Editor’s Note: The empire strikes back
Insurtechs grabbed headlines for transforming the industry, but carrier-side innovators are on the rise.
Insurance carriers are asserting their leadership position in guiding the disruption of the industry.
Insurtech's rapid emergence and ascendancy, to use a Star Wars analogy, has been seen as “a new hope” for the industry. But now — to continue the metaphor — the empire is striking back. The “empire,” in this case, are incumbent insurers who are taking an ever-more active role in trying to shape the insurtech sector. About four in five insurtech funding deals in the fourth quarter of 2017 were done by established insurers, according to Willis Towers Watson's Quarterly Insurtech Briefing. Some incumbents are simply looking to fill specific needs with their newly minted tech partners. They tend to invest in companies that increase efficiency in some component of the traditional insurance value chain — not insurgents looking to disrupt. There are, however, still carrier-side standouts looking to bring insurance into a new era using digital technology. For the second year in a row, we've spotlighted some of these key innovators, and their insurtech partners, for the cover story of this edition. These visionaries include people like John Hancock's Brooks Tingle, whose commitment as a marketing VP to establishing the wearable-powered wellness program Vitality was recognized and rewarded with a promotion to CEO of the entire life insurance business. A similar story comes from Allstate's Glenn Shapiro, who embraced drones and social-media analytics as chief claims officer and is now in charge of all aspects of personal lines. One can imagine similar career trajectories for Travelers' Beth Maerz, who re-architected renter's insurance to target the millennial market; or Nationwide's Seth Flory, who is bullish on the potential for blockchain technology, as their early projects evolve. Playing it safe is tempting, but ultimately the trend lines in the industry are clear. Whereas insurers in the past may have been more secretive and guarded about their innovations, now internal startups like Allstate's Arity and MassMutual's LifeScore Labs are looking to establish the data-driven scoring models they've developed as standards for their lines of business. They aren't worried about gaining a small edge, when they could end up leading a much bigger and more consequential transformation. “Incumbents sent a clear message to potential disruptive outsiders: by investing heavily in start-ups and technology, (re)insurance companies appear to have assumed a semblance of control over the insurtech revolution,” writes Willis Towers Watson Securities' global CEO, Rafal Walkiewicz. In a way, insurance is at an advantage in being somewhat “late to the party” for digital disruption compared to industries like retail and banking. Insurance leaders have learned from what's happened outside the sector and are willing participants in their revitalization.