Category Archives: InsurTech

University of Pennsylvania PennApps XX Hackathon Recap

By Brent Carris, Research Assistant, Insurance Information Institute

Left to right: Brett Lingle, Zoë Linder-Baptie, James Ballot and Brent Carris

The Wharton Risk Center  and the Insurance Information Institute  co-sponsored the second annual Hack-for-Resilience at PennApps XX, the nation’s oldest and largest student-run college hackathon. Presentations were given by Carolyn Kousky and Brett Lingle of the Wharton Risk Center School; and the I.I.I.’s James Ballot.

From September 6 – 8, 18 student teams used software and hardware technologies to “hack”—conceive and build new apps and devices—ways to combat the risks posed by natural disasters, such as hurricanes, wildfires, and floods. The students also vied to create either a product or service that provided insurance in a customer-friendly manner, a category generally known as Insurtech.

A panel of judges from the I.I.I. and the University of Pennsylvania’s Wharton Risk Management and Decision Processes Center selected the winners.

First place in the Insurtech category was Wildfire Protect– a parametric wildfire insurance product designed to provide immediate payouts to insureds that experience property damage from wildfire.

Second place was a tie between Prophet Profit and Navig8. Prophet Profit is an app designed to help households save money by allocating funds in all sectors of the stock market. The Navig8 team created an app to assist the visually impaired communicate during a disaster.

First place in the resilience category was awarded to a hack called Phoenix. This team created an autonomous drone which detects and extinguishes fires.

You can see all other entries and winners here.

Live webcast: I.I.I. CEO Sean Kevelighan talks insurance market dynamics at CAS spring meeting

Sean Kevelighan, I.I.I. CEO

Interested in the state of the insurance market? Tune in to a free live webcast on Monday, May 20th at 11:20 a.m. ET to watch Insurance Information Institute (I.I.I.) CEO Sean Kevelighan talk about the industry at the Casualty Actuarial Society’s Spring Meeting.

Kevelighan will address the insurance market’s financial performance over the last 15 years with a special focus on rising auto costs and on leadership needed to sustain the business model, create jobs and promote/facilitate economic growth. Plus, he’ll touch on InsurTech and digital transformation in insurance.

No pre-registration is required to watch the webcast, just go to this link at 11:20 a.m. to watch the live session.

Water damage is costing homeowners billions. Could IoT help?

Pop quiz: what’s one of the most common types of homeowners insurance claims? (Hint: it’s not fire.)

It’s water damage. Maybe that’s not surprising – it rains a lot in many places. But what may surprise you is that things like pipe bursts and broken appliances are increasingly the main causes of water damage in homes.  

In insurance-speak, these are called “non-weather water damage claims.” Worryingly, these claims are happening more often and are getting a lot more expensive. A Best’s Review article reports that the average homeowners water damage claim is now over $6,700. Large losses (over $500,000) have doubled in number over the past three years. Non-weather water damage is now costing insurers (and their policyholders) billions in losses every year.

This is happening for several reasons. Our housing stock is aging, as is our infrastructure. More houses are being built and they’re getting bigger – many houses now have extra bathrooms and second-floor laundry rooms, which means more piping. (The story is probably different in Florida. You can read why that is here.)

But the worst part is that many – if not most – water damage claims are preventable. Inspecting pipes or conducting routine maintenance can go a long way. That’s where the internet of things (IoT) comes in. Smart devices and connected sensors installed on piping can detect leaks before they occur or before they cause too much damage. They’re basically smoke detectors, but for water.

And they work. Best’s Review noted that installing IoT devices can reduce water losses by up to 93 percent.

The Review quoted an IoT company CEO who claimed that leak detection devices could save insurers and their customers $10 billion every year.

Homeowners have admittedly been slow to install IoT to help detect leaks. But insurers are hopeful that raising awareness about the issue, offering policyholder incentives like premium discounts, and encouraging IoT installation during home construction will begin to turn the tide.

 Update: Of interest, Washington state adopted a rule in 2018 that specifically mentions water monitors and water shut-off systems as permissible tools for an insurer’s risk reduction program.

The state of the Insurtech market 2018

S&P Market Intelligence has recently published a report on the state of the Insurtech market, and on November 7 the company held a briefing on the subject. Panelists included Slice CEO Tim Attia, Drew Aldrich, Principal at American Family Ventures and the report’s author, Research Analyst Thomas Mason.

Here are some of the trends observed by S&P in the insurtech space:

  • Insurtechs are still in very early stages and that means it could take up to seven years before the recent crop of successful insurtechs go public and return investor capital.
  • Digital agencies and tech-focused underwriting generated the largest amount of deal value in the first half of 2018.
  • Companies that have full control of distribution, underwriting and servicing their policies (full-stack companies) have amassed substantial funding.
  • Disruption of the sort wreaked by Netflix on the entertainment industry is unlikely for the many lines of insurance (auto for instance) that are already dominated by the direct distribution model.
  • In commercial insurance where direct sales are not as prevalent, large incumbents are vigorously competing with startups for direct sales.

The panelists had this advice for incumbents who are looking to compete with nimble insurtechs:

  • Prediction is the next big frontier.
  • Spin off a separate digital insurer, it’s a lot easier than changing existing systems, silos and layers.
  • Embrace a culture of entrepreneurship and willingness to experiment.
  • Consumer expectations are changing quickly – the disruption could have happened already, and we don’t even know.

 

 

Insurtech deals reach a record in the first quarter of 2018

Insurtech deals reached $724 million in the first quarter of 2018, according to Willis Tower Watson. This is a record and a 155 percent increase from Q1 2017.

The number of transactions, at 66, also represents a record. Seven of those transactions rose to over $30 million in recent funding rounds.

There was only one developed market incumbent insurer participating in the fundraising while the remaining funding rounds were dominated by traditional VC money. Willis speculates that the stakes are becoming too high for insurers, especially if they are mostly investing in order to learn how to improve their existing processes.

Trends in P/C Insurance Technology

Over the past few years property/casualty insurance companies have been vigorously active as investors in technology startups and in partnerships with complementary technologies and ecosystems (drones, smart homes, car sharing, cyber risk management).

Established Insurers are also launching new brands and businesses.  Munich Re’s Nexible, an online auto insurance portal, is one of many examples.

On Thursday March 23, CB Insights’ lead intelligence analyst Matthew Wong conducted a webinar on trends in P/C Insurance Tech. Here are some of the highlights from the webinar:

  • Mentions of technology in earnings calls of major P/C carriers nearly quadrupled in the 3rd quarter of 2017 compared to the prior quarter.
  • P/C insurance tech start-ups have raised over $3 billion since 2012.
  • The U.S. leads the number of tech deals, with the fastest growing markets such as India, Saudi Arabia and Indonesia lagging. Europe is seeing an uptick in P/C startup activity.
  • Many insurance tech startups are partnering with the real estate industry
  • More startups are targeting small and medium sized businesses
  • More startups are gearing to distribute cyber insurance

Slides from the Trends in P&C Insurance Tech webinar are available for download here.

 

Key insights from this year’s ACORD insurance innovation challenge

This year, ACORD held its annual insurance innovation challenge competition in Boston. The competition highlights tech-driven solutions from some of the best and brightest in the business. Willis Re’s Dan Foster reports in this blog post on several key insights from the event.

  • This year’s winners demonstrated their ability to compile data that’s widely available and generally sought-after and use it in new ways. Something the industry needs to get quicker at doing.
  • The industry has been too focused on growth through product development or distribution innovation leaving a lot of room for improving underwriting and operational efficiencies.
  • A greater balance of technology efforts across different business processes would serve the industry well. While individual InsurTech companies continue to become more specialized in the problems they address, the dispersion of the tech movement across all operations will foster greater cohesion in all segments of the industry.

Willis Re’s most recent InsurTech Briefing, for Q3 2017 is available here.

InsurTech disruption: threat or opportunity?

Whether you’re an InsurTech startup with new ideas or an incumbent concerned about protecting your book of business, the greatest risk you can take may be to resist collaboration, according to a post on Willis Towers Watson Wire.

In Threat vs Opportunity? InsurTech is largely a matter of perspective, Andrew Newman, president and global head of casualty at Willis Re, says while it’s understandable that many insurers have perceived InsurTech as a threat to the value chain, the biggest threat lies not in technology itself, but in competitors of any description leveraging these innovations to gain advantage by reducing risk and lowering costs.

“The plain fact is that the vast majority of InsurTech companies aren’t interested in going to war with incumbents. Their focus is on creating value within the insurance value chain – not collapsing it. So if incumbents embrace ‘disruption’, rather than concentrating on defending themselves by keeping these opportunities at arm’s length, then they will find that the available technology is largely complementary to most of the current processes in the industry.”

Download the presentation Insurance: Leading Through Disruption by Insurance Information Institute president and CEO Sean Kevelighan to find out more about how the industry is poised to lead through disruption.

2017 Magic Ball on Insurance

It’s that time of year when insurance predictions for 2017 are being made, and as we look ahead, it’s clear that these are innovative times for our industry.

First up, Insurance Networking News with 10 Insurance Tech Predictions for 2017, based on a research report by Strategy Meets Action (SMA). Karen Furtado, SMA Partner and co-author of the report explains: “In many cases, the 2017 trends reflect a move by insurers to operationalize strategies that have been in development or early phases in the past couple years.” Predictions include: insurtech remains sizzling hot and 2017 will be pivotal for its future; digital transformation will expand; and telematics starts a new growth phase.

Keeping it hot, next up is The Financial Brand with Top 5 InsurTech Trends for 2017. Check out #1 Micro-Insurance to Handle Usage-Based Needs which highlights the growth of micro-policies covering specific risks for specific durations of time. At #3 Emergence of Blockchain as a Key Driver says smart contracts are emerging as the ideal way to automate claims management and underwriting creating billions of dollars in savings. It tips the B3i partnership between Aegon, Allianz, Munich Re, Swiss Re and Zurich as one to watch in 2017.

Talking of specifics, there’s Fast Company with 5 Fintech Startups To Watch in 2017 and pay-per-mile auto insurer Metromile headlines the list. “Insurance investors say Metromile has become an important proof point for the industry’s hottest topic: Measuring observable behavior in order to get more granular about risk.” Fast Company describes insurance is a “massive opportunity” in fintech in the year ahead.

And as we ring in 2017, CB Insights takes stock with a look back at some of the most notable partnerships, hires and financing rounds in insurance tech in the past year. Of particular note are the 29 startup-insurer partnerships in 2016, a reflection of insurers’ growing participation in the tech startup landscape. Insurance Information Institute’s Insuring California blog writes more on this here.