Insurtech companies have relied heavily on reinsurers to support their growth, but profitability concerns are beginning to put pressure on these relationships.
Insurtech companies are growing quickly. But growth — including the move to become licensed insurers — comes with greater regulatory scrutiny and capital requirements.
In order to comply, insurtech companies are relying heavily on reinsurance, essentially insurance for insurance companies, by transferring the risk of a high proportion of their premiums to incumbent reinsurers like Munich Re or Swiss Re. With this approach, insurtech companies receive a commission from the reinsurer, can reduce their exposure to claim payments, and reduce the level of capital reserves that they legally need to set aside.
Want to see more research? Join a demo of the CB Insights platform.
If you’re already a customer, log in here.
