With consumer expectations and the threat from digital-first competitors rising fast, the stakes couldn’t be higher for P&C insurers.
According to Accenture, the revenue gap between innovation leaders and laggards in the insurance sector could top 37% by 2023. To remain competitive, insurers need to harness the power of a cloud-based platform like Guidewire that enables them to leverage the latest insurtech innovations, speed time-to-market, differentiate their offerings, and achieve sustainable growth—fast.
But scouting out the hottest new insurtech innovations to get ahead of the curve is getting tougher. With VC investment in insurtech companies topping more than $15.4 billion last year, identifying the most promising new technologies means insurers must search for the proverbial needle in a rapidly growing haystack.
It’s the whole reason we launched Insurtech Vanguards, a first-of-its-kind access acceleration initiative designed to help P&C insurers gain new visibility into insurtechs’ cutting edge technology as we vet possible new additions to our PartnerConnect program.
This isn’t (just) about coolhunting, mind you. It’s about educating our customers about trailblazing startups that address important industry trends. To understand what I mean, let’s look at a few technology themes reshaping the competitive landscape—and how some of our inaugural Vanguards address them.
#1 Digital Authority: Deepfakes a Real Threat to Insurers
Insurers have grown increasingly reliant on digital media to make actionable decisions regarding the condition of insured assets both in underwriting and claims—for better and worse.
While doctored Photoshop images and screen grabs scraped from the Internet continue to be used in fraudulent claims and false inspection reports, the proliferation of “deepfake” technologies now poses an even graver threat. Leveraging artificial intelligence, these technologies can be used to synthetically generate images, videos, and even voice or video calls that are nearly impossible for even experts to differentiate from the real deal. According to industry surveys, only 39% of insurers have taken steps to mitigate this threat.
That’s where Vanguard Attestiv comes in. By leveraging AI and blockchain technology, this Natick, MA-based insurtech assures the authenticity of digital media captured by any person or device to help insurers prevent fraud and accelerate digital transformation initiatives. At a time when deepfakes are used to manipulate public opinion and pull off $35 million heists, insurers will need all the help they can get to prevent the industry’s $80 billion per year fraud problem from getting worse.
#2 Catastrophe Management: Rethinking Risk Assessment
According to the UN’s recent “code red for humanity” climate report, it’s already too late to stop global warming from fueling a significant jump in extreme weather-related disasters over the next two decades. And strategies built on repricing portfolios to avoid long-term exposure to catastrophic events doesn’t count for much when the historical data used to model that risk is based on climate patterns that no longer exist.
Instead, insurers require real-time and evolving risk data to profitably price risk while avoiding bad bets all together—as well as tools for managing these risks. Data from Guidewire Live HazardHub, for instance, offers the most comprehensive risk data set available, with more than 1,000 property and casualty risk factors about any location or business, available via API on demand, in seconds.
Other sources and tools are available from some of our Vanguards. Maptycs, for example, offers business intelligence and data visualization solutions to turn geospatial data into actionable intelligence for assessing property risk exposures, as well as real-time threat monitoring for managing crisis response. Zesty.ai uses artificial intelligence to provide unique insights impacting specific property risks. And Annex gives insurance companies the ability to offer and manage flood and earthquake insurance to help close protection gaps profitably.
#3 IoT: The Internet of Transformative Opportunities
The explosive growth in big data, predictive analytics, and Internet-of-Things (IoT) devices enables insurers to deliver personalized, proactive cover and services that help policyholders save time and money. It’s foundational to new forms of usage-based auto insurance, as just one case in point. And Vanguards like Roost and MakuSafe are helping to bring this kind of innovation to other forms of P&C insurance.
Roost, for instance, is a Sunnyvale, CA-based company focused on transforming insurance models with a suite of “property telematics” solutions that provide white-labeled, 24/7 fire and water damage alerts using real-time IoT sensors. When water leaks alone can cost insurers as much as $16 billion a year, the value of predict-and-prevent service models becomes obvious.
Meanwhile, West Des Moines, IA-based MakuSafe offers an award-winning solution that leverages wearable technology to help improve worker health, safety, and productivity while mitigating workplace hazards and exposure to costly workers’ comp claims.
According to the U.S. Department of Labor, overexertion, improper lifting, twisting, and reaching account for one-third of all workers’ compensation costs, to the tune of $20 billion per year. Traditional ergonomic safety programs typically rely on one-time solutions. But Makusafe wearable armbands continuously gather real-time worker behavioral data that is then analyzed to understand trends and deliver alerts with specific, risk-reducing recommendations to a business’ leadership.
#4 Data-Driven Insights: Optimal Efficiency, Maximum Effectiveness
Guidewire customers understand how embedding live, data-driven insights throughout the insurance lifecycle can boost the profitability of their books of business. By obliterating data silos across all channels and call centers, and using data science and machine learning to optimize marketing activities based on customer profiles, it’s possible to create what McKinsey calls a “user-first” customer experience.
This enables insurers to mine internal and curated external data to serve up highly-personalized content, products, and services. They can also streamline processes throughout the insurance value chain. Just ask Vanguards like AnalyticsIQ and Albany Group.
When consumers and companies are in the market for insurance, it’s often related to a significant life event—marriage, the birth of a child, buying a new car, or growing a business. That’s why Atlanta-based AnalyticsIQ leverages cognitive psychology research and proven data analytics methodologies to build sophisticated predictive models that help insurers reach the right people with the right products, at the right time. And UK-based Albany Group slices and dices data to help reduce the complexity involved with managing insurance supply chains.
#5 Alternative Distribution Tech: Powering Insurance Ecosystems
According to HSCM Ventures Partner Adrian Jones, embedded insurance and distribution tech—including comparison raters, cloud-based self-service platforms, and more—are redefining the industry. And William Blair’s recent report, “Glacial Shifts in P&C Industry Value: Mega Trends and Emerging Competitors,” estimates valuation for “new guard” distribution tech startups could top $262 billion by 2030.
It’s easy to see why. With names like AgentSync (producer management and compliance built on the Salesforce platform) and AcclaimIQ (agent licensing and compliance management), Bindable (embedded/alternate distribution) and BrokerLift (turnkey quote, pay, and receive for self-service digital customers), as well as Zensurance (brokerage quote engine for commercial lines), Vanguards are bringing breakthrough innovation to this space.
According to a report from InsTech London, the embedded insurance market alone is expected to grow to $722 billion within eight years—six times its size today. And McKinsey estimates that up to 25% of all personal lines premiums could be generated through embedded ecosystems in that time frame. For auto, it could top 30% or more. Put that together with a booming number of other API-enabled distribution technologies, and the term “game changer” comes to mind.
#6 Computer Vision and AI for Delivering New Value
Premiums underwritten with the help of computer vision and other forms of AI will grow nearly 1,500% to $20 billion by 2024. And according to JD Powers’ 2021 US Property Claims Satisfaction Survey, insurers offering the kind of virtual claims reporting enabled by these technologies have the highest overall satisfaction scores in the study’s 14-year history.
But if several Vanguards have anything to say about it, that could just be the tip of the iceberg. Take Chisel AI, which enables insurers and brokers to extract, identify, and classify data from quotes, policies, applications, binders, submissions, statements and more at 400X the speed of human experts. This can boost quoting capacity by 2X and underwriting capacity by 50%.
There’s also Click-Ins, which uses visual AI, deep learning, and 3D modeling to digitize and automate vehicle inspections and assess the true condition of a car anywhere, anytime. Or Indico, which uses these same technologies to automate, analyze, and unlock the value of unstructured data—documents, emails, images, videos, and more—and applies it across a wide array of enterprise workflows. Toss in MotionsCloud (property and vehicle inspection), and Refocus AI (sales and CRM), and the possibilities are endless.
Life’s a Pitch, and Then You Fly
Best of all, this is just the beginning. As we identify the hottest up-and-coming insurtechs, we’ll surface them to our existing community of customers based on their specific challenges and business goals.
And be on the lookout for Pitch Day: Catch ’22, a six-week, “Shark Tank”-style online competition! The top 10 entrants will present to a live and virtual audience made up of Guidewire customers, prospects, and partners—aka, the opportunity of a lifetime. Learn more here!