life insurers step up dealmaking

At its annual meeting earlier this month, Berkshire Hathaway’s Warren Buffett gave a cautious outlook for the cyber insurance industry, explaining:

“I don’t think we or anybody else really knows what they’re doing when writing cyber…I think anybody that tells you now they know in some actuarial way either what general experience is like in the future, or what the worst case can be, is kidding themselves.”

Meanwhile, market expansion of cyber coverage continued in 2017. Last year, standalone cyber direct written premiums grew by 7% to $986M, per Fitch. AIG and XL Group took 23% and 18% market share of the standalone premiums captured in filings.

Among the publicly-traded companies in the cohort above, cyber has also become a hotter topic for executives on earnings calls.

Cyber insurance startups have also received more venture capital interest as of late. Part of the reason is a belief that 1/ startups can construct novel approaches to gauging the cyber risk profiles of SMBs in a streamlined way 2/ startups can better use technology to go beyond insurance into a more active risk management service including in-house cybersecurity tools.

At-Bay, a Mountain View-based managing general underwriter for Hartford Steam Boiler, announced a $13M Series A last week led by Khosla Ventures. Per CEO Rotem Iram:

“We work year-round to monitor our portfolio companies’ technology and alert them of new vulnerabilities. After clients buy an insurance policy, we share a common incentive with our portfolio clients, avoiding loss, and as a result we provide these services free of charge.”

Another startup, Coalition, which we wrote about in January, has reportedly signed on 1,000+ customers and wrote over $1M in premium in its first three months of writing insurance.

Both Coalition and At-Bay distribute their insurance products through existing retail brokers and write up to a $10M aggregate limit. Depending on who you ask, the number of SMBs with cyber insurance is somewhere between 5% to 15%.

Coalition’s cyber insurance products are backed by Swiss Re and Argo Group. One benefit for these startups’ (re)insurance partners is the access they get to cyber risk insights that would be harder to discern from cyber analytics vendors. Other recent cyber insurance-related startup financings include Paladin Cyber and CyberCube Analytics.

More ecosystem partnerships

Competition is heading up between China’s leading online health service providers – Ping An Good Doctor and Tencent-backed WeDoctor.

Just days after Good Doctor’s IPO and subsequent valuation concerns, WeDoctor received a new $500M investment and strategic partnership with Hong Kong-based insurer AIA Group. Specifically:

• A portion of WeDoctor’s 110M+ registered customers will be able to access AIA’s life and health insurance products in the five provinces where AIA operates in China today
• AIA customers will gain preferred access to WeDoctor’s online and offline healthcare services.

Why this matters: Cigna recently said it believes China will become its biggest overseas market, because it features 1/ an expanding middle class 2/ an aging society and 3/ a rise of chronic diseases. Today, China has overtaken India with the highest number of diabetics.

Platforms like WeDoctor and Good Doctor are helping insurers build ecosystem-based approaches to digital healthcare in China. Good Doctor, for example, claims 190M registered app users and says it operates the country’s largest internet healthcare platform in terms of members and daily online consultations.

Ladder raises from life insurers

Ladder today announced it had raised strategic investment from Allianz Life and Northwestern Mutual. The Menlo Park-based MGA startup provides up to $8M in term life insurance and says it has placed $1B in coverage to date.

Here are some recent responses to Peter Orszag’s Bloomberg column on the decline of life insurance ownership:

• From MassMutual CEO Roger Crandall: Curbing the decline in life insurance ownership
• From former Foresters Financial head of strategy Jake Tamarkin: What’s wrong with life insurance

Have a great week,

Matt
@mlcwong

P.S. Our Future of Fintech conference is about a month away. Hear from SoFi’s Anthony Noto, Affirm’s Max Levchin, Robinhood’s Vlad Tenev, and more on June 19-21 in NYC. You can save $500 by using the code FoFinsurance.