Who's On First? Keeping Score On Insurtechs


In the 1980s, when so many tech companies made so many empty promises that the term "vaporware" came into widespread use, cynical IBMers referred to their marketing department as "where the rubber meets the sky." Last week's InsureTech Connect gathering in Las Vegas suggests that, after some fits and starts for the insurtech movement over the past year and a half, we're about to see the rubber meet the road. 2018 should be an eventful year.

Any number of companies made compelling cases about how insurtech is cutting costs and setting companies up for much deeper reductions—so much so that, were I a carrier, I'd be looking over my shoulder. There's an argument to be made that brokers and agents, far from going away, will use technology to increase their access to knowledge and to deepen relationships with clients, then will feed business straight to reinsurers. And plenty of people in Las Vegas were happy to advance that argument. (Rick Huckstep explores the threat to traditional insurers in one of this week's Six Things articles: "Time to Get Personal.")

A senior executive at a big regional brokerage wouldn't go as far as Huckstep but did say the pressure on carriers is growing: "We tell clients that we swap out carriers at least as fast as general managers trade baseball players."

It seemed that everyone in Las Vegas had bought into the idea of innovation and was arranging for proofs of concept (POCs) with a number of startups, which is great—as far as it goes. But there are two issues to watch.

First, to continue the baseball analogy, you can't tell the players without a scorecard. In other words, the cast of characters is now changing rapidly. We tend to focus on the launch of interesting startups and on the rounds of funding they line up, but startups fail, too. We can all celebrate Guidewire's $275 million purchase of 3-year-old Cyence, but, historically, about 90% of startups fail, and there's no reason to think that insurtech will be immune. We track some 2,000 insurtechs on our Innovator's Edge platform (along with 70,000 other companies that are of interest to insurers looking to accelerate their innovation), and I'd bet that, a year from now, we'll still be tracking about 2,000 insurtechs—just not the same ones, in many cases. You have to stay on top of the new ideas and keep initiating POCs.

Second, don't congratulate yourself too much for getting to the POC stage. We've seen this sort of thing happen in other industries: Someone will visit Silicon Valley, then go home, put a ping pong table in the office, start providing free food and declare victory. Surely, the reasoning goes, innovation will now follow. Now, POCs are much better than ping pong tables, but they can still create a false sense of assurance. They only matter if they get beyond any sort of innovation silo, get exposed to the core business and ultimately get pulled into areas where they can produce major gains. Identifying the right POCs to pursue is hard—but it's actually the easiest part of the innovation process. Driving a new technology or idea into the business is far harder. (Contact our Guy Fraker at guy@insurancethoughtleadership.com if you want some help or just want to hear some war stories. Guy has been running or consulting on innovation projects at insurers for decades—starting way back when he had hair.)

We'll certainly do our best to keep you up to date on the latest and best ideas at www.insurancethoughtleadership.com, beginning with the six articles below that are my favorites from the past week. Driving innovation in insurance and risk management is a worthy goal that we can all get behind. Please let me know if we can do anything else to help. 


Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993.

Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.