InsurTech/M&A/Financeđź’°/Collaboration
Transformational deals on the rise as insurance bucks M&A slowdown
Insurance mergers and acquisitions (M&A) have remained resilient amid economic volatility driven by a banking crisis and high interest rates.
Faced with uncertainty and other headwinds such as technology disruption, insurance CEOs are betting big. Large-scale, transformational M&A deals are on the rise again, as insurance leaders increasingly leverage these transactions to reposition their business for long-term success, global professional services PwC has found.
Transformational M&As: “Bigger, bolder, riskier”
PwC’s 2023 M&A integration survey shows nearly half (48%) of M&A deals in 2022 were classified as transformational, versus 19% of deals in 2019.
Transformational deals are those where companies acquire new markets, channels, products, or operations that fundamentally change their organization.
Hippo reports 56% YoY growth in total generated premium in Q2’23
Home insurer Hippo has announced total generated premium (TGP) growth of 56% YoY to $318 million in the second-quarter of 2023, compared to $204 million a year ago.
At the same time, net earned premium for the quarter was $13.8 million, a shift from $9 million from the prior year’s quarter.
In addition, revenues for Q2’23 were $47.7 million, a 66% rise from $28.7 million from Q2’22.
At the same time, total revenue for H1’23 was $87.5 million, an increase compared to $53.2 million from H1’22.
Alongside the rise in premiums and revenue for the quarter, Hippo has reported a bigger net loss of $108 million, compared with a net loss of $74 million from the prior year quarter.
Liberate and Vanguard Claims Administration Launch First Phase of Comprehensive Digital TPA Solution
Liberate Innovations Inc. (Liberate) and Vanguard Claims Administration (Vanguard) have partnered to build a cutting-edge Digital Third-Party Administrator (TPA) solution designed to usher in the next generation of claims management, increasing efficiency, accuracy and the turn time of claim outcomes for clients.
“Many insurers expect to spend years developing automation that we can build in as little as 90 days”
Field adjuster guided automation, the first phase of the extensive, multi-faceted Digital TPA solution, is now live. The Vanguard Field Adjusters Tool sharpens efficiency and accuracy by providing field adjusters with a client-specific digital guide for comprehensive data collection during inspections.
“All clients share some basic field adjusting requirements that are then augmented with an added layer of specifications. This tool facilitates both standardization and flexibility, enabling us to customize requirements and share them with field adjusters, so nothing is missed," explains Vanguard’s Chairman, Robert Gilliam.
This milestone marks significant progress toward the end goal of a comprehensive Digital TPA transformation, equipping Vanguard to go to market with a dramatically differentiated model, positioning them for rapid expansion and growth.
Payoneer Expands Data Capabilities With Spott Acquisition
Payments platform Payoneer has acquired Israeli startup Spott to enhance its data capabilities.
The purchase, announced Thursday, will help Payoneer better understand its small and medium-sized business (SMB) customers and help them expand their operations, the company said in a news release.
“Harnessing Spott’s capabilities, Payoneer will analyze large sets of data to apply advanced AI models and make predictions and decisions about its service offerings for a global SMB customer base,” Payoneer said. “The first application of the technology will be on the Payoneer working capital products to enhance underwriting capabilities.”
Based in Tel Aviv, Spott — according to its LinkedIn page — offers insurance to the eCommerce sector and, per the news release, uses AI to accurately “surface, assess, and quantify” data for faster and better-informed business decisions.
News
Lyft Inc Patent: Processing Telematics Data for Vehicle Collisions
Lyft has been granted a patent for methods and systems to process telematics data.
The patent describes a system that obtains telematics information from a device associated with a vehicle, determines anomalous operations of the vehicle, and identifies vehicle collisions by comparing routing information with the telematics data.
GlobalData’s report on Lyft gives a 360-degree view of the company including its patenting strategy.
Finding a solution to the US flood insurance challenge
Matthew Nielsen of Moody’s RMS highlights the need to encourage flood insurance take-up in the US.
Representatives from the Federal Emergency Management Agency (Fema), US insurers, flood plain managers, regulators, catastrophe modelers, and other experts recently gathered in Washington DC to discuss a weather peril that has the potential to affect every postal code in the United States: flood.
At the National Flood Conference, the pressing nature of flood risk was reinforced using statistics ranging from the 37 individual billion-dollar events that have occurred since 1980, to the $850 billion given out in flood assistance and aid since 2000.
Examining the take-up rate for flood insurance in the US, this remains small with only 4.7 million National Flood Insurance Program (NFIP) policies in force in June 2023, a figure that has shrunk by almost one million in the last five years. In the same period, just 420,000 private residential policies were written.
These numbers highlight the importance of expanding flood insurance coverage, whether via the NFIP or private policies, and of ensuring that homeowners are covered when the waters begin to rise.
Insuring the Future: How Gen Z Digital Natives Are Transforming Insurance
Generation Z insurance consumers – or those born between roughly 1997 and 2012 – want the insurance process to be authentic, honest, and immediate. That’s according to guests on The Insuring Cyber Podcast’s quarterly InsurTech update episode.
“Gen Z really wants those effortless digital experiences, and they really want the option to purchase or service their policies on their own,” said Bobbie Collies, chief growth officer at Coterie Insurance.
She said this could mean adapting to a mobile-friendly user experience or finding the right technology to meet consumers’ needs no matter what, even if it’s at 2 a.m.
“I think [traditional insurers] can learn from not only InsurTechs, but also other industries, that people want to do business when they want to do business, and that might mean purchasing insurance late at night or over the weekend when most carriers aren’t open for business. Or they might want to generate a certificate of insurance at two o’clock in the morning,” she said. “We really have to listen to what the customers want and then try to figure out how we use the technology to deliver that.”
Effi Fuks Leichtag, chief product officer at NEXT Insurance, agreed that Gen Z consumers want access to insurance wherever and whenever.
“The number one thing about being attractive to Gen Z is to be able to fulfill their need the moment that desire comes over,” he said. “If it’s 2 a.m. on a Friday and you need insurance, you need to be able to fill that.”
He added that patience in younger generations is much shorter, and that’s because expectations for immediacy have already been set in such a tech-driven age.
“When you think about it, if you return an Amazon product, you now can just click a button. You no longer need to even to print the UPS receipt or whatever it is,” he said. “I think those expectations are now everywhere. I want my food delivery within minutes. I want my certificate of insurance within seconds
Commentary/Opinion
Mastering the Fourth Industrial Revolution
We are sitting at the inflection point of the Fourth Industrial Revolution, the biggest personal and professional opportunity of our lives.
I've spent most of my career helping organizations build comparative advantage at the intersection of strategy, technology and innovation. I now believe both individuals and organizations should aim even higher.
We have the good fortune and awesome responsibility of sitting at the inflection point of the Fourth Industrial Revolution. For better or worse, ever better and cheaper technological building blocks, including pervasive connectivity and computing, AI, robotics and genomics, are blurring the lines of the physical, digital and biological worlds. They are already reshaping industries and societal patterns, and the transformation is accelerating.
Our individual and organizational opportunity is to guide our little slices of the universe toward the better, and away from the worse, potential outcomes. In doing so, we can help build a collective future with greater health, sustainability and prosperity. We can build a world we can proudly leave to our children and their children.
Chunka Mui, Futurist and Innovation Advisor
An Interview with Chris Bassett, senior director at Capgemini on Embedded Insurance
ITL's Paul Carroll interviews Chris Bassett, senior director at Capgemini, on reimagining embedded insurance through a "point of design" approach, emphasizing seamless alignment with integrated offerings.
Chris Bassett is an insurance strategy and innovation specialist who partners with executives to drive profitable growth through new solution development and solving for complex business and operational challenges. He is currently a senior director with Capgemini U.S.
AI in Insurance
The 10 Biggest Mistakes in AI Strategies
Caution is in order whenever a new technology is supposed to take the world by storm. A look at past failures for AI initiatives is instructive.Â
Way back in 2014, Wired magazine co-founder Kevin Kelly wrote, "The business plans of the next 10,000 startups are easy to forecast: Take X and add AI." Boy, was he right.
That prediction was far bolder than it looks in retrospect. For the preceding nearly 60 years, an AI revolution had been much promised but was always just over the horizon. Even proponents acknowledged that there was "an AI winter."Â
But Kelly saw a convergence of new forms of computing power, plus big data and better algorithms, and declared the winter over.
And here we are: A form of AI, best-known through its incarnation in ChatGPT, has captured the world's imagination, and not only every startup but just about every established company is figuring out how to fit generative AI into its business plans.Â
Paul Carroll, editor-in-chief, Insurance Thought Leadership
ChatGPT, You Are Always on My Mind
The first stop for insurers on the generative AI journey is near the base of the mountain: They can see the activity and storms above, but they haven’t started to climb yet.
At Datos Insights’ (formerly Aite-Novarica Group’s) recent Insurance CIO Council event, hosted concurrently with the InsurTech Hartford Symposium, over 70 insurance executives spent two days with us talking about the technology topics that are top of mind for them. Unsurprisingly, artificial intelligence (AI)—and ChatGPT specifically—was one of the themes most discussed. This has proven true across the other industry events we participate in as thought leaders, such as those hosted by LIMRA and AWS.
Realizing that your organization must come to terms with the new AI-enabled world feels like looking up at a mountain from its base. The first stop for insurers on this journey is near the base of the mountain: They can see the activity and storms above, but they haven’t started to climb yet.
The second stop is a little further along, where cloud cover causes confusion and doubt. At this point, there is a strong sense of needing to head somewhere, but no certainty as to what direction to go. There are “experts” on every side making suggestions, but they’re as likely to hinder as to help when you’ve lost track of the way forward.
The third stop is where insurers start to ideate. This ideation tends to be very broad; while it may not lead directly to action, it often leads to more focused ideation. ChatGPT and similar tools are constantly front of mind, perhaps prompted by interest or questions from the CEO or the board. At this stage, there is a lot of activity, but little to show for it—despite being a necessary part of the journey.
John Keddy and Jack Krantz, Datos Insights, (formerly Aite-Novarica Group
Recommended Events
Podcast: Future of Insurance: Industry Influencer Podcast Series - A New Wave of Claims Transformation
Welcome to the Future of Insurance: Industry Influencer Podcast Series hosted by InsurTech leader Denise Garth, Chief Strategy Officer at #Majesco!
She is joined by a wide array of industry leading customers, partners and insurtech influencers to discuss the latest industry trends, market opportunities, and digital technology needed to meet customer expectations and stay ahead of the competition. Ranked by Feedspot as one of the best insurance industry podcasts, subscribe today so you don’t miss out!
Denise is joined by Insurance Solutions Group’s Stephen Applebaum in this latest episode, to discuss the center of the digital customer relationship—claims. They’ll explore how and why claims operating models are changing, the role of data & analytics, exciting areas emerging in risk resilience, how loT is changing the customer experience and the new era of claims replacement.Â
Listen here