Other parts of this series:
Caribou Honig is the co-founder and chairman of InsureTech Connect. In this interview, he looks at the kingdom of the enterprise, how a harebrained scheme became the move-to insurtech convention—and why it’s time for begin-united states of americato prove themselves.
Highlights
- The first wave of insurtech begin-usaare at a factor of proving that their products certainly paintings—and demonstrating properly economics for themselves and their stakeholders.
- Not all insurtechs will survive—in line with Caribou, “maximum of them will die out.”
- Trends to observe consist of the connection between technology, fee curves and the drivers of transformation; APIs; embedded insurance; and channel partnerships as a way to introduce new categories and merchandise.
Season of the Accenture Insurance Influencers podcast
Welcome lower back to season two of the podcast. This season, we’ll be taking a deep dive into insurtech. Every two weeks, we submit an interview with an insurtech founder, VC or thought leader with the intention of learning: How are these industry vanguards harnessing alternate and the usage of it to create a more dynamic future for themselves?
Last week we kicked off the season with a observe Trov. Founder and serial entrepreneur Scott Walchek shared what he’s discovered approximately the insurtech global; why Trov has pivoted from its on-demand direct-to-purchaser software; and why the agency is now specializing in self sustaining cars and financial institution partnerships.
The evolution of insurtech, with Caribou Honig
Insurtech players might be acquainted with Caribou Honig as the fedora-wearing chairman and co-founding father of InsureTech Connect (ITC), as well as the chairman of HR Transform. Recently, he spoke to us approximately all matters insurtech, from rising trends to a philosophical study the social implications of insurtech. In truth, we had a lot to talk about that we’ll be publishing several episodes with Caribou during the season.
In this primary episode, he seems on the modern nation of insurtech—and gives us a teaser for what to anticipate at ITC2019, taking location September 23–25 in Las Vegas.
The following transcript has been edited for length and readability.
Welcome lower back to season two of the podcast. I’m Eagranie Yuh, and nowadays I’m speakme with Caribou Honig, the co-founder and chairman of InsureTech Connect, and chairman of HR Transform. I’m definitely searching forward to our communique. Shall we get commenced?
I’d be delighted.
You spent ten years at Capital One, an organisation recognised for its facts-pushed recognition; and from there you co-based QED Investors, a mission capital organization targeted on records-pushed agencies. Given that background, what are you seeing inside the insurance industry proper now?
I think there’s a group of exciting traits. Some, I get extra obsessed on than others.
- Parametric coverage, where the payouts are triggered via a few objective 1/3-celebration facts feed, for a few sort of incident. I like that lots. It’s nevertheless ramping up and it could be my first rate white whale that by no means honestly takes off to its fullest the way I think it should.
- APIs. I’ve actually been obsessed currently with APIs and the API-ification of the coverage stack. I assume that’s got massive implications for insurance, whether or not insurtech or incumbents.
- Cost curves. I’ve these days began thinking about the entire era-pushed alternate in coverage as a query of price curves. And I worry that begins to get definitely, certainly nerdy, even greater than my regular nerdy stage. But I’m just beginning to consider properly, the whole lot obtainable, from a generation angle from the facts age, whether or not it’s processing energy, whether or not it’s extra implemented such things as cloud storage, or the value of a given amount of functionality of a cellphone. Getting a satellite picture, the price of that’s taking place; the price of sequencing the genome is falling dramatically. A lot of cost of exertions can start to get replaced by using software program or system intelligence. A angle of searching at the technology developments impacting coverage as a hard and fast of cost curves is maybe an thrilling language to observe.
And I recognize you’ve amassed a library of APIs.
So I’ve got a facet task referred to as InsurAPI.Io. It seems like there ought to be a catalog of all of the APIs related to coverage gathered in a single area, so that if you are growing an API and you want to allow the arena understand about it, you simply allow the arena realize about it via InsurAPI.Io. Or in case you’re looking to construct something and you need to discover what APIs already exist, you could simply tap into, so that you don’t ought to rebuild it, you just go to one area, InsurAPI.Io, and also you find it.
And strangely it didn’t seem to exist, but regarded like it'd be beneficial. And so I’m in a procedure with more than one folks I recognise to try to create it. So right now we’re in a tough beta, and over the course of the next couple months, I’m hoping that it turns into virtually quite functional and start to be useful for human beings.
At InsureTech Connect, you’ve opened up your beyond keynotes by way of searching at some of the huge enterprise traits. Last year [2018], you mentioned a Cambrian explosion in insurtechs. Can you speak a bit bit approximately that?
Yeah, I’m always satisfied to. Now, I’ll start for people who aren’t aspiring biologists. It’s a reminder that the Cambrian explosion became like 500, 550 million years ago. And it’s simply in which complicated organisms started out to emerge and form of went from lots and masses and plenty of unmarried-celled animals to, “Oh appearance, there’s a complex trilobite swilling all round. Isn’t that interesting.” But without a doubt, many one of a kind styles of existence were attempted out at that second and that gave upward push to a whole lot of exciting a hit forms of existence thereafter.
I assume the Cambrian explosion we’re seeing in insurtech commenced approximately 3 or 4 years in the past, no longer 500 million years in the past. But without a doubt, I see this explosion of interesting new thoughts and new types of organizations and business models and merchandise and statistics all rising seemingly out of the top notch primordial soup of coverage.
That’s truly exciting because it’s virtually tough, even if you’re a VC, to are expecting which one, or which frame kind, of begin-up goes to prevail. But it’s a bit less difficult that allows you to make the claim that a few of them are going to succeed and that’s what it appears like. I won't recognize whether it’s going to be mammals or Tyrannosaurus Rex that emerges out of the Cambrian explosion, however it positive feels like some thing on multiple legs might be going to have a quite accurate outcome.
Right. And as we’re recording this, Lemonade recently introduced a bid for IPO with an anticipated $2 billion valuation. I don’t necessarily want to get into the specifics of that, however as an alternative to speak approximately distinctive routes for these insurtechs, so IPOs, M&A, MGAs that tackle more of the risks themselves. What are those viable for these little or medium-sized companies? What are the alternatives?
You recognize, I’ll begin by pronouncing, “…and most of them will die out,” that is an critical backdrop.
Part of it can be the challenge capital math that’s in my head, right? Success for this Cambrian explosion does not suggest 9 out of ten of these begin-united stateshave to be triumphant. It method two or 3 out of ten need to do quite properly, as a minimum make their buyers a few money. Maybe one in ten do clearly, genuinely nicely, deliver their investors a 10x or 30x final results. And which means, by the manner, that more money will then come into the sector and be recycled and it’ll retain to have its proliferation of new agencies, new begin-u.S.Coming out of it.
But that still shows a third will fail, and a third will type of capitulate and just become bolted directly to some different business enterprise that has a operating business model, and that’s best.
I assume that of the ones which can be going to be eventual winners… Look there’s two types, there’s a essential split.
- There’s the B2B agencies, those which are trying to sell into coverage incumbents. They’re organisation-facing begin-ups, they are looking to help the incumbents grow to be higher, faster, more efficient, greater patron-pleasant, anything.
- And then there’s the consumer-going through begin-ups. Think of Lemonade, as a well-described purchaser-dealing with begin-up. They’re now not trying to promote into Allianz; if anything, it’s the other manner around.
The customer-dealing with ones like a Lemonade or Metromile, they’re looking to get the insurance incumbents into their deliver chain, whereas the B2B ones are looking to end up part of the deliver chain of the present day insurance giants. Both are valid ways to visit marketplace of direction, however they have one-of-a-kind professionals and cons.
In phrases of exits, IPOs are great. They are, first and primary, they're a financing event. They aren't the vacation spot. And that’s why superb marketers don’t get wrapped up round, “hey, my intention is to IPO.” If your aim is to IPO, that makes for a far less interesting agency. If your aim is to build a exceptional employer and that could end up turning into part of a few different company, or it can become being standalone, may additionally stay personal for many years––the ones are all fine.
I suppose the secret's how are those corporations building essentially good economics for themselves and for their stakeholders. That second element is similarly important. A superb organization—a sustainable organisation—isn't going to just construct outstanding profitability for itself, it’ll be building a wonderful price proposition for its clients, whether or not establishments or consumers. And it will be simply incredible for its very own deliver chain. If you're a consumer-facing, new insurtech start-up and also you’re working with a reinsurer, a part of your activity in building it into a sustainable business is ensuring that reinsurers get precise returns too. As properly as ensuring that those customers are getting a superb coverage product.
It’s curious because at your 2017 keynote, at the cease of your touch upon Cambrian explosion, you stated, “with few exits to this point.” So what I’m hearing is which you do expect quite a whole lot of exits to come, a third of the industry.
I do. I’ve turn out to be very optimistic, simply, in the closing twelve months. If you’d requested me 12 months and a day ago, I would’ve said, “I think that this insurtech aspect goes to prove to be treasured. But there’s a real scenario in my mind that I worry about wherein it doesn’t.”
At this factor the matters I’ve seen, I experience like yes, there’s actually a few precious groups being created, in both the B2B and the consumer-facing aspect of things. Maybe now not usually the buzziest groups, however I do think that there are quite a few agencies that are building real, sustainable economics, and are pursuing strategies on the way to, over the years, deliver scale and are therefore developing actual economic price, either as a standalone within the long time, or something this is valuable inside the fingers of a person else.
We’re now, name it 3 years for the reason that Cambrian explosion began and the first wave of contemporary insurtechs started out getting early-degree funding. Now is just about the time in which you’d expect them to begin demonstrating the truly thrilling economics, due to the fact first you’ve got to get the finances, you then’ve got to begin building out the product, you then’ve got to build out partnerships. And in coverage, despite the quite appropriate willingness of the coverage cost chain, the coverage incumbents, to clearly experiment and interact with the begin-ups, lights up a brand new product honestly does take pretty a long term in insurance––for lots properly motives. It’s complex. There’s regulatory hurdles. There’s actual threat which you need to manipulate here.
But now's approximately the time when the primary wave of begin-u.S.Ought to be at the point of proving that what they’ve been constructing honestly works. And so the next 12 to 24 months; I will say, if that first wave of insurtechs doesn’t start to have some clear winners when it comes to basics, then there's a real trouble.
But I’m honestly quite positive from the bits and pieces I’ve seen and triangulated into, that there’s at the least an awesome fraction which might be building something actual and exciting.
Cool. Well it’ll be an thrilling 12 to 24 months to peer how that plays out. Another considered one of your harebrained schemes that appears to have taken off, InsureTech Connect, kicks off September 2019. Forgive me, I don’t have the dates in the front of me however…
September twenty third to 25th.
There you pass. In Vegas?
Yes, on the MGM.
Last yr it had greater than greater than 5000 attendees. Is that right?
That’s proper. In our first yr we had 1500, it went 3500. Last year was 5500. Our exceptional bet is it'll be someplace around 7500 this yr.
Wow. I imply, that’s pretty remarkable for a harebrained scheme. What do you characteristic to this fantastic pickup in help of ITC?
I like to mention that within the direction of someone’s career they’ll probable have 3 or four really precise thoughts. And this became honestly considered one of my 3 or 4 quality that I assume I’ll ever have. This certainly turned into a case of constructing some thing for a focal point organization of 1. And as humorous as that sounds, that definitely is a key to why it succeeded.
I had to go to this factor, so I found a fellow who’s now come to be a exceptional business partner with me, Jay Weintraub, to help bring this perception to existence. And we constructed it to be the sort of convention that I could want to go to with my mission capital hat on, assembly other buyers, and meeting the entrepreneurs, and meeting the innovation executives throughout the industry.
I suppose that helped with the execution of it quite a lot. Making sure that it without a doubt became very commercial enterprise-targeted, very final results-focused, an area where enterprise virtually can get performed. Certainly I assume we benefited from our timing as properly. We couldn’t without a doubt discover anything else obtainable quite like it. And it simply coincides with the Cambrian explosion.
It’s genuinely intended to be very which includes all classes of insurance, all components of the price chain for coverage as properly. And I assume that we genuinely did a pretty first-rate activity, if I can pat myself on the lower back, round additionally making it expansive at the diversity and inclusion; bringing inside the new talent. We had some scholarships, so to talk, for some students to wait. We in reality made positive that this isn’t your grandfather’s Oldsmobile.
This isn’t necessarily a conventional-looking convention in phrases of who’s there, but it's far senior in terms of the individuals. And, perhaps what’s most super, is humans come to it with a attitude of exploration and innovation. And I think context topics, because I assume you can have most of the same humans attending a special occasion with out the equal context and that they wouldn’t be as keen to take new introductions and meet people that they haven’t met earlier than.
But I think that we managed to set the context for the occasion in order that humans are coming in truely quite keen to encounter folks they may now not already understand and be open to new ideas as the muse of the conference for destiny business deals, future partnerships popping out of it.
As it receives larger, do you experience like it sort of takes on a existence of its own in which those matters will evidently show up? Or does ITC want to manual things? Are you a touch bit extra of a matchmaker as it receives bigger?
As it receives bigger, it’s sincerely harder for us to hand matchmake: “Oh Susie! Oh Bobby! You two should surely talk. You’ve got something in common.” We actually try to try this where we will, but the larger it is, the hand-picked connections just don’t scale as nicely. We have tools that we offer, an app to allow people matchmake and we’re in reality quite considerate approximately the frameworks we use there.
There’s truly loads of, I name it social engineering, happening as nicely in now not just the content that’s on stage but inside the whole layout of the time table. There’s a variety of fee in serendipity. It’s one in all my favorite phrases. And if we are able to engineer the situations for serendipity, where two individuals who weren’t even seeking out each different controlled to sit down down on the right lunch desk and say, “Oh, what do you do?” “Oh, what do you do?” “Oh, nicely that’s interesting. We need to talk approximately that once the occasion.”
If we are able to engineer those conditions for serendipity, and the context of in which humans want to find out about what’s taking place and what the possibilities are, that really receives our job executed, 90 percent.
What can humans anticipate from ITC if they haven’t attended? What’s the overall layout? Is this suits and ties or are we talking jeans and hoodies?
Whatever makes you snug. Now, the fits and ties, the tie component as a minimum is pretty uncommon. You see some of them, that’s OK. And you realize you spot the denims. I like to speak about likely the most commonplace, which is what I might name “challenge informal”: jeans with a sports activities coat, for the guys at least.
It’s supposed to be onerous, and I suppose we succeed at that really. If you show up on Monday and visit more than one the pre-conference activities, then we’ve were given the kickoff, and then there’s usually a few dinners and such things as that. And then the principle software begins the following morning and goes until four:00 or 5:00. And then there’s dinners and beverages, and drinks and dinners, and assembly with human beings. And then greater of the equal the following day.
It’s honestly supposed to be—now not frenetic—however virtually lively and onerous, because all people’s coming there abruptly. And in case you’re going to make the maximum out of it, you want to jam the time in to satisfy with as many human beings as you can and notice the thrilling content that you could and enjoy the blessings of serendipity.
You simply do need to move in with a attitude of, “OK, I’m now not going to be necessarily hitting the slots in any respect. I’m not going to be ingesting too much. This is going to be paintings, work, work, but I’m going to get extra performed in and a half of days than I’d be able to get completed otherwise in and a half weeks.” That’s my hope anyway.
And then it’s also––my son is asking at colleges right now and he’s a junior, growing senior in college––and as we’ve gone to the large universities, all of them say that the identical line, “You can make a big faculty small, but you can’t make a small school massive.” And there’s a piece of that for InsureTech Connect. Our job in lots of methods is to help everyone have the right event for them. And that doesn’t suggest it’s going to be the equal occasion. They may additionally don't have any overlap with someone else at the occasion in phrases of what panels they see or what networking activities they attend. And that’s exceptional, because so long as you could make it applicable for everybody there, then that’s first-rate.
I assume one of the key factors of Insuretech Connect is which you entice a virtually worldwide target audience. Why is that crucial?
So it starts offevolved with, insurance is a international industry and the insurtech movement is happening globally. And so it might be a narrower verbal exchange to make it just about the United States.
There’s a number of value, of path, in local meetings and there are a few very good regional meetings around insurance and insurtech around the arena. But there’s additionally amazing value in having at the least one convention that does have a international scope of conversation.
And so there’s learnings that you can get from understanding what’s taking place in extraordinary markets, and talking on your counterparts in distinct markets. The aspirations of the start-united states of americaand the pursuits of some of the incumbents don’t recognize geographic bounds.
I think some of the Chinese tech titans, for example, that have a few actual plays in insurance, they’re beginning to study increasing into markets like Brazil. And one of the things I love is that we can have approximately, my bet is 100 humans from Brazil this yr attending. So it’s a terrific purpose for people from China, in the event that they’re interested by what’s going on in Brazil, to attend our occasion and learn from it. I simply suppose it’s a far extra robust set of conversations people could have.
You generally highlight some large coverage developments as part of your keynotes. I’ve observed you’ve gotten far from the predictions a touch bit, however I’m curious: do you have any teasers of what to anticipate for the 2019 keynote?
Well, I foreshadowed a bit bit, this considering generation particularly using exchange by using the cost curves down, and the way that during a few cases may be so tremendous, that it’s transformative or opens up the door for transformative business fashions. I like that concept loads.
I gained’t be able to assist myself however to hold speaking approximately the API-ification of the insurtech stack. And I’m getting progressively extra enthusiastic about genomics and the results there.
What I feel most confident approximately is that this notion of embedded coverage. I’m trying to discern out the first-class not-funny funny story to make approximately it. It’s just like the shift from B2B2C to B2B2C. Except the difference is the center B is “broker” within the conventional coverage model. And the shift to in which the center B is only a business that serves as a channel accomplice. Maybe it’s an OEM like a Porsche or someone like that, or a Tesla; maybe it’s a homebuilder like Lenore; maybe it’s a genetics issuer like 23andMe; maybe it’s Expedia.
I like the perception of channel partnerships as being more and more not unusual, each in the conventional categories of insurance, however additionally as an preliminary access point for new classes, new products, new sorts of coverage.
I’m getting worried in a single employer that’s developing an coverage product, a existence and especially unintended disability coverage product, for humans taking part in excessive-danger sports activities, organized sports like a few form of canoeing experience or a triathlon, let’s say. And it’s an thrilling new product. Not a conventional coverage product, a touch bit more on-call for-ish.
But the move-to-market approach of embedding it into the ones occasion organizers makes a heck of a whole lot of experience. I could effortlessly consider this organization struggling to discern out a way to market it direct-to-patron and you understand––it’s just not a herbal in shape together with your conventional corner shop brick-and-mortar broker, but embedding it with the right channel companions makes all the experience in the world. So I assume one of the subject matters is that this B2B2C in which the center B is a channel companion, no longer a classic dealer.
Well, we’ll sit up for seeing the keynotes after it launches. That changed into my communication with Caribou Honig, co-founder and chairman of InsureTech Connect and HR Transform. Thank you very much for taking the time to talk to me Caribou.
It’s been an absolute delight.
Summary
In this episode of the Accenture Insurance Influencers podcast, we pointed out:
- The evolution of the insurtech increase—and the need for the first wave of begin-united states of americato begin proving themselves as sustainable, worthwhile agencies.
- Shifting price curves, APIs, embedded insurance and channel partnerships as traits to look at.
- What to assume at InsureTech Connect 2019, taking region September 23-25 in Las Vegas.
For more steering on self-riding automobiles:
- Read how Ping An and AXA have transformed coverage in China and Singapore.
- Find out what insurers can analyze from Chinese insurtech massive Zhong An.
- See what microservices and blockchain imply for insurance.
We’ll be persevering with our verbal exchange with Caribou Honig in some weeks. But first, we’ll communicate with Ruth Foxe Blader, a dealing with director on the funding crew at Anthemis, where she invests in early-level fintech and insurtech start-ups. She’ll speak approximately keys to success for managing trade, and why Anthemis is centered on digitally native financial offerings.
Catch that episode in weeks—and inside the intervening time, you could seize up with earlier episodes of the podcast.
What to do next:
- Visit com/insuranceinfluencers for greater facts or subscribe at once right here:
Contact us if you’d want to be a guest on the Insurance Influencers podcast.
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