hartford: the next insurtech capital · connecticut’s strength in insurance 5 $44.6b (19.5%...
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Hartford:The Next InsurTech CapitalFEDERAL ADVISORY COMMITTEE ON INSURANCE MEETING
MAY 10, 2018
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AGENDA
• Creating Hartford’s InsurTech Ecosystem• The InsurTech Landscape & Drivers of Change• How Insurance Is Embracing Innovation• Partner Perspective: Why Hartford? Why Now?• Next Steps: Growth & Ways to Get Involved• Connecticut’s Regulatory Perspective on InsurTech
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Creating Hartford’s InsurTech EcosystemMICHELLE COTE, MANAGING DIRECTOR: CONNECTICUT CENTER FOR ENTREPRENEURSHIP & INNOVATION
UNIVERSITY OF CONNECTICUT SCHOOL OF BUSINESS
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AWARDEE
THAMES RIVER
AWARDEE
HARTFORD/EAST HARTFORD
AWARDEE
STAMFORD
AWARDEE
NEW HAVEN
Innovation Places
Additional Programs
INSURTECH
MEDTECH
AEROSPACE / ADV MANUFACTURING
SOCIAL CAPABILITIES
PLACEMAKING
FY 18: $2M in state funding + $3.7M cash match and in‐kind
contributions
5 STRATEGIC AREAS OF FOCUS:
Planning Team: • Corporate Partners• City Leadership• Key Implementation Partners• Higher Education Representatives• Entrepreneurs
Innovation in Industry
Physical Place
Social Capabilities
1 Emergent Conditions:
Strategic Opportunities/Challenges:
ADVANCING INNOVATION IN CONNECTICUT:
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CONNECTICUT’S STRENGTH IN INSURANCE
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$44.6B(19.5% Connecticut GDP)
Actuarial Talent in US
employees in Connecticut’s Insurance & Related Industries
#11,449 $33B 110 200,000
Source: 2017 Connecticut Insurance Market Brief (PWC) and Connecticut Insurance Department
Insurance Professionals Per Capita #1 58,700
Insurance Companies licensed to do business in Connecticut
Annual Premiums written by Connecticut Insurance Companies
Insurance Companies Headquartered in Connecticut
Agents, Brokers, Adjusters & Other Professionals Licensed
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• Establish Hartford as a globally‐recognized center of InsurTech activity
• Attract new technology startups to Hartford • Create strong pipeline of talent • Increase innovation activity with anchor insurance companies
GOALS:
CURRENT PARTNERS:
InsurTechStart Ups
Service Providers
Accelerator
Higher Ed Partnerships
Distributors
Insurance Companies Investors
Mentors
Events
Local Government
Co‐Working
HARTFORD’S DEVELOPING INSURTECH ECOSYSTEM
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PROGRAM LAUNCH: INSURTECH ACCELERATOR
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Phase 1 Phase 2 Phase 3
Shape: Build: Sell:
BusinessModel Canvas
Intro Pitch Investor
Deck
Minimum Viable Product
Financial Model
Contracting & PoCs
Investor Documents
Demo Day
300+applications
Functioning Technology
Relevance to Insurance Value Chain
$150,000 ‐ $500,000 working capital
Operational Governance
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SPRING 2018: 10 STARTUPS IN FIRST COHORT
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The Evolving InsurTech Landscape & Market Drivers of Change
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J ILL FRANKLE, AVP STRATEGIC VENTURES, THE HARTFORD
BETH MAERZ, VP CUSTOMER EXPERIENCE AND INNOVATION, TRAVELERS
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Profound Impact on Industry:
• Digital Engagement, Speed and Transparency
• Evolving Attitudes on Asset Ownership/Sharing
• Changing Models of Mobility
• New Solutions for Home Protection
• Emerging risks, i.e. Cyber
Emergence of new technology enables usto reimagine every aspect of our business.
New & Emerging
Technology
Distribution is consolidating and alternative models are evolving.
Shifting Distribution
Models
Customer expectations are being shaped by their experiences in other industries.
Changing Consumer
Expectations
Data and analytics is transformingevery aspect of our business.
New Data & AnalyticMethods
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DRIVERS OF CHANGE IN INSURANCE
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Global InsurTech Investments & Deals ($M)
OVER $9B INVESTED IN INSURTECH SINCE 2012
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12Source: CB Insights Q417 Insurance Tech Report. Total funding of $9B is slightly less than totals on prior slide. Differences due to timing of data pulled from CB Insights.
INVESTMENT TRENDS IN INSURTECH
$0.5B in 70 companies6% by $
15% by cos.
$0.2B in 25 companies2% by $
6% by cos.
$5.9B in 256 companies65% by $
57% by cos.
$2.4B in 100 companies27% by $
22% by cos.
In 2017, we began to see a shift away from
front‐end distribution to back‐end enabling
technologies.
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13Source: CB Insights Q417 Insurance Tech Report.
STARTUPS: PRODUCT & DISTRIBUTION
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14Source: CB Insights Q417 Insurance Tech Report.
STARTUPS: BUSINESS PROCESS ENHANCEMENT
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15Source: CB Insights Q417 Insurance Tech Report.
STARTUPS: DATA & ANALYTICS
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16Source: CB Insights Q417 Insurance Tech Report.
STARTUPS: CLAIMS MANAGEMENT
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How Insurance is Embracing InnovationJ ILL FRANKLE, AVP STRATEGIC VENTURES, THE HARTFORD
BETH MAERZ, VP CUSTOMER EXPERIENCE AND INNOVATION, TRAVELERS
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TWO TYPES OF INNOVATION
As a result of these differences, a variety of approaches to innovation are needed
• Shorter‐Term• Incremental Improvement• Fix Broken Processes• Driven by Day‐to‐Day Pressures
• Longer‐Term• New Business Models• New Revenue Streams• Less Constrained by Day‐to‐Day Pressures
Tactical Innovation Strategic Innovation
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MULTI‐PRONGED APPROACH TO INNOVATION
Focus Areas
• Collaborate with startups • Prototype and pilot future capabilities• Incubate business models of the future
Innovation LabDevelop Future‐State Capabilities & New Business Models
• Invest directly in start‐ups• Form alliances with VCs and accelerators• Deliver strategic insights
Core Operations
Strategic Initiatives
Visionary New Models
Horizon 1(<18 mos)
Horizon 2(18‐36 mos)
Horizon 3(36+ mos)
Innovation Lab & Corporate Ventures
Business UnitInitiatives
• Achieve short‐term performance goals • Seek better, faster, cheaper• Test applications for new technology
Accelerators & Academic Partnerships
Corporate VenturesAccess Emerging Trends, Technologies & Business Models
Business Units Deliver Operating Plan & Optimize Existing Capabilities
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Responding with New Products and Capabilities
NewProducts
Developing an Outside‐In Perspective Regulatory
Creating New Ways of Working
Digital Capabilities
TechnologyModernization
Partnerships&
Universities
Startups/Accelerators
New Talent
HumanCenteredDesign
Agile,Focused Teams New Skills
INNOVATION INSIDE THE INSURANCE INDUSTRY
Startups offer speed and novel
approaches
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Partner Perspective: Why Hartford? Why Now?J ILL FRANKLE, AVP STRATEGIC VENTURES, THE HARTFORD
BETH MAERZ, VP CUSTOMER EXPERIENCE AND INNOVATION, TRAVELERS
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HARTFORD’S STRENGTHS & ASSETS
Industry Representation & Proximity
Access to Talent
Source: McKinsey. CT is ranked #1 for density of actuaries
25+ insurance companies in and around Hartford
7% of current employees in Insurance/Financial Services
Local access to startups increases interactions within partner companies
Startups helps attract tomorrow’s workforce: Advanced Analytics, Data Science, UX/UI
Local Colleges & Universities produce young talent with relevant skills
Existing, Workforce desiring participation in startup culture
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Promotes Culture of Innovation
Face to Face, Focused Interactions
Speed of Experimentation Ecosystem Development
(New Talent & New Ideas)
Carrier Benefits
WHY AN ACCELERATOR WAS THE RIGHT FIT FOR HARTFORD
Mentorship & Development Close Collaboration on Use
Cases & Pilots Concentration of Top Carriers
in Hartford, Boston, NY Technical Talent Cost of Living/Setup
Startup Benefits
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AN INNOVATION ANCHOR: HARTFORD’S INSURTECH HUB
Source: Startupbootcamp.
Pilots Secured by Startups
Hours spent with Startups by local mentors
Startups Establishing Offices in Hartford
Registrants for Demo Day
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21 4
659300
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Next Steps: Plans for Growth &Ways to Get InvolvedMICHELLE COTE, MANAGING DIRECTOR: CONNECTICUT CENTER FOR ENTREPRENEURSHIP & INNOVATION
UNIVERSITY OF CONNECTICUT SCHOOL OF BUSINESS
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REFLECTIONS ON YEAR 1
Visible Spark for Economic Growth in Hartford
Robust Partner Engagement
Internship Program
Community Partnerships
Engage more members of the community
Higher Ed Workforce Associations
Increase Pilot Activity
Replicate “Buzz” Year Round
Opportunities for GrowthEarly Successes
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GROWTH & NEXT STEPS
More Partners
Broaden Participation from Region and Nation
Coordinate with other InsurTech Centers
Host Regional and National Events
Specialization Follow On Support East Coast Hub
Develop Specialty around Segments of InsurTech:
P&C
Health
Life, Annuity & Retirement
Attract Investment Capital
Increase Talent Development
Extended Support for Pilots & Company Growth
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Connecticut’s Regulatory Perspective on InsurTechTIMOTHY CURRY, DEPUTY COMMISSIONER
CONNECTICUT INSURANCE DEPARTMENT
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• Economical, more flexible and easier‐ to‐access InsurTech solutions can encourage the young and the less‐affluent consumers to make appropriate risk‐transfer decisions
CORE MISSION: CONSUMER PROCTECTION
Healthy, Competitive Insurance Markets are Essential to the Mission
• InsurTech innovations are revolutionizing certain markets and fundamentally changing how carriers and policyholders interact
• Regulators must be “at the table” or risk irrelevance
Innovation Can Reduce Society’s Uninsured & Under‐Insured Segments
Risk Mitigation Benefits
• Many InsurTech solutions focus on new and innovative ways to prevent loss; this mutually benefits carriers and policyholders
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BALANCING INNOVATION AND REGULATORY STANDARDS
Flexibility –Where Possible Holding Firm –Where NecessaryInnovations call for re‐examining older protections in light of new realities:
Financial Strength:
Market Conduct; Discrimination
• Reconciling 30‐day cancellation and nonrenewal notice requirement for a product with an entire policy period of 7 days
• Re‐examining statutes and regulations requiring paper delivery of policy documents
• Waiving seasoning requirements for innovative startup carriers wishing to enter a state’s market
• Compliance with minimum statutory capital requirements for an entity permitted to offer insurance to the public
• Predictive models and/or machine‐learning techniques must demonstrate fair underwriting and pricing methods
• “Big data” must bear a rational correlation to the intended subject matter and not embed biased assumptions
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SUPPORT FOR STARTUPS
Expertise, Openness, Outreach
“Office Hours” Initiative
• Commissioner Wade is a member of the Innovation and Technology Task Force of the NAIC’s Executive Committee, and of the Big Data Working Group
• CID staff have participated on a number of InsurTech‐related panels and attended local, state and national conferences
• The Department has visited the Hartford InsurTech Hub on several occasions and a number of Department staff attended the first Demo Day in April 2018
• CID is currently arranging to provide staff on an “office hours” basis to enhance availability to the InsurTech entrepreneurs in Hartford and encourage an open dialogue
• Purpose: to ensure InsurTech entrepreneurs can vet ideas for regulatory concerns as early as possible
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THANK YOUWWW.HARTFORDINSURTECHUB.COM
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