Mitra Ferdows, a graduate of Business Management from the United States’ Loyola Marymount University and an investor in different start-ups, believes insurance (Insurtech) and financial (Fintech) start-ups have a bright future that could overhaul the age-old industries.
Mitra Ferdows is an economic expert who has worked with various start-ups as a consultant and investor for years.
“Fintech and Insurtech mean using innovative technologies to change or ameliorate and optimize processes in the current insurance and financial industry so that it would be possible to activate new business models by boosting productivity,” said Ferdows about the Fintech and Insurtech industries.
“The phrase Insurtech is comprised of two words: insurance and technology. Likewise, Fintech comes from ‘financial’ and ‘technology,’” she said.
She also weighed in on the necessity of utilizing new technologies in the insurance industry.
“Insurance is an age-old and well-established industry whose structure has remained stable in society in the past 100 years and whose business models have changed very slowly,” she said.
“However, new requirements in the 21st century such as the need to care about customers and facilitate sale processes as well as the necessity of more transparency and competition online has prompted many of old companies offering insurance services to consider changing their business models or becoming more active online,” Mitra Ferdows added.
“In other words, insurance services cannot simply be offered via agencies and online sales, and it is required that these companies also offer services associated with technology,” she noted.
“Moreover, the competitive atmosphere has led to the formation of start-ups which themselves are not necessarily the companies that sell insurance services; rather, they offer services to facilitate sales or improve the services offered by insurance companies or simply to contribute to competition and transparency on the market,” Mitra Ferdows said.
“The global Insurtech market was at $7 billion in 2019, and it is expected to target a robust growth rate from 2020 to 2025, which is very great and considerable for an emerging industry,” she said.
“This very significant growth has prompted insurance firms across the world to start considering changing their business models so that they wouldn’t fall behind when competing with start-ups. Furthermore, we are seeing investors putting huge amounts into start-ups in this domain,” she said.
As for investment in insurance start-ups, Ferdows believes the pace of investment is staggeringly high and will soon lead to the creation of unicorns or companies worth billions of dollars.
“The volume of investment on Insurtech start-ups amounted to about $ 1 billion in 2014 and increased to more than $ 4 billion by 2018, but with the outbreak of the corona pandemic worldwide in late 2019, this figure increased to an unprecedented growth of $7 billion and in 2020, which shows investors’ great interest in this industry,” she said.
“Like it or not, business models in the insurance industry are undergoing fundamental changes due to start-ups, a development which will change the nature of this industry in ten years,” she said.