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The Right Fit

Guy Carpenter head of innovation: Wave of insurtech startups has insurers looking for answers.
  • Meg Green
  • January 2019
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Claude Yoder

Claude Yoder

Claude Yoder, head of innovation and product development, Guy Carpenter, said more than 2,000 startups are focusing on some aspect of the insurance sector, but the challenge is determining which companies might be relevant to each insurer's needs. Yoder spoke with AMBestTV at the annual meeting of the Property Casualty Insurers Association of America, in Miami. Following is an edited transcript of the interview.

How is the insurance industry responding to the insurtech movement?

There are several ways that they are doing that. Insurtech really started several years ago with probably more concern around insurtech being disruptive and trying to come in with capabilities that would become insurance companies. More recently, you see many more startups that are interested in partnering with insurance companies. Of the 2,000-plus startups that are out there, the vast majority are looking to work with insurance companies to improve some aspect of operations, whether its distribution, underwriting, pricing, claims, infrastructure. As we look at it now, we see great opportunity for insurtech startups to actually work with insurance companies to improve their business operations.

What are carriers looking for when it comes to these insurtech companies?

The startups that are out there are typically more nimble. They're willing to work very quickly to solve problems. They've increasingly moved across the insurance value chain. They're no longer focused on just one aspect. Insurance companies are really interested in using them across the piece.

There is a lot of interest, for example, in particular on the distribution side, looking for startup companies to help them in some way, especially for those companies that are dealing with carriers that are dealing with the digital-native phenomenon. Really, kids that grew up with the iPhone are about 8% of the workforce today. They are going to more than triple that percentage in the next five years. The way that they want to transact business in general, and certainly with respect to insurance, is very different than what's been happening today—even than say with today's 25-year-old. The iPhone is only 11 years old. It's created its own expectation level from that type of individual distribution. Being able to speak to that customer base is very important, but it doesn't really end there. It goes to better techniques on the underwriting side using things like machine learning and pattern recognition. It goes to claims with respect to leveraging unstructured data using natural language processing techniques, and also looking to be more nimble in terms of the infrastructure.

There's an ability for carriers to work with startups that are starting to do aspects of a company's infrastructure billing policy in very interesting ways. It's also very diverse I think, in terms of line of business. It's not just personal lines. It's certainly in the commercial realm, life health, especially. It's grown very large over time. As I say, well over 2,000 startups that are out there are growing every year and part of the challenge is just figuring out which of those startups are the right ones to consider in partnering with.

What is the biggest challenge carriers face when trying to sort out who they should partner with?

The mere fact that there are so many of them and there is really no authoritative source that you can go to say, here is the insurtech community. A lot of startups have a machine-learning capability, or a robotics capability, or a virtual assistance capability. It may help insurance. It may help other industries, and part of the trick for carriers is to actually find where these startups are, how big is this community? They are looking in some ways for a map at the mall, the insurtech mall, in the first instance just to get their arms around what's out there to form a really broad perspective. A second challenge is, even if you are able to do that, how can you technically vet these startups, because they are startups.

 


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