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Optum Financial Leadership Series: Insurance Innovation and the Shiny Object

In our latest episode, Bryan Falchuk, author of The Future of Insurance, is joined by the CEO and Founder at Jumpstart Insurance and the Chief Innovation Officer at reThought Insurance.

In the recent third entry of our ongoing series of discussions with insurtech and fintech leaders, Bryan Falchuk, author of The Future of Insurance, hosted a discussion about Insurance Innovations and the Shiny Object. He was joined by:

  • Nick Lamparelli – Chief Innovation Officer at reThought Insurance
  • Kate Stillwell – CEO and Founder at Jumpstart Insurance


watch the full discussion

“Insurtech 2.0 is the integration of the facilitating technologies with product expansion. 2.0 is the expansion of the types of coverages, the types of insurance products, insurance policies that are available, enabled by the facilitating technologies which were characteristic of insurtech 1.0.”

—Kate Stillwell, CEO and Founder at Jumpstart Insurance

To start things off, Stillwell powerfully defines insurtech 2.0 as the creation of new products or services built upon the insurance technologies that defined insurtech 1.0. She gives examples of these product/technology pairings:

  • Pay-by-the-mile insurance wouldn’t be possible without the telematics that measure the miles
  • Parametric insurance wouldn’t be possible without the data and the monitoring technologies that trigger the payment

And she goes on to give examples of upcoming insurance products similarly enabled by specific technologies:

  • Cyber policy coverage enabled by technologies to monitor outages, intrusion attempts, and cyber terrorism efforts
  • Reputational insurance and insurance of intangible assets enabled by AI technologies that monitors the insured’s activities on social media

Even now, social media is already increasing the speed at which insurance providers are able to respond to emergencies. Lamparelli noted that after hurricane Ida, analysts at reThought used SOS posts on Twitter to identify municipalities with heavy flooding, allowing them to proactively contact their policyholders there and begin claims.

“If you go back to the early 90’s and you look at what making car alarms an almost standard feature in vehicles did — it dropped vehicle thefts by 90 plus percent over time. Vehicle thefts aren’t even a thing anymore because of car alarms. Sensors are going to do the same thing to losses that are due to smoke, fire, water.”

—Nick Lamparelli, Chief Innovation Officer at reThought Insurance

Another key technology that will reshape insurance is smart sensor technology, primarily made possible because of 5G. In the same way the standardization of car alarms nearly eliminated auto theft, smart sensors will save lives and completely change how consumers purchase insurance.

Lamparelli was excited at how embedded sensors can identify a potential tragedy ahead of its occurrence. Given the example of a building collapse, he notes how those within the building could receive early notice of the problem, allowing them to escape and enabling repair crews to prevent the collapse.

Embedded sensors caused Stillwell to ask the question, “What if insurance no longer has to be purchased separately because it’s already included as a part of a property or an object?” This would transform the industry, growing the number of policy coverages and removing much of the stigma around insurance. Part of that stigma exists because of time and difficulty associated with paying a claim. But smart sensors, even now, can automatically trigger a claim and deliver an electronic payment.

“There’s this culture of ‘let’s wait and see.’ And that’s very prudent and it’s informed by decades and centuries of experience. Very much sort of wait and see. And if they succeed, then we’ll adopt. But that doesn’t really work in tech because for tech to succeed, there needs to be this culture of move fast and break things. Now granted, that’s not the best strategy for insurance exactly that way, but there needs to be some balance between move-fast-and-break-things and wait-and-see.”

—Kate Stillwell, CEO and Founder at Jumpstart Insurance

In what is likely the most important takeaway from the conversation, both Lamparelli and Stillwell discuss why individual insurers — which exist in an industry that has historically been slow to embrace change — need to become more agile, and more willing to embrace early adoption. As these new technologies become more prevalent, insurers who aren’t spearheading the services that embrace them will be left behind to insure a higher-risk population.

According to Lamparelli, those who haven’t already embraced telematics for auto insurance have missed their opportunity. “Because you have too many tech companies, too many early adopters that have done it. They have such a significant data edge, your only play is going to be to partner with them.”

So how do insurers choose where they should start when exploring insurtech 2.0? Play to your strengths. It obviously doesn’t make sense for a property insurer to explore the telematics used in the auto industry. But a company specializing in catastrophe insurance would be well positioned to invest in parametric now.

>> Watch the full discussion now

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