Wounded Unicorns Don’t Mean the End of Disruption

The fact that one disruptor may have failed to hold its enterprise valuation doesn’t mean that disruption isn’t coming.

(Image credit Dollar Photo Club.) 

Some of the insurance industry is enjoying a brief moment of schadenfreude as the WSJ reports that Zenefits, one of the disruptive “unicorn” start-ups threatening traditional channels in the insurance market, had its valuation reduced significantly by a major institutional investor.

It turns out that hitting aggressive revenue growth targets demanded by tech investors in a slow-moving market like employee benefits may be harder than it looks. But this does not mean that the general value proposition of making it easier to buy and manage employee benefits is not attractive, or that customers are not clamoring for an easier way to interact with the insurance industry.

This market shift is inexorable. It may not happen as fast as the folks on Sand Hill Road want it to, but neither will it be as slow as the folks in the corner offices of insurance companies and brokerages would like to believe.

(Related: What Does the Failure of Google Glass Mean for Insurance Innovation?)

Anyone who doesn’t believe that should look at personal lines. It won’t be the whole market, and it won’t be tomorrow. But small business owners bank online, buy supplies online, and recruit online. They have been bombarded with billions of dollars of advertising telling them to buy their personal auto insurance online, and the government is now telling them people can buy personal health insurance online.

The fact that one disruptor may have failed to hold its enterprise valuation doesn’t mean that disruption isn’t coming.

Matthew Josefowicz // Matthew Josefowicz is the President and CEO of Novarica. He is an expert on insurance and financial services technology, with two decades of experience advising CIOs on IT strategy and solutions. He has written more than 100 reports on insurance technology issues and is the lead moderator of the Novarica Insurance Technology Research Council. Prior to launching Novarica in 2007, he founded and led the global insurance group at analyst firm Celent and worked at D. E. Shaw & Co., LP. He holds a BA magna cum laude in Classics from Brown University. He can be reached directly at mj@novarica.com.

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