2020 has seen several landmark IPOs in the insurtech space: neo-carriers Lemonade and Root both had very successful public market debuts. Duck Creek -- a cloud-based policy administration software vendor -- has traded well since its IPO in August.

While the valuation multiples look frothy, the strong performance of these offerings provides support to all players in the ecosystem. As well as providing handsome returns for early investors and employees, public market investors have sent a clear signal to the next wave of start-ups to show that they are believers in the insurtech story. 

The high valuations of Lemonade and Root compared to the pedestrian trading multiples of incumbent insurers offer a clear message: The market believes the insurance industry will experience digital transformation in the next decade -- with or without the incumbent players. The banking sector prevailed against startup online banks 15 years ago. Incumbent insurers has strong advantages: brand, distribution, capital, and know-how. But are they able to transform themselves? If not, expect more disruptors accessing the public markets for growth capital.