March 21, 2017
Insurance has its Cambrian moment
by Paul Carroll
We have reached a Cambrian moment in insurance. Just as the number of animal phyla exploded during what scientists call the Cambrian period, the number of insurtechs is accelerating at an extraordinary pace, and there are no signs of slowing.
Just look at what the carriers, alone, are doing. A KPMG survey of 200 insurance executives found that 50 reported already having corporate venture capital units. Half of those units had at least $250 million to invest, and several had more than $1 billion. Beyond those 25% who reported having a VC unit, a further 37% of the respondents said a unit was being set up. That’s a boatload of cash being directed at opportunities in insurtech.
A search of news just in the hours before I wrote this found that Zurich Insurance Group, the Admiral Group, Allianz, Munich Re and Swiss Re have formed partnerships with U.K. accelerator Startupbootcamp InsurTech, as has XL Catlin. Meanwhile, Aflac announced a $100 million fund to invest in insurtech over three years.
The fact that the industry has hit its Cambrian moment is a monumentally hopeful sign for all of us who believe that insurance needs to be disrupted, but this only puts us in what I see as the second of five stages of innovation. Based on my 30 years of following innovation as it has turned numerous industries on their heads—beginning with what personal computers did to IBM and the rest of the computer industry when I covered it for the Wall Street Journal in the 1980s and early 1990s—I believe that we’re now past the denial phase but still need to go through three more phases, after this Cambrian one.
And the next stage will likely be painful. It’s the winnowing phase, when we learn once again that nine out of 10 startups fail and realize that many of these huge investments will be for naught. (The final two phases are: “scaling up” the startups that succeed and then “lather, rinse, repeat”—to make sure the innovation process continues.)
So, be careful. We’re making real progress, and it’s natural to be enthusiastic. That’s the way the Cambrian phase always seems to work. But not every tree grows to the sky.
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