Tag Archives: Sure

8 Start-ups Aiming to Revive Life Insurance

In my last post, I described the state of the life insurance industry, including the pain points where InsurTech entrants are poised for impact.

The life insurance industry is suffering from a dying (literally) distribution model, complex products and a flawed purchase funnel.

New entrants can transform the industry by bringing a clean-sheet approach to:

  • Putting the client at the center of the business
  • Prioritizing the direct-to-client experience, including simpler products and path-to-purchase
  • Launching businesses on a back-end that enables low-cost, fast issuance and personalized underwriting and offers
  • Creating business models that align carrier and client interests and flex beyond protection-after-the-fact to providing value through prevention services
  • Supporting multi-channel servicing and claims management that satisfy clients
  • Using data responsibly to be proactive, personalized, timely, cost-effective and relevant
  • Treating life insurance as part of the client’s broader financial plan, including the connection to anticipating one’s healthcare requirements and managing the drivers, to the extent these are controllable, of health problems
  • Aligning with the demographic trends (the boomer handoff to the millennial generation and the emergence of the new majority in the U.S.) and the technology trends (mobile as the main screen; the role of social media in the client experience; and the application of big data to change the experience and business model)
  • Disproving orthodoxies that have become barriers to innovation for the sector, i.e., “insurance is sold not bought,” “the agent is the customer,” et al.

As much as start-ups are emerging and being funded aiming at health, home and auto, much less attention is being paid to either life insurance or its sibling, long-term care.

One founder/CEO with whom I spoke this week had two possible explanations: (1) Life insurance is the stepchild of the sector, and (2) the “sold not bought” orthodoxy is embedded, even among start-ups, which are typically seen as better not only at casting aside such self-imposed obstacles but seizing upon them as open doors for disruption. These factors may be deflecting entrepreneurial energy and attention in other directions.

See Also: InsurTech Can Help Fix Drop in Life Insurance

Long-term care has been a challenging product for traditional carriers, with players either abandoning the product or re-pricing and reconfiguring their products as flaws in earlier underwriting have become clear. According to Consumer Reports, between 2007 and 2012, 10 of the 20 top long-term-care providers stopped selling the product, and those in the business began raising rates, some reportedly as much as 90%, to address high claims projections.

That said, there are new ventures worth watching, and the good news about the relatively low level of attention being paid to life insurance, for those who see ignored space as white space, is that there could be more opportunity to succeed for those who engage.

Here are a few start-ups focused on the valuable white spaces:

In stealth mode are three companies worth keeping an eye on:

  • Sureify Labs is focused on “bridging the gap between insurers and their current and future policyholders” through a B2B offering aimed at helping traditional carriers move into the new world. The company’s site states that the platform “starts with consumer web and mobile applications that drive engagement through device-integrated wellness, savings and rewards programs tied to a policy. Behind the scenes, we give you as the carrier all the tools necessary to engage, communicate and up-sell your policyholders through digital mediums.” This sounds as though it would be a dream come true for carriers that are serious about building client-centric businesses.
  • Ladder, formed just a year ago (see: CB Insights report) is reportedly starting with a mobile value proposition built around easier and faster access to term life insurance, using available, permissible data sources to improve the underwriting process. If, as the name suggests, the company is building a value proposition that redefines the traditional notion of an insurance ladder – a construct that lets you plan for extra coverage when you’ll need it the most and taper off coverage at other times – I would expect them to develop more dynamic, effective relationships with clients than those propagated by the traditional one-and-almost-always-done insurance sales model.
  • Human Condition Safety (HCS’ site is under construction) is an example of a start-up focused on expanding the value a life insurance carrier can provide by offering prevention services in addition to protection. AIG became a strategic investor in the company earlier this year. HCS is said to be “developing wearable devices, analytics and systems to improve worker safety.”

A number of start-ups are building capabilities to solve carrier problems improving on the traditional distribution and product models. An investor might ask if these are businesses or features:

  • Force Diagnostics is focused on “combining science and a customer-centric streamlined process” to transform health and wellness screening. The expense (to the carrier), hassle (to the applicant) and elapsed time (a burden to all) associated with today’s underwriting requirements for blood and urine samples are ripe for reinvention.
  • Insurance Social Media, part of Serious Social Media, is offering a “set it and forget it” capability to improve agent effectiveness on social media. Given the demographic profile of the average agent (57 years old, and accustomed to pushing product), kick-starting their social media presence and providing relevant content solve pain points for today’s distributors. Of course, two questions regarding any start-up aiming to mass-produce content are: first, can such content come across as authentic, and second, how does this model scale?
  • Insquik offers agents a white label solution to create their own online stores. The focus is on term life automatic issuance up to $350,000 face value, and, according to the company’s site, aims specifically to serve the sub-segment of agents who “have access to large populations of consumers i.e., focused on Worksite Employee Benefits, Affinity Groups, Unions, Groups and Associations.”
  • Fitsense is a start-up coming out of StartupBootcamp that is building a data analytics platform focused on enabling insurance companies to reduce premiums “for anyone with a smartphone or wearable device.”
  • Sure provides a digital front-end and a more real-time experience for an old idea – a micro-duration life insurance policy that provides coverage during air travel. (In the pre-digital era, this was simply called “per trip coverage”.) American Express is one company that for more than 30 years offered air flight life insurance policies at varying face amounts, as part of a portfolio of travel-related protection benefits.

The opportunity for Insurtech to expand efforts in the life insurance category is not simply the commercial potential of disrupting a model that has proven its limitations. It is also the prospect of addressing a societal need that has been neglected for decades. These are two compelling reasons to encourage more participation by investors and entrepreneurs, stimulating a bigger pipeline of entrants to take on the reinvention of the category.

The 5 Charts on Insurance Disruption

The high-level forces (people, technology and market boundaries) are responsible for insurance’s driving influences — new expectations, innovations and new competition that individually exert tremendous transformation pressure on the industry. The forces don’t operate in isolation, however. They are connected and combine to create an even more powerful and disruptive impact on the industry. Majesco developed a model to reflect these forces:

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The combined impact is creating a powerful market shift that brings the three together, creating unprecedented innovation and disruption. It reflects what author Malcolm Gladwell calls a “tipping point.” A tipping point occurs when an idea, trend, behavior or expectation crosses a threshold and spreads like wildfire, changing the fundamentals of business. These are often sudden, as we have seen in other tipping points over the last century, reflected in the move from the industrial age to the information age and now to the digital age. Each move created leaps in innovation and transformation.

People

The makeup of the market is shifting. Insurers who ignore the shift will be challenged to retain their customers, let alone grow their businesses. This shift is being driven by demographic, cultural, economic and technological forces. They present new challenges and opportunities for the insurance industry that will require insurers to rethink their strategies, products, channels and processes to reach a fast-changing market.

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Market Boundaries

The combination of the sharing and platform economy trends is dissolving traditional boundaries and the long-held competitive advantages of incumbents. Just as start-ups can now access technology as a service, they can also access resources (sourcing and crowdsourcing), designing, manufacturing and more as a service, giving any company access to the resources needed to compete. As a result, companies must compete on more than brand, product, price or distribution. They must compete on innovative approaches.

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New Entrants

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Shifts in the Industry

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To download the full report, click here.

trends

InsurTech Trends to Watch For in 2016

The excitement around technology’s potential to transform the insurance industry has grown to a fever pitch, as 2015 saw investors deploy more than $2.6 billion globally to insurance tech startups. I compiled six trends to look out for in 2016 in the insurance tech space.

The continued rise of insurance corporate venture arms

2015 saw the launch of corporate venture arms by insurers including AXA, MunichRe/Hartford Steam Boiler, Aviva and Transamerica. Aviva, for example, said it intends to commit nearly £20 million per year over the next five years to private tech investments. Not only do we expect the current crop of corporate VCs in the insurance industry to become more active, we also expect to see new active corporate VCs in the space as more insurance firms move from smaller-scale efforts — such as innovation labs, hackathons and accelerator partnerships — to formal venture investing arms.

Majority of insurance tech dealflow in U.S. moves beyond health coverage

Insurance tech funding soared in 2015 on the back of Q2’15 mega-rounds to online benefits software and health insurance brokerage Zenefits as well as online P&C insurance seller Zhong An. More importantly, year-over-year deal activity in the growing insurance tech space increased 45% and hit a multi-year quarterly high in Q4’15, which saw an average of 11 insurance tech startup financings per month.

In each of the past three years, more than half of all U.S.-based deal activity in the insurance tech space has gone to health insurance start-ups. However, 2015 saw non-health insurance tech start-ups nearly reach parity in terms of U.S. deal activity (49% to 51%). As early-stage U.S. investments move beyond health coverage to other lines including commercial, P&C and life (recent deals here include Lemonade, PolicyGenius, Ladder and Embroker), 2016 could see an about-face in U.S. deal share, with health deals in the minority.

Investments to just-in-time insurance start-ups grow

The on-demand economy has connected mobile users to services including food delivery, roadside assistance, laundry and house calls with the click of a button. While not new, the unbundling of an insurance policy into financial protection for specific risks, just-in-time delivery of coverage or micro-duration insurance has already attracted venture investments to mobile-first start-ups including Sure, Trov and Cuvva. Whether or not consumers ultimately want the engagement or interfaces these apps offer, the host of start-ups working in just-in-time insurance means one area is primed for investment growth in the insurance tech space.

Will insurers get serious about blockchain investments?

Thus far, insurance firms have largely pursued exploratory investments in blockchain and bitcoin startups. New York Life and Transamerica Ventures participated in a strategic investment with Digital Currency Group, gaining the ability to monitor the space through DCG’s portfolio of blockchain investments. More recently, Allianz France accepted Everledger, which uses blockchain as a diamond verification registry, into its latest accelerator class. As more insurers test blockchain technologies for possible applications, it will be interesting to monitor whether more insurance firms join the growing list of financial services giants investing in blockchain startups.

Fintech start-ups adding insurance applications

In an interview with Business Insider, SoFi CEO Mike Cagney said he believes there’s a lot more room for its origination platform to grow, adding,

“We’re looking at the entire landscape of financial services, like life insurance, for example.”

A day later, an article on European neobank Number26, which is backed by Peter Thiel’s Valar Ventures, mentioned the company would like to act as a fintech hub integrating other financial products, including insurance, into its app. We should expect to see more existing fintech start-ups in non-insurance verticals not only talk publicly but also execute strategic moves into insurance.

More cross-border blurring of insurance tech start-ups

Knip, a Swiss-based mobile insurance app backed by U.S. investors including QED and Route66, is currently hiring for U.S. expansion. Meanwhile, U.S. start-ups such as Trov are partnering and launching with insurers abroad. We can expect more start-ups in the U.S. to look abroad both for strategic investment and partnerships, and for insurance tech start-ups with traction internationally to expand to the U.S.