2016 early-stage insurance startup trend. SquareTrade's losses. This week in insurance tech.
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Last week, we hosted our first-ever CB Innovation Summit and covered a lot of ground. Below are a few talking points that came up:
XL Catlin’s Sarah Street on whether smart home tech will eliminate the need for insurance
Do I think (home sensors) will eliminate the need for all home insurance? No, I don’t. Because irrespective of everything that you do around loss prevention, disaster still happens. But it will definitely influence insurance.
For years, insurance carriers have offered discounts for having security alarms in their homes. But we’ve not known if those alarms have ever been switched on or if they work and therefore we’ve been assuming that rational behavior would be the case. With real sensors and real information, it’ll allow the industry to be more granular on a consumer by consumer basis offering better terms, better coverage and ultimately better prices for people who have different behavioral aspects.
Sequoia’s Jeff Pashalides on the TrueCar/USAA partnership
TrueCar was partnered very closely with USAA. USAA is a great organization, but in Silicon Valley it’s not the bright shiny object. In the case of TrueCar, they said the corporate strategy of USAA is to solve real problems for their members. USAA already lent into auto, they already insured auto and they were trying to fill out five or six more pieces of the auto lifecycle for their members.
So they said what can we build in-house and what can’t we build in-house. Having an actual car-buying program is complicated, you have to be national, you have to have a footprint that they just weren’t able to do in-house. When TrueCar went public, roughly a third of the business was coming through USAA. TrueCar probably couldn’t have existed without them and USAA couldn’t have solved a problem for their member base without TrueCar.
UnitedHealthcare’s Deborah Sundal on startups “achieving scale”
We can have the most elegant, well-positioned startups who have no idea what it means when we say scale. They may be able to scale for a hospital system, but they do not know what it means to turn on a dime to sell to massive numbers of large employers and then to need to be able to deliver that across the country and sometimes across the world.
If you want to catch up on more coverage of the entire conference, you can do so here. Videos will become available here.
The number of insurance-related corporate venture capital groups continues to grow. Just this month, we’ve seen the announcement of new corporate venture funds by Northwestern Mutual and Swiss insurer Helvetia Group.
Naturally, overall strategic private tech investment by (re)insurers has spiked.
Notably, insurers or their venture arms completed just one strategic investment to a private tech company in 2012. In 2016, they completed 100. Among the hot areas for strategic investment were digital insurance distribution, cybersecurity, and connected devices.