Life and Small Commercial Carriers Discuss Startup Trends, Key Capabilities, and Best Practices at InsureTech Summit

Last week, Novarica hosted nine life and 16 small commercial insurer attendees for its first InsureTech Summit. Participants met with 20 startups to ask questions, see demos, and discuss best practices for creating partnerships. Insurer attendees asked a variety of questions to get insight into the capabilities that startups had to offer. Their questions can be grouped into three main categories: integration and pricing, insurance use cases, and data and data quality.

Integration and Pricing

Multiple startups were asked about their ability to integrate with core systems, implementation approaches, and implementation timelines. One startup, a communication platform focused on insurance, mentioned extensive APIs and light integration, removing the need to key in all user information to manage transcripts. Another startup working in the life space described its longest implementation as seven months, with its most recent implementation lasting four months from contract signing to production. Some startups preferred working with systems integrators during implementation.

One insurer attendee asked a startup featuring an AI-powered data platform about its pricing options. The startup described a pricing model based on volume of submissions, and others embraced this flexible pricing approach, citing “pay-per-document” and “a la carte” options. Most startups could deploy both via cloud and on-premise.

It’s good to see these mature startups approaching insurers with multiple integration options ranging from “no integration needed” to “API integration” to “pre-built integration with common core systems.” Many new startups haven’t yet recognized the reality of insurer legacy infrastructure, and one sign of a startup with live clients (like our event presenters) is a robust plan to support a variety of complex insurer back ends.

Insurance Use Cases

On the small commercial side, one drone-based startup’s clients saw 32% fewer roof claims in 2019 than in previous years, despite experiencing more severe weather. Another startup, focused on decision science, used AI to simplify the commercial underwriting process and cited a case study in which a general contractor BOP client saw a three-fourths reduction in application questions. A third startup working with small commercial carriers highlighted its use of data collection to validate risk-related aspects of entities submitted: smoke detectors, whether a business serves alcoholic beverages, the percentage of receipts related to alcohol, etc. One InsureTech attendee mentioned the ability to reduce carriers’ exposure to omissions and errors by 10%.

Startups working on the life side highlighted the ability to integrate with financial planning apps. One vendor, which leverages consumer wearables to mitigate the risk of undiagnosed chronic conditions for life insurers, discussed the concept of offering a truly differentiated life insurance product: a policy that is re-rated based on ongoing behavior. One InsureTech mentioned that a current life carrier client used its offering to process 75,000 claims per year, while another client processes around six million claims per year.

Insurers want to hear from startups that understand their specific industry use cases rather than those that bring a cool technology and look to see where it might fit. Better yet, insurers want to learn about real results from production case studies; projected improvements don’t mean much without real-world proof.

Data and Data Quality

Some InsureTechs in this space work with third parties to get data. Flexible approaches to data seemed to be popular as multiple startups reported paying for data or offering client contract options. Insurer attendees also asked about the accuracy and quality of data provided by InsureTechs. One startup attending does its own interpretation of data; it does not buy data, but it has agents continuously managing data in the background of its batch processing cycle.

All startups seemed to embrace a customer-centric data ownership model, with flexibility to modify terms of service based on the carrier or any state-specific requirements around data and privacy. It’s clear that data is becoming part of the core system ecosystem, both for incumbents and startups alike.

Approaching InsureTech Partnerships: Education and Expectations

To get the most out of InsureTechs and the capabilities described above, insurers should be prepared to educate startups on the industry and plan for maintenance. The startup attendees at Novarica’s InsureTech Summit were all vetted for robust products with existing production clients and a level of funding promising a reasonable runway. That means they’ve had experience with the realities of insurer legacy systems and processes. But most startups won’t understand the complexity of an insurer’s legacy environment, so carriers should expect to teach them about their integration and maintenance needs.

Working with startups also means planning for transience, as even funded startups have limited financial runways compared to incumbents. The goal for carriers should be having the ability to turn off tech without having to rebuild processes from scratch, keeping in mind that startups often have great technology but may not be built for scale or duration.

If carriers hope to create successful partnerships, knowledge of what InsureTechs are offering, as well as best practices on working with them, is essential.

To learn more about working with startups, check out some of Novarica’s related research below. To learn more about any of the InsureTech Summit startups presenters, contact our subject-matter expert, Jeff Goldberg at [email protected].

InsureTech Summit Startup Attendees

Commercial: Automation Hero, Betterview, Cape Analytics, Chisel, DataCubes, Hi Marley, Kespry, Planck, RiskGenius, Terrene Labs

Life: Atidot, Automation Hero, Benekiva, Cardiogram, Everplans, Friendly, Instabase, Limelight Health, Sureify, Vidado

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