Since starting Bungalow a little over a year ago we’ve met with a host of insurance companies, investors and other financial services professionals. In all these meetings, there’s one comment that we hear over and over again:

“We see all kinds of fintech¬†entrepreneurs, but where are all the insurance startups?”


While there are definitely some notable startups in the insurance space (Coverhound, Zenefits, Policy Genius, Abaris), it definitely is rare to find another entrepreneur working in insurance. Others have noticed this issue as well.

To confirm the idea that insurance has really been left behind, we took a look at AngelList to see the number of US startups in insurance versus those in fintech, a sector that’s attracted a lot of capital and attention recently.

FinTech startups vs Insurance startups

As seen above, it certainly appears that insurance has continued to lag behind fintech. Given the similarities in these industries (data-heavy, regulated, slow-moving), it’s worth considering why that is.

Hers’s our take on a couple of the primary reasons for the disparity:

1. Lack of youth in the insurance industry

It’s easiest to start a company in an industry you know a lot about (whether this is desirable is another question) which is why founders often leave their companies to start something similar, or at least in a similar industry. In insurance, where the average employee is 59(!) years old, there are just a lot fewer young entrepreneurial-minded people looking to break out on their own. Contrast this with the banking industry, which sucks up every Ivy League educated human it can get its hands on, and you can begin to see why fintech has a lot more new ideas and entrepreneurs.

2. Brutal Regulation

Most people would agree that both financial services and insurance are heavily regulated. But it’s not until you work in the industry that you really see the how much worse insurance is. Whereas the financial services industry is regulated at the federal level (SEC, etc.), insurance is regulated by individual states, meaning that a startup has to navigate different rules, requirements and personalities for every state it wants to operate in. The cost to just get licensed in each state (literally a rubber stamp) can easily make up the majority of a startup’s capital base.

Beyond these reasons, it’s also a simple fact that the insurance startup ecosystem remains very much in its infancy. Useful data is still extremely hard to find or extremely expensive; Insurance companies lack the processes to deal with new ideas; Venture capitalists are still wrapping their heads around the industry, and on and on.

We expect that as early innovators solve some of the most vexing challenges (consumer engagement, product simplification, unlocking data) and bring new talent into the industry, more and more startups will follow. And no matter how great the challenges, there is no doubt that a $2 trillion industry that still sells over 90% of its product in person has more than enough opportunity.