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LAS VEGAS — Insurtech firms help speed change at established insurers through collaboration efforts, a panel of experts said.
Insurers use the services of insurtech firms, invest in the companies and in some cases acquire technology companies as they seek to digitize and develop their businesses, they said.
But the incumbent insurers should be careful not to disrupt the creativity of the firms they collaborate with, they said during a session at the InsureTech Connect conference in Las Vegas on Wednesday.
“Historically, the insurance industry has been fairly insular and there’s been a preference to build internally, but now there’s a lot of off-the-shelf novel solutions … that we can really leverage to move forward quickly,” said Jill Frankle, assistant vice president for strategic ventures at Hartford Financial Services Group Inc.
Large insurers are also willing to collaborate with competitors on technology, she said. The Hartford, for example, was a co-founder of the local insurtech hub in Hartford, Connecticut, along with other large insurers such as Aetna Inc., Cigna Corp. and Travelers Cos. Inc.
“The industry has really changed and has recognized that, for the most part, we are all seeing the same insurtechs and its how we prioritize, how we choose to partner and how we choose to execute … that will be the differentiator over the longer term,” Ms. Frankle said.
Hartford engages with insurtech firms in a variety of ways, she said. For example, it might quickly start using a novel set of data that a firm can provide; in other instances it may want to partner with a firm and offer staffing support to develop a pilot product; and in other cases it may want to invest in a firm where it makes strategic sense, she said.
When the insurer does buy or invest in a company, it often still allows the acquired company to operate relatively independently, Ms. Frankle said.
“I think it’s important to continue to let people evolve and have that entrepreneurial spirit, even if they are within the mother ship,” she said.
Prudential Financial Inc., another established large insurer, recently acquired Assurance IQ Inc., an online life and health insurance agent, for $2.35 billion. The acquisition was part of the Newark, New Jersey-based insurer’s long-term strategy to promote “financial wellness” for individuals, said Federico Spagnoli, regional president of the insurer’s Latin American business.
The life insurer first decided to develop its technology applications for its financial wellness strategy internally, and one of the first tasks completed was to identify 25 million customers with which it had very limited interaction, Mr. Spagnoli said.
Prudential then discovered that Assurance IQ had previously used advanced analytics to engage with its 24 million customers in the mass market in less than two years, he said.
“That was the key rationale for us, when we realized they had kind of cracked the code in that space … that’s when we made that huge commitment,” Mr. Spagnoli said.
To ensure that Prudential continues to “support and not kill this insurtech player, we plan to leave them alone,” he said.
The insurer will send just a few people to Assurance IQ’s headquarters in Seattle and “bring their best practices to us, rather than the other way around,” Mr. Spagnoli said.
Insurtech firms can also be used to help established insurers “get the train going” while remaining independent, said Irene van den Brink, chief commercial officer of Digital Insurance Group BV, an Amsterdam-based insurtech firm.
Large insurers can partner with insurtech firms to digitize existing business or develop new projects within their organization, she said.
“As long as you have some good examples within your organization, it’s easier to get the rest also going,” Ms. Van den Brink said.
InsureTech Connect offers unparalleled access to the largest and most comprehensive gathering of tech entrepreneurs, investors and insurance industry incumbents from across the globe. Business Insurance is covering the event in Las Vegas on Sept. 23-25. View the slideshow.