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Insurers Aren't Innovative? Think Again!
But you first have to give up on "insurance ignorance" -- the idea that the best way to disrupt the industry is to start by knowing nothing.
Q1 '23 has shown a clear trend in the insurtech deals: It is not any more about raising money, it is about M&A. The Financial Technology Partners / FT Partners' monthly report has certified it.
The number of investments in Q1 '23 has been 47, with less than $800 million invested (the most recent lower quarter was Q2 '18, with less than $600 million).
The number of M&A deals has been 34, totaling $4.7 billion (already higher than the entire 2022).
Even looking at the listed insurtech carriers, we had some exciting takeaways (while waiting for the Q1 earnings calls). These takeaways are highlighted by the recent journeys of Lemonade and Oscar.
Matteo Carbone, founder and director of the Connected Insurance Observatory
Why to Be an 'Arms Merchant'
When you hear all the talk about how ChatGPT and the metaverse will rewrite the rules of business, remember the lessons from the early days of the internet.
All the frothy talk about how ChatGPT changes everything and about how we all need to be part of a land grab in the metaverse suggests that it's worth taking a look back at how the changes-everything/land-grab adherents fared during the early days of the internet in the late 1990s.
It wasn't pretty.
While there were a few monster successes, notably Amazon, there were far more face plants like those by Webvan and Pets.com. The companies that reliably prospered, such as Sun Microsystems and Cisco, were what those of us in the financial media referred to at the time as "arms merchants" -- they supplied the combatants in the internet wars rather than forming "armies" themselves.
I'd suggest that being a metaphorical "arms supplier" is the best way for companies, including insurers, to play on ChatGPT and the metaverse.
Paul Carroll, Editor-in-Chief, Insurance Thought Leadership
'They're just killing us': Defense Bar confronts rise in nuclear settlements
The plaintiffs bar is obtaining nuclear settlements through skillful manipulation of juries, said Robert Tyson, who has sought to rally the defense bar against rising verdicts and settlements.
Since most cases settle rather than go to trial, plaintiffs lawyers have become adept at leveraging nuclear verdicts to obtain nuclear settlements, said Tyson, a trial lawyer-turned-strategic managing partner at Tyson & Mendes in San Diego, California.
“The No. 1 cause of nuclear verdicts is plaintiffs lawyers,” Tyson said. “They are manipulating juries through psychology. They’ve changed the way they try lawsuits, and the defense industry has not changed the way we try lawsuits. So they’re just killing us.”
CMT: Screen Interactions Show Distracted Driving Growing Worse
US motorists are more distracted than ever while driving, interacting with their smartphones or other devices during 58% of trips taken, according to a report by Cambridge Mobile Telematics.
CMT, which supplies the telematics hardware that carriers use to monitor drivers enrolled in usage-based insurance programs, said the share of screen interactions per trip increased from 54% in 2020, a nearly 8% jump.
Even more concerning: Screen interaction time during trips, meaning the amount of time that devices were being used while driving, increased to two minutes and 12 seconds in 2022, up 23% from 1 minute 47 seconds in 2020. Drivers who interact with their phone screens while driving are 240% more likely to crash than drivers that don’t interact with their screens, the CMT report says.
CMT draws data from its DriveWell platform, a telematics program that is used by 21 of the top 25 US insurers. The company has issued annual reports on the insights it has gained about distracted driving since 2019.
Auto insurance shopping, carrier switching increases again in Q1
J.D. Power and TransUnions’s Q1 2023 loyalty indicator and shopping trends (LIST) report found that insurance shopping continued to increase and GEICO, for the first time since the report has been released, didn’t have the highest number of new customers who switched from other carriers.
The report found a nearly half percent quote rate increase over Q4 2022 to 12.4%. However, a slowdown in shopping that began in December and lasted into January “made a dramatic turnaround” in February from 11.6% to 12.6% then 13.1% in January. The March figure is a new record.
How AI Chatbots Can Expose Corporate Secrets
Companies using generative artificial intelligence tools like ChatGPT could be putting confidential customer information and trade secrets at risk, according to a report from Team8, an Israel-based venture firm.
The widespread adoption of new AI chatbots and writing tools could leave companies vulnerable to data leaks and lawsuits, said the report, which was provided to Bloomberg News prior to its release. The fear is that the chatbots could be exploited by hackers to access sensitive corporate information or perform actions against the company. There are also concerns that confidential information fed into the chatbots now could be used by AI companies in the future.
Major technology companies including Microsoft Corp. and Alphabet Inc. are racing to add generative AI capabilities to improve chatbots and search engines, training their models on data scraped from the Internet to give users a one-stop-shop to their queries. If these tools are fed confidential or private data, it will be very difficult to erase the information, the report said.
Commentary/Opinion
White Paper Examines Impact of OEM Collision Repair Part Design Patents on Consumers, Industry and Environment
Some patented crash parts cost more than twice comparable, non-patented parts due to OEM “Backdoor Monopoly” according to the paper.
A new white paper examines how automotive OEM design patents impact consumers, local economies, and the environment. Blaire O’Neal, PhD, a researcher and consultant who specializes in issues around social justice and technology, released the white paper titled, Gaming the System, a Backdoor Monopoly: How OEM Practices in the Automotive Industry Impact Consumers, Local Economies, and the Environment.
Blaire O’Neal, PhD, is a researcher, consultant and daughter of Mike O’Neal president of Diamond Standard Parts, an independent crash parts manufacturer
Recommended Events
AM BEST TV: Conning's Dobbins: Insurers Partner With Smart Device Manufacturers to Mitigate Risk
Alan Dobbins, director of insurance research at Conning, discusses how homes equipped with smart devices, such as electronics that provide data, can help improve risk management, pricing and ultimately mitigate risk.
The Hartford’s Tooker: Insurtechs forcing industry “to think bigger and faster” | The Insurer TV
On The Insurer TV’s recent visit to The Hartford’s corporate campus in Connecticut, Mo Tooker spoke about the launch of the carrier’s new innovation lab and discussed the lessons his company and the broader industry are learning from the recent insurtech boom.
Tooker said that irrespective of whether an industry player is an incumbent, start-up, broker, or carrier, the latest cohort of insurtechs has forced executives to “think bigger and think faster”.
The executive’s comments come against the backdrop of an insurtech segment that saw firms attract significant funding when capital was cheap, but which has become more challenged in the past year as capital costs have soared.
InsurTech/M&A/Finance💰/Collaboration
Zinnia to Acquire Policygenius, A Leading Digital Insurance Marketplace
Zinnia, a life and annuity insurance technology and digital services company, today announced it is acquiring Policygenius, a digital insurance marketplace. The acquisition lays the foundation for the industry’s first front-to-back architecture to power the entire insurance value chain and better serve carriers, advisors, and policyholders.
The transaction expands Zinnia’s reach into digital distribution solutions, creating new opportunities to service carriers and distribution partners. Together, Zinnia and Policygenius will offer products and services spanning life and annuities, disability, and property and casualty insurance. At the heart of Policygenius is a platform that simplifies the process for consumers to buy insurance, and an extensive data analytics capability that, combined with Zinnia’s growing tech capabilities and well-established third-party administrator (TPA) infrastructure, lays the groundwork for exceptional experiences for those who buy, sell, manufacture or administer insurance policies.
Zinnia will continue to offer Policygenius’ full suite of online services under the Policygenius brand. These capabilities will connect with Zinnia’s new system of record to further develop the Open Insurance architecture. The acquisition opens growth opportunities for Zinnia’s and Policygenius’ combined 60+ carrier clients, 350 distributors and partners, and 2M+ policyholders
Betterview launches AI-powered roof age solution for P&C insurers
Betterview, an InsurTech that provides property risk intelligence, has launched an AI-powered roof age solution to support property and casualty (P&C) insurers.
Betterview is a provider of actionable intelligence to property and casualty (P&C) insurance companies.
The company’s new solution uses artificial intelligence (AI) and computer vision to analyse high-resolution aerial imagery, enabling precise determination of roof age data.
According to Betterview, roof age data has always been critical for insurers in risk assessment and policy decision-making. Older roofs are closely linked with an array of different risk factors including structural failures, damage from hazards like wind and hail, and a higher likelihood of a complete collapse.
Remove the Complexities Around Scaling Up
In his best-selling book, “Scaling Up: How a Few Companies Make It…and Why the Rest Don’t,” author and entrepreneur Verne Harnish brands complexity as one of the biggest factors preventing businesses from scaling up successfully.
Let’s face it, complexity isn’t an issue at the beginning, but it becomes more important as the organization, and its corresponding data, grows. As companies expand, it’s natural to invest more in more sophisticated technology. Not unexpectedly, all of the additional (and different solutions) generate data, and it becomes increasingly difficult to manage and integrate data between disparate applications. (Enter complexity.)
Insurers often handle this complexity by purchasing even more technology and hiring even more employees, but these solutions are typically far from well thought out or successful. Keep in mind, the introduction of complexity into the equation doesn’t mean that scaling up should be handled haphazardly or avoided. In the case of large insurance brands, McKinsey & Company believes scale can be a strong competitive advantage if the insurer in question recognizes that harnessing the benefits of scale means effectively managing data complexity, not just buying more tech or hiring more employees.
How one insurtech has overcome the tech recession
Joyn Insurance's partnership with Commit allowed the company to launch its platform amidst a downturn of insurtech investments.
Joyn Insurance was founded and launched in 2020, when investments in insurtech were on the rise. With its fully remote team of just 14 members, the insurtech startup company aimed to create a platform that supports and streamlines the entire underwriting process, to provide commercial insurance in the E&S market.
The insurtech saw early on in its journey the rise and fall of insurtech investments – investments hit a record high of $20.4 billion in 2021, though they have since fallen to 57% in the fourth quarter of 2022, the lowest level seen since the first quarter of 2020, according to the Gallagher Re Global Insurtech report.
Insurtech Ledgebrook raises $4.6M SAFE to scale flagship GL & Supported XS offering and develop additional products
Ledgebrook, a Boston-based insurtech founded in March 2022, has announced that it raised a $4.6M round of funding to scale its flagship non-admitted GL & Supported Excess product & support the development of future offerings.
By leveraging a combination of both the best of modern technology and underwriting expertise, Ledgebrook aims to differentiate itself by offering the fastest, smoothest quoting experience to its wholesale broker partners.
Insurtech Ledgebrook raises $4.6M SAFE to scale flagship GL & Supported XS offering and develop additional products
Buoyed by the positive reception to the launch of its first product, Ledgebrook will look to move quickly in staffing up to accommodate demand and recruiting the next set of underwriting leaders to launch additional LOB on the back of the same core tech stack.
"I'm absolutely thrilled to bring Parker aboard Team Ledgebrook," said Founder & CEO Gage Caligaris, "his experience of having placed >$1B in premiums as the owner of a retail brokerage makes him uniquely qualified to offer insight and support to Ledgebrook as we grow."