I've been reading about the history of insurance to understand how we got here. Here's a quick story from one insurance book.
There once was a membership association called the American Insurance Underwriters (AIU). The AIU acted as an agent for member insurance companies in international markets. Each member insurance company held a percentage of the AIU pool by which payments and liabilities were assigned.
In the 1960s, an insurance company and AIU member bid on a contract to insure a large church in Boston. But the insurance company didn't bid the insurance like everyone else. Instead, the underwriting team created a tailored contract with its own rate calculations, "rather than the standard forms and prices other (AIU) insurers had agreed to use."
The incumbent insurer was not pleased:
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It's been a good ride over the last year for the insurance technology ("insurtech") community. In 2015, insurtech raised over $2.6 billion. In the first quarter of 2016, insurtech broke a record for money raised.
And yet, I am looking at the companies that are emerging from these fundraise events, and I keep thinking, "Really, that's it?"
There have been some outliers. Lemonade and other peer to peer companies are interesting to me because they have an opportunity to create fundamentally new technology that connects people and just happens to also provide insurance through the connection. I am still awed by the magic of Uber and I hope a Peer to Peer company can replicate that experience.
But when it comes to other insurtech innovations emerging with funding rounds -- well, I am a bit underwhelmed. I call these companies the Aggregators and the Process Improvers.
I was recently thinking about the dilemma faced by many insurance agencies when an image popped in my head:
Ever since I read the Steve Jobs biography, I have been obsessed with Apple's approach to technology. The company's approach to technology can be summarized with one mantra:
I can't stop thinking about algorithms. I am obsessed and I want to tell you why.
Most insurance software is enterprise-level. As an observer of the insurance market, I have watched numerous insurance software rollouts face the same fate at launch: frustration and exasperation because user requirements are not met.