44
Insurtech in the US: By the numbers A data-driven view into the insurance tech distribution landscape (P&C/Life focus) October 5, 2017
Insurtech in the US: By the numbers A data-driven view into the insurance tech distribution landscape (P&C/Life focus)
October 5, 2017
The technology market intelligence platform.
CB Insights software lets you predict, discuss and communicate emerging technology trends using data in ways that are beyond human cognition.
A few of our happy customers
The most publicly reference-able customers of anyone in the industry
“Think of the fundamental value chain of venture
capital…If we play the clock forward, the finding and
assessing of investments will be almost entirely done
by technology, not human beings. And the company
that is today positioned to be the market leader in that
evolution is CB Insights."
Pat GradySequoia Capital, Partner
Ray DalioFounder, Bridgewater Associates
“Our brains work like computers. They
input data and process it in accordance
with their wiring and programming. Any
opinion you have is made up of these two
things: the data and your processing or
reasoning.”
THE BACKDROP…
FEWER AMERICANS HAVE LIFE INSURANCE TODAY
Source: ACLI Fact Book, WSJ
9000
10000
11000
12000
13000
14000
15000
16000
17000
18000
19000
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
INDIVIDUAL LIFE INSURANCE POLICIES PURCHASED IN THE US BY YEARIn thousands
HALF OF LIFE INSURERS USING SOME TYPE OF AUTOMATED UNDEWRITING
Source: Limra, WSJ
MORE MILES DRIVEN > MORE CAR ACCIDENTS…
Source: III
…MORE SEVERE ACCIDENTS > HIGHER RATES
Source: III, WSJ
STUDENT DEBT IS DELAYING MILLENNIAL HOMEOWNERSHIP
Source: NAR
32% 29% 23% 10% 5% 2%More than 8 years 3-5 years 6-8 years 2-3 years 1-2 years Less than a year
LENGTH OF TIME DELAY FOR PURCHASING HOME FOR NON-HOMEOWNERS
Median delay of non-homeowners =
7 years
THE RENTER ECONOMY VS. RENTERS INSURANCE
Source: Pew, CB Insights, III Pulse Survey
“While polls have cited that 35-40% of renters have renters insurance, Cozy CEO Gino Zahnd thinks the figure is closer to <10% because of a skew toward the multi-family industry.”
SMALL COMMERCIAL INSURANCE: GROWING AND FRAGMENTED
Source: BCG/Morgan Stanley, McKinsey
HISCOX USA DIRECT BIZ: SEVEN YEARS TO $100M IN PREMIUM > SMALL BUSINESS IS A HARD PROBLEM
12-1300 class codes and 50 states =6,500 risks
“(Small business) is a really hard problem. There’s a high degree of difficulty and so that means if you can do it, there’s real value in it.”
- James Hobson, CEO, Attune
CYBER INCIDENTS ARE NO. 2 RISK GLOBALLY
Source: Allianz, III
CYBER IS EXPECTED TO BE ONE OF THE LEADING P&C GROWTH AREAS
Source: A.M. Best, Fitch Ratings
THE ZEITGEIST: STARTUPS AND VC ARE OUT TO “DISRUPT” THE INSURANCE INDUSTRY
INSURANCE STARTUP INVESTMENT DEAL ACTIVITY REMAINS STRONG…
$32
$240
$31 $44 $78 $37 $110
$45 $135
$422
$180 $132 $172
$1,852
$369 $295
$783
$398
$230 $271 $283
$985
$300 13 9 11
13
20
12
21
12
1922
30
2325
3128
40
59
3438
43
38
64
45
0
10
20
30
40
50
60
70
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
GLOBAL INSURANCE TECH FINANCING TRENDQ1'12 - Q3'17 (9/22/2017)
Total Funding ($M) Total Deals
…BUT THE NATURAL EVOLUTION OF MARKETS = CREATION > CROWDING > CONSOLIDATION
Source: CB Insights
MEANWHILE, (RE)INSURERS UNDERSTAND THE NEED FOR CHANGE. HERE’S WHAT THEY SAID ON 2ND QUARTER EARNINGS CALLS:
“I think different competitors and others are at different stages of their engagement in the marketplace. We are not standing still…”
“Change is coming. And we are not alone in terms of carriers improving their capabilities because of what technology brings that will lead that change.
“We do see change coming. We see it probably quicker today than we did a year ago.”
“We, like a lot of people, are starting to look at the insurtech space.”
Source: CB Insights
Alex RampellGeneral Partner, Andreessen Horowitz
“The battle between every
startup and incumbent comes
down to whether the startup
gets distribution before the
incumbent gets innovation.”
Source: A16Z
THE STARTUPS…
DIRECT-TO-CONSUMER STARTUPS GO AFTER TERM LIFE INSURANCE
Source: CB Insights
A LOOK AT HEALTH IQ…
Description: Online life insurance brokerage providing special rate life insurance for “health conscious" consumers as well as standard life insurance products.
Special rate insurance partners: Assurity Life Insurance, Ameritas, Savings Bank Life Insurance
Select investors: CRV, Greylock, Menlo Ventures, Ribbit Capital, Felicis Ventures, Foundation Capital
Claimed “coverage secured”: $5.72 billion
Quote process flow today:
Source: Health IQ
VC-BACKED STARTUPS ARE TAKING ON PERSONAL AUTO DISTRIBUTION IN DIFFERENT WAYS AMID A LONG-TERM STRUCTURAL SHIFT
Lead Gen
Broker Carrier
MGA
Select startups:
Root Insurance’s mobile app takes driving habits including mileage, hard braking, dangerous routes, driving regularity and time of day into account.
VC funding: $7M
States: UT, AZ, IL, IN, OH
DWP grew from $110K to $380K in Q2’17Source: William Blair, S&P Market Intelligence
A LOOK AT METROMILE…
HSCM’s Michael Millette on 7-year, $500M reinsurance placement paying higher ceding commissions in earlier years to offset CAC announced Sept. 12, 2017
“We believe that they analyze and select risk skillfully, and are happy to be their partner in this book of business.”
Direct premiums written (H1’17):$22.5MStates:
CA, IL, NJ, OR, PA, VA, WA
Source: Metromile, S&P Market Intelligence, Insurance Insider
MORE VC-BACKED STARTUPS TARGET TODAY’S RENTER…
Renters insurance Security deposit
Lease guarantee
Insurance & Surety
$382 Million $791 Million $4.76 Billion
New York California Countrywide
TOTAL RENTERS & CONDO INSURANCE PREMIUMNew York, California, Countrywide, 2013
A LOOK AT LEMONADE…
Lemonade chief insurance officer John Peters on expansion of its reinsurance program announced Sept. 1, 2017.
“We now have up to $325M in reinsurance protection: a lot for any company, let alone one our size.”
Direct premiums written (H1’17):$1.9M
States (Q2’17): CA, IL, NY
Customers as of June 2017 States as of October 2017
No deductible policies launched Sept 27, 2017
Source: Lemonade, S&P Market Intelligence, Reinsurance News
STARTUPS GO AFTER SMALL COMMERCIAL (BACKED BY (RE)INSURERS)
(Re)insurance backers:
Select startups:
MORE WORKERS’ COMP STARTUPS COMING…
Source: CB Insights
IN CHINA, ZHONG AN HAS RIDDEN SCENARIO-BASED INSURANCE FOR THE INTERNET ECOSYSTEM TO IPO…
Market cap after first day of trading: $12 billion
Source: Zhong An IPO prospectus
…NO SUCH THING IN THE US BUT STARTUPS ARE AIMING TO MAKE MORE RELEVANT INSURANCE OFFERS
“Instead of incessant advertising, Clearcover strategically offers car insurance “in moments when it matters,” like when consumers are buying a car, managing their finances or actively shopping around…When those moments do come up, Clearcover then uses its platform and custom APIs to get people from search to purchase with minimal effort.”
Source: Chicago Tribune, Zinc Platform, Tomorrow Ideas
Zinc is a technology company that provides insurance distribution software integration for loss, theft, and damage coverage to online merchants.
Tomorrow Ideas offers a mobile app for users to create free wills and trusts and also operates as a life insurance brokerage.
THE INCUMBENTS…
MASSMUTUAL’S HAVEN LIFE NOW IN 50 STATES. CUNA MUTUAL’S TRUSTAGE PASSES $1B IN COVERAGE. MASSMUTUAL PILOTS DIRECT
November 2016:Launch
September 2017:$1B in coverage
July 2017:$500M in coverage
Source: TruStage, MassMutual
STATE FARM SET TO LAUNCH NEW DIGITAL DIRECT AUTO WRITER
State Farm letter to agents:
“Today, State Farm Mutual Automobile Insurance Company is filing to authorize a new insurance company in Rhode Island – where we do not currently have State Farm agents – for the purpose of testing advanced insurance and technology concepts. The new company, HiRoad Assurance Company, is a digital direct writer initially writing auto insurance with the potential to later add other lines of insurance.
Customers’ expectations are changing based on their experiences with other companies. This test will help us become better as we learn how to accelerate the delivery of new approaches and technology that could be utilized by HiRoad and by State Farm and State Farm agents, employees and customers. It is disrupting ourselves in a way that helps us grow so that we can in turn disrupt the industry.”
ASSURANT PARTNERS WITH COZY; INCUMBENTS ENTERING AT INFLECTION POINTS
= 1.5M renters policies
= 500K independent landlords/renters (80% renters)
TRAVELERS TO BRING SIMPLY BUSINESS TO THE US
“So we look around the world, and we think how are we going to develop those capabilities? And we’ve got two choices: we can develop it internally or we can see who’s great at it, and see if we can bring that expertise in-house...Our ability to help them accelerate that in the U.S., I think was really attractive to them and the capabilities they bring to us is attractive to us.“
- Alan Schnitzer, CEO
GEICO BUSINESS INSURANCE <> BIBERK?
THE INSURANCE INDUSTRY HAS BECOME ONE OF THE MOST ACTIVE IN CORPORATE VENTURING
0
5
10
15
20
25
30
35
PRIVATE TECH INVESTMENTS BY (RE)INSURERSQ1'12 - Q3'17 (through 9/22/2017)
(RE)INSURERS ARE NOW TAKING THE LEAD ON TECH INVESTMENT DEALS
A LOOK AT MUNICH RE…MUNICH RE PARTNERSHIPS/INVESTMENT/M&A2015 – 2017 YTD (through June 2017)
Partnership
M&A
Investment “Once enough units have been sold, the two companies will present fleet data on accident reduction to state insurance regulators, who must sign off for Munich Re to bundle the tech into a newly designed insurance product it’s hoping to launch.”
partners with
MARKEL ACQUIRES STATE NATIONAL
“State National, I think they are ideally situated to sort of be the go between the insurtech folks and sort of your standard insurance carrier types. It’s a clash of cultures there, I would say.
The insurtech folks are used to things happening lightening fast and with minimal regulatory issues and all that and that’s not insurance. So there almost needs to be a translator between insurtechfolks and standard insurance folks. And that is a role that State National plays…And we see them helping us with our insurtech initiatives sort of being that translator between us and those folks.”
- Markel co-CEO Richard Whitt III
invests in
NO SILVER BULLETS. FORGET BUZZWORDS, WATCH ACTIONS.
“Our focus is on being a SaaS company, and not a broker.” – Zenefits CEO Jay Fulcher
Sign up for the CB Insightsinsurance tech newsletter
Join 17,000 (re)insurance executives, strategy professionals, investors, and startup founders:
https://www.cbinsights.com/research-insurance-tech-newsletter
Want the deck? Email me at [email protected]
