We are happy to announce the launch of our first InsurTech Radar on France covering 131 active insurance related and technology driven startups (cliquez ici pour voir la version française). The report provides a snapshot of the current status of InsurTech in France and assesses its future potential. The InsurTech Radar France is a joint effort between me / Policen Direkt and Oliver Wyman (Dietmar, Matthieu, and Damien).
The French startup scene has seen tremendous growth over the last years. And it has a strong promotor: Emmanuel Macron is fostering the French startup ecosystem. La French Tech and Finance Innovation are doing a great job at promoting entrepreneurship in France.
Paris has developed into a major European hub for entrepreneurs. Station F claims to be the largest startup campus worldwide and sets benchmarks. It is certainly one of the hottest startup clusters that we have seen so far.
Better funding opportunities for InsurTechs in France have also contributed to this development. Early stage investors like astorya.vc, Blackfin and Truffle Capital are actively looking into InsurTech now. Many French insurers are also seeking investment and cooperation opportunities with startups.
So, it does not come as a surprise that InsurTech has become big in France. Considering that the French InsurTech market kicked off later than other European markets (e.g. UK and Germany – see our InsurTech Radar Germany), it is impressive to see how quickly it has caught up.
Early InsurTech role models in France are surely Alan and Shift Technologies. But our Radar shows that there is more to it: We observed 131 InsurTechs in France with 19 different business model categories across the insurance value chain (Proposition, Distribution, Operations). We applied the well tested methodology and assessed the level of activity, market potential and chances of success for every business model in France. We also included comparisons to our Global InsurTech Radar. Findings include:
- Proposition attracted 12% of the French InsurTechs (vs. 19% globally), 42% are Distribution business models (vs. 42% globally) and 46% are Operations models (vs. 39% globally).
- The trend towards new (P&C) full stack carriers (Low Cost) is not yet visible in France. Is this because French insurance customers are particularly difficult to convert for InsurTechs and like to stick with their traditional insurers?
- Community-based (P2P) proposition business models are quite popular. This is likely to level off in the next years as recent market exits already indicate (see InsPeer).
- As in other markets, there is a strong focus on distribution models.
- Despite the usually high costs involved in building up an end customer brand and building up economically viable online customer acquisition channels D2C is strong in France. Interestingly, long term savings and retirement planning are quite common in D2C – something we did not see in other markets.
- Price Comparison Websites (PCW) are also very popular in France – even without taking into account established generalist comparison sites like Le Lynx, Les Furets, Hyperassur, Assurland (which we did not count as InsurTechs).
- Compared to e.g. Germany the number of digital B2C brokers is fairly small.
- Life Digitizer models with a direct link to insurance are a French specialty. It will be very interesting to observe how these models do in practice and if they can become role models for other markets.
- Operation tech plays are strong in France – Digital Sales Enabling, Service & Admin and Claims are very popular business model categories in France. It seems that French InsurTechs are in a cooperation mode with established players and avoided the rather confrontational tone of InsurTechs in other markets (before they switched to cooperation mode as well – see wefox).
We also observed some fairly white spaces which might generate new opportunities for startups:
- Corporate Platforms, for example, are nonexistent yet. One of the reasons might be the overall still low level of digitalization of SME in France making a market entry trickier than e.g. in the US.
- From Insured to Protected, Risk Partner, and Digital Risks are also business models with upside potential for new entrants in future.
In line with the generally observable startup shake out pattern, we expect that some of the InsurTechs we caught on the Radar will go out of business over the next 1-2 years. However, we anticipate that despite this the total number of insurance startups in France will continue to grow. As in other InsurTech markets globally, we will witness pivots in business models towards more attractive business models as well as a second wave of InsurTechs which will tackle the more complex but also more rewarding opportunities, some of which have not been addressed yet. European expansion might also become a theme.
So, watch out for French InsurTechs – they are here to stay!
Article by: Dr. Nikolai Doerdrechter