Q&A: Cyence CEO Arvind Parthasarathi. This week in insurance tech.
Coming to life
Amid a growing number of insurance tech startups, few have targeted life insurance policies.
Today though, Ladder Financial announced a $14M Series A round led by Canaan Partners to sell term life policies through an MGA agreement with Fidelity Security Life Insurance with plans to launch in California.
Marketplace lender SoFi is also reportedly entering the life insurance business and appears to be planning to sell a Protective Life product per its insurance license. In September, MassMutual’s Haven Life announced it would sell term life policies of up to $1M without urine and blood samples for qualifying customers.
While we’ve seen an uptick of activity on the P&C front this year, life has been underindexed. However, more startup activity, and perhaps product innovation, looks to be on the way.
Below is some data on insurance tech Series A activity globally since 2011. (CB Insights subscribers can click here to see all deals and data.)
Q&A: Arvind Parthasarathi, CEO, Cyence
Over the last couple years, there have been growing number of moves by major industry players to invest, acquire, or partner with cyberrisk specialty firms.
The latest was by Aon, which agreed to acquire NY-based cybersecurity specialist Stroz Friedberg to “augment (its) risk-mitigation services, while also providing insights to help insurers expand and create new cyber offerings.” Last year, AIG took a minority stake in cyber investigations firm K2 Intelligence. And earlier, Marsh collaborated with Cyence to power its Cyber View and Cyber Monitor services.
Cyence recently emerged from stealth with $40M from NEA, IVP and Dowling Capital Partners to provide economic modeling of cyber risk for the insurance industry.
There’s four components to how I think about this company. The first is around the cybersecurity problem: there’s lots of great technology that’s out there, but there isn’t any amount of money that you can spend on cybersecurity to give yourself a guarantee that you will not have an event. So how do you actually solve for this problem? It technically can’t be solved, it has to be thought of as a risk.
Secondly, when we talked to people in the industry, we realized cyber is an opportunity and a peril. It’s a fast-moving market for premium growth, but on the other hand, there’s also billions or trillions of dollars of exposure. The insurers need an economic risk model and a framework to deal with both.
In the marketplace, we saw lots of ratings and scorecards that you can get on a company’s cyber posture, but we found the insurance industry wanted a different take on the same problem, which was having an economic view, largely becasuse the insurance industry is looking at things in aggregate, whereas the cybersecurity industry is focused on protecting individual companies.
Finally, in order to be able to do all this economic modeling, we realized this wasn’t a technology problem. A large portion of the claims that are being paid out have nothing to do with technology: many of them are insiders or accidents or privacy violations. There’s an excessive focus in cyberinsurance on cybersecurity and technology, whereas in reality the problem the industry is solving is really a human behavior problem and being able to have an effective model that can have capital deployed on it.