One of the things venture capitalists are good at — when they are not funding and driving innovation — is blogging. Those VC guys really like a good blog, and VC blogs are a good place to read about insurance, as the combination of fresh thinking on stale technology is hard to resist.
Hacker Daily is one such blog worth checking out. It talks about any and all industries from an innovative and entrepreneurial perspective, including (from time to time) insurance. Last month, Josh Nussbaum wrote a post about the art of predicting how successful a successful investment might be. One of the industries he used for his study was insurance (along with healthcare, and a bunch of other stuff), and it’s worth a look at what he had to say about it.
Here is his paragraph on insurance:
Insurance — Similarly to healthcare, legacy underwriting models were designed for a different time where across all insurance products, risks were statistically modeled based on a variety of factors. Given the whole supercomputer in our pockets point mentioned above, data collected from online and offline interactions provides a massive opportunity for new underwriting, pricing, and products tailored towards our lives today vs. 50–100 years ago. It won’t happen overnight as traditional insurance companies aren’t yet equipped to handle all of this data and it doesn’t make sense for them to completely change their models either. While today many startups are attempting to shift the paradigm and start their own insurance companies (through a Managing General Agent model), eventually legacy insurance companies will see these threats and realize that it behooves them to build out the necessary infrastructure that allows them to buy, integrate and build the right technology tools and services to continue their decades-long dominance. At the same time, access to new data points and new behaviors offers the opportunity for new insurance products vs. past all-encompassing products.
Let’s unpack that a little bit:
To paraphrase Josh, the Future of Insurance Underwriting Software is Now!