizations work globally and insurers were undoubtedly not excluded by these new trends. Enterprise tech has represented a key topic for the carriers who had to face a new phase of remote collaboration with their clients as well as with their intermediaries. We have seen an increasing interest in different types of automation solutions that range from back-end automation to front-end automation.

With back-end automation, we mean all the solutions that are needed to implement smoother internal processes; most of the time this practice refers to the automation of repetitive tasks by leveraging IPA or RPA solutions, which consequently free up workers from some of their daily responsibilities. Startups such as Hypatos or Automation Hero have been at the forefront of this automation revolution, enabling our partners to move towards a more paperless working routine.

When we talk about front-end automation, we refer to all the processes and actions that are needed to simplify and digitize the customer experience and the work of agents and brokers Flexperto for instance, has been heavily engaging with our corporates by helping them to digitize their 1-1 sales and services without losing the personal contact to their clients. These types of solutions are paving the way for an omnichannel presence of insurers.

What To Expect in the Insurance Industry: 2022 and Beyond


The pace of change has accelerated thanks to tremendous increases in the volume of electronic data, the ubiquity of mobile interfaces and the growing power of artificial intelligence.

Traditional industry borders fall away and the future of insurance stands to be greatly influenced by platforms and ecosystems, which is an interconnected set of services that allows users to fulfill a variety of needs in one integrated experience.

Currently, insurers act primarily as risk aggregators. They have a passive and limited relationship with customers, which increases their exposure to disintermediation. For all these reasons, insurers are heavily interested in the ecosystem propositions and they can play multiple roles in it.

The role of insurers within an ecosystem could be multiple; nevertheless, to succeed in ecosystems, insurers will have to take a hard look at their traditional roles and business models and evaluate opportunities to partner with players in other industries (Telcos, Banks, Cloud service providers, etc.).

The ecosystem services are structured as modular propositions; thereby the provider of a specific offering within the ecosystem is also capable of embedding the same service into another chain, adding value to multiple ecosystems. Consumer ecosystems that are currently emerging around the world tend to concentrate on needs such as travel, healthcare or housing.

A proposition that looks attractive to develop digital ecosystem offerings, is Etvas, a B2B2C platform for add-on services that add value to insurers' products and optimize customer touchpoints to achieve better monetization and customer retention.

However, despite the massive opportunity that ecosystems could bring, oftentimes incumbents show that they are not ready to surf this new wave of innovation. Their legacy systems may have a difficult time adapting to this new concept.

To offer solutions on how incumbents can embrace the new change, three startups, Tech11, Instanda and Socotra presented their pitches at an event hosted by Plug and Play focused on “adapting your core systems to play a role in the new ecosystem scene.” We encourage insurers looking to build and enable successful ecosystems to embrace such technologies and work towards a key differentiating factor within the industry.

Innovation in insurance is happening.To stay up to date on the latest health and insurance technology startups,join the Plug and Play Platform. Our Insurtech program in Munich runs twice a year boosting our startups through corporate business development, networking and pitch events, world-class mentorship, and the potential for investment.