Insurtech Connect 2019 – Review

By Andy Jamieson    October 1, 2019

Insurtech Connect was held in Las Vegas on 23 to 25 September 2019

Insurtech Connect, or ITC, was big. Really big. Below is a summary of my key take-outs and an industry perspective from a first-timer’s experience of ITC. I was invited through Insurtech Australia to be part of the Australian delegation, supported by Munich Re and Austrade to experience, learn and network via ITC. It was a great experience and revealed a great opportunity for our business within this ecosystem.

Quick Summary of Insurtech Connect (ITC)

  • Insurtech is a nascent industry and growing quickly. In 4 years, the ITC event has gone from a few hundred participants to over 7000 people, hundreds of exhibitions and marketplace participants
  • AI and technology to improve business processing capabilities is everywhere. This could be seen in Machine Learning applied to claims to identify possible fraud or drones with inbuilt AI to view, assesses and report on damaged property, for example
  • Product development tools, for rapid development and deployment of insurance products, are coming online reducing carriers’ development cost and increasing their speed to market and capabilities
  • Insurtech presents a significant opportunity as digital adoption, internally and with end customers is still low – the market is there, looking and wanting to evolve and improve.

 

ITC is a great conference. The Insurtech Industry is just getting started. The ways of innovation are coming, the evolution of business models is occurring at a rapid pace. In short, the market is well-placed to both adapt new innovations and capitalise on them. In addition, startups that are focusing on the insurtech industry should be encouraged to keep going and keep pushing forward. The market and opportunities that exist are sizeable.

Below are reflections on a few key sessions that I attended.

What business are we really in?

Chris Colborn, Chief Experience Officer, Lippincott

Chris posed the question of what business are we (insurance) really in? It is a good question to ponder and Chris drew upon other industries and the evolutions that have occurred within them. For example, with new iPhones, whilst their price, value and replacement costs have increased, there is actually a reduced need for insurance due to less reliance on the physical product and rather a deeper connection with the data contained within the ecosystem. The hardware can be found easily – find my iPhone, the data stored remotely through iCloud or other data services.

Chris challenged us to think whether “what the product does is valuable for the customer.

What business are we in? A “tax” or a value creation business? Insurance needs to move from a tax mentality to a value creation business – value in the mind of the customer.
Customers ultimately don’t want to have to claim on their insurance, it is a pain, takes time and work to resolve and restore the damage that has occurred. Ideally, insurance carriers need to move towards “increasing alignment to customers desires eg protection and risk mitigation and prevention and prediction.
His conclusion was most powerful, posing that we need to think about a “purpose perspective” not just product offering (traditional and transactional). Those businesses with a purpose perspective will outperform organisations that don’t by around 5x. That is huge!

 

The Insurance Industry Needs Disruption. Let’s Do It Ourselves.

Glenn Shapiro, President, Allstate Personal Lines, Allstate Insurance Company
Glenn delivered an incredible presentation. His timing, consistency, visual supports and message were all impeccable. It was a masterclass in how to deliver a keynote to a large audience.
Glenn’s underlying message is that the insurance industry is still in a “warm cocoon” and needs to be disrupted as every other industry has. In short, disruption just hasn’t yet happened within Insurance.
A key theme of Insurtech Connect is that technology can solve the legacy challenges within insurance. However, Shapiro challenged that assumption with the example of Loss Adjusters, stating that a great loss adjuster in the 1990s would process 4-5 estimates a day of Auto Claims processing. In 2020, loss Adjusters are still processing 4-5 estimates a day on Autos claims. So why is there no material progress being made, even as technology has advanced and adoption has increased?
In short, Shapiro suggested that the claims process in insurance is “not a service experience you’d accept in any other part of your life.
Going deeper into Autos, Shapiro shared that the ability of a customer to take a photo of a damaged car and share with a carrier, whilst it promised a lot of utility, hadn’t yet seen significant take-up by customers. This technology had saved Allstate 50% of the time in the process, but customer adoption has been low, in the single-digit adoption of the process by customers. This feels counter-intuitive but yet shows the slower rate of real change within the insurance industry.
So Shapiro acknowledges that the insurance industry is in a ” warm protective cocoon. It will burst and be challenged”.

Soaring Valuations & the Possible Insurtech Hangover

Jay Gelb, Managing Director, Barclays
Vincenzo La Ruffa, Partner, Aquiline Capital Partners
Andy Lerner, Managing Partner, IA Capital Group
Carsten Maschmeyer, Founding Partner, Maschmeyer Group Ventures
George Schwegler, CEO, Transamerica Ventures

Moderated by:
Mee-Jung Jang, Managing Director, Techstars

A great session looking at the valuations and investments made into insurtech. Over the past few years, close to $15bn has been invested in insurtech businesses. These businesses range from new carriers such as Lemonade to periodic offerings such as Trov, through to AI and Machine Learning tools aimed at improving processing capabilities and efficiencies. The investments to date have been big, and have grown significantly each year.

It was interesting to hear that the panel agreed that there hadn’t been $15bn in value created by these businesses just yet. They contrasted that level with Stripe’s recent capital raise that valued it at over $30Bn. So that means the investors and investments are still waiting to see the returns materialise. Insurtech as a whole is still an early and developing investment class.

Three key areas of opportunities for Insurtechs were:

  • Insurers no longer have all the customer data, insurtechs can quickly locate, generate and build vast sources of valuable customer data. It has never been easier to digitise customer data.
  • Insurtechs are broadening what they do to become MGAs and get authorised licenses to expand their offering.
  • Major direct insurers spend over $1bn annually on advertising – that is a big number spent reaching and acquiring customers.
Finally, Carsten Maschmeyer, of German Shark Tank, urged insurtechs to focus on aiming for realistic valuations vs higher valuations as a way to both not set the bar too high and to ensure that investors remained engaged within the industry. There is always the tension at play here between VC and startup and so Carsten’s input needs to be tempered by that context.
I’m already looking forward to Insurtech Connect in Singapore in 2020. Will you be there?

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