techcrunch.comI’ve worked on a number of projects over the past year as an MBA Associate with the General Catalyst team. One of my principal areas of focus has been a deep dive into the emerging field of insurance technology startups, piggybacking GC’s early work in the space with investments like Oscar Health, TrueMotion, Gusto, Super, Livongo and Freebird.

The most exciting opportunities going forward are online aggregators and brokers, new direct-to-consumer brands and new models. There’s now an insurance technology industry conference, OnRamp, bringing together
relevant stakeholders.

Given that insurance is fundamentally about the trading of information (consumer data for a policy product), if you think about it, the most logical and near-term place for technology disruption should be found in distribution.

Yet, across product verticals, in-person agents have remained the primary distribution channel with dominant penetration: commercial (~99 percent), life (99 percent), homeowner’s (94 percent) and auto (73 percent).

It makes sense that agents have remained so entrenched in the market, but as with every other industry, we are beginning to see the Internet enable a new world of comparison shopping, online transactions and streamlined customer service for the insurance consumer.

There has been a lot of excitement and buzz around commercial insurance brokerage, largely catalyzed by the stratospheric rise of Zenefits. As a company, Zenefits focuses on facilitating benefits and personal lines (health, disability products) and sells into HR. We see another tremendously exciting opportunity in the commercial space, with products like general liability, directors/officers and cybersecurity insurance that are more focused on corporate risk and have a different buyer in the COO, chief compliance officer or CTO function.

Any business generally needs to purchase upwards of 5-7 different types of insurance to get started. These policies are typically sold over the phone, through PDFed documents with a similarly clunky claims management process. Compounding the problem, carriers of commercial lines are more regional and fragmented, so corporations often have to herd cats to purchase
adequate coverage.

A significant part of the opportunity here is to digitize and curate that experience into a streamlined workflow. As with personal lines in the consumer space, a player that can serve as a single throat to choke and trusted source can be incredibly helpful. We’ve seen a handful of players emerge in this space to provide price comparison and various policy management tools – notably Insureon, emBroker, CoverWallet and Next.

There are a tremendous number of ideas here – too many for this space.
Yes the broker is valuable as a trusted advisor. Yes the current structure is dictated by a cumbersome patchwork of state laws. Yes aviation insurance is an arcane specialty. And yes, for the nonce the numbers don’t justify much effort.
On the other hand, the customer for drone insurance will be very different from the general aviation customer. The necessary coverages will become much more complex. As the industry grows and operating hours mount, risk will become much better understood. At which point, an automated work-flow will become increasingly essential to reduce underwriting costs – to say nothing of presenting an opportunity to capture the recurring revenue stream.
The author closes making the point that beyond the incentives to the underwriter, the real tipping point will be a new generation of customers who prefer to buy differently.
As we have seen time and again, the first one with the better mouse trap will catch a disproportionate share of the mice. Meanwhile I refer you to Who Moved My Cheese. A classic cautionary tale with over 27 million readers worldwide.

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