ITC 2021 in a Nutshell

Partnerships: While the theme in earlier years has been how insuretech startups would disrupt established carriers, there is a greater spirit of partnership this year. Carriers recognize the need to take new technologies and new ways of doing business seriously, and startups recognize they need to partner with carriers more on their terms.

Distribution innovation: Digital agents and brokers , as well as platforms, exchanges, etc., are in the driver’s seat when it comes to distribution innovation, and carriers are becoming more adept at integrating with them.

Executing on innovation: Carriers are realizing the key to insuretech innovation is to change the way they innovate: digital product-led, human-centered design; long-term vision but small, incremental experiments; and modern architectures that support rapid development.

Customer experience is currently a top priority for many carriers as it is still a place where there is much room for improvement. A Tier 1 CIO says his firm lives by the words of Steve Jobs: “You've got to start with the customer experience and work backwards to the technology.”

Insurtechs still have much room for growth. In a keynote session, the speaker said the combined market capitalization of all insurtechs is presently less that that of PayPal. However, the general demand is skewing towards solutions that are focused on solving basic business problems (i.e., subrogation, document management) rather than those playing more aspirational areas.

Real-time pricing for risk is becoming a reality. This is enabled through better use and access to data, enhanced underwriting practices, and a rise in digital agents.

Vendor partnerships: I definitely agree with all Rob’s point especially the partnership bullet and I would add to it that the vendors in the space are in the same place as the carriers; many are looking to partnerships as a way to grow as well, especially at the pace the industry is currently moving at. This applies to both, insuretech startups and more mature providers of solutions or services.

Digital, digital, digital. If you aren’t in the process, planning or executing digital capability then you best get out of the way because you will be left behind. Obviously the insuretech sector will emphasize this but happy to see that many established vendors are moving at light speed to enhance existing or build/planning new digital capabilities.

It’s all about the data. A large number of vendors and insuretech’s representing data and analytics. Existing and new data sources to be tapped for such things as embedded insurance and underwriting.

Experiences must be holistic: The experience for the producer and the customer carry equal weight. Irrespective of the service channel—online, offline, chat, web, social, or over the phone—customers must feel a coordinated experience and recognize value.

Building vs. partnering: Digital transformation tools are now, clearly ubiquitous and available “off the shelf”, but are insurers still trying to build it themselves? The benefit of partnering is not only an accelerated delivery, but the infusion of innovation and technical expertise.

It’s a marathon, not a sprint: Persistence is key. This year’s ITC had a vibe that is reflecting a maturing market for early entrants who were startups 3 years ago. This is very good news for longevity sceptics and means that insures must get beyond just a ”cool use case” by pursuing solutions that must expand their enterprise value—adding increasing value over time.

Agents and brokers are getting more involved in the insurtech world: Using new digital tools to create process efficiencies and reduce expenses. None more important than data! Agents are starting to use AI against their own submission data to better select markets ( who actually writes this) in order to avoid work, to leverage insurers for better pay, to improve their own sales through propensity analytics etc. But this data is valuable when you have scale - meaning the larger the agent, the more valuable the data - if they have the tools to use it. We’ve seen M&A in the insurer world grow - partially based on the aging workforce and now also, on the need for scale. I could foresee a time when the brokers are selling data back to the carriers to help them understand their own pricing, selection, appetite, success rates.

Maturity of insurtech: We now know what works and doesn't. Insurtech startups have figured this out, in some cases evolving into a tech player rather than staying just as an insurance player (i.e., Haven Life launches Haven Technologies, following other similar plays from Slice Labs, Trov, Zhong An just to mention a few). Insurers know that they have to look for their next partner in the exhibit hall rather than the sessions. And while back in 2017 at ITC, there weren’t many startups looking to compete with insurers among the participants, this has changed this year (who didn't notice the green t-shirts of the Hippo gang everywhere?). These neo insurers claim their share of attention as they grow in size and test their business models at scale.

Execution kills novelty: Nothing new in terms of technology for insurers, but a few insurance models enabled by technology growing in relevance. Think about the different flavors of embedded insurance, parametric insurance, digital partnerships, and risk sharing models. Success is now measured by the capacity to execute at scale. Looking beyond product and market fit, into risk fit; enabled by technology but being a risk taker in the core (unless you are in the distribution side of the business).

Show me the money (Part II): Back in 2017 I reflected post-ITC that the industry needed to see successful, profitable, stories to sustain investments in insurtech startups. While some (neo) insurers could be seen as a success from an investment perspective, there is still some way to go until they can demonstrate sustained profitability. For now, their valuations represent, at most, the potential they have to grow their portfolios. Those few that are showing profits are either niche (neo) insurers that operate at low cost or jumbo (neo) insurers that use the scale of their ecosystems and partners.