The InsurTech Hartford Symposium was a great experience for many reasons. People are still debating the location of the “Insurance Capital,” so it was important to have this venue for insurance thought leadership in Uncasville, Connecticut. The concept of a physical insurance capital may be outdated, but even in 2023 the idea of a concentration of talent and thinking is critically important. Colocation is useful in creating concentration of thought and action and it is obvious that the Hartford and Connecticut development organizations are very interested in recapturing that crown, whether it be physical or virtual. It was good to see Gov. Ned Lamont and the heads of the key state development agencies speaking and engaging at the conference.
I had many good conversations and some takeaways stood out.
Providing scale and competitive advantage through technology
I spoke on a panel that initially looked to be a rehash of the continuing debate about purchasing packaged software vs insurers continued desire to build custom software to suit their unique problems. (Hint: Buy software if available and purpose-built. Your uniqueness is rarely in the software.) Instead, we had a much more interesting discussion about constructing insurance businesses and distribution chains organically and inorganically and the role of technology in providing scale and competitive advantage.
The upshot of our discussion: It’s more important than ever to understand who you are, your value proposition and your longer-term goals. It’s OK to change direction after learning more about your market through experience, but multiple pivots are no longer cool. Also, for insurtech startups, it’s good to know whether the plan is to IPO or flip, as they are very different playbooks.
Content matters more than new technology
New tech is great but content is still king. Insurers value new technologies especially in support of digital transformation, speed to market and customer service initiatives. However, there has been a blurring of the lines lately as to what is a strong technology toolset versus a core application system. This can lead to “shadow builds” disguised as configuration.
“New tech is great but content is still king.”
How do you know the difference? The way to tell an application buy from a shadow build is by how much applicable content comes with the purchase. Most core systems will require configuration but beware of the level of configuration required crossing over into building a large critical mass of insurance rules by SMEs (subject matter experts), especially if the work is mostly done by the insurer or a third-party consultant.
Regulators are ready and willing to engage with insurtechs
Commissioners Andrew Mais of Connecticut, Elizabeth Dwyer of Rhode Island, and Nathan Houdak of Wisconsin held a lively panel where they addressed the value of disruption – to a point. The commissioners believe insurtechs are key to the continuing evolution of the insurance industry and regulators want to engage with them early to help them avoid mistakes and false starts.
Insurance is complex and often doesn’t seem totally rational to people who haven’t lived through changing legislation and consumer reactions. One told the story of an insurtech that asked why insurers must be so heavily capitalized as it seems like an artificial barrier to entry. The commissioner then explained the concept of reserves and surplus.
In the same vein, another regulator made it very clear that insurance is not an industry where it’s ok to go fast and break things. Innovation is great and potentially disruptive, but it is not really possible to positively disrupt an industry that you don’t understand.
I look forward to attending InsurTech Hartford again. I think this is one of the most worthwhile insurtech meetups I’ve seen in a while. Most of my conversations were more about business models, partnership ecosystems and regulation, and less about APIs and blockchains. I am keen to see what the next discussion might contain.
What do you think insurtechs at every evolutionary stage should be discussing? I’d love to hear your thoughts.