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October 03,2018

Bringing Dreams to Life

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Greetings from Las Vegas, where we've gathered for the third InsureTech Connect with 6,000 or so of our closest friends. That's about twice as many attendees as last year, which was twice as many as the first year. Exponential growth is good, right? And the group now represents what a venture capitalist might call a "full stack" -- all types of companies, investors, startups, technologies, countries, you-name-it are represented here.
 
It's exciting to see companies bring to life the sorts of dreams that many of us have been describing for years now. For example, I met with Cover Genius, which takes an API-based (as in, application programming interface) view of the world that enables a model I've described as "Do you want fries with that?" The startup offers digital versions of insurance products that e-commerce companies can bundle into their offerings, generating savings on costs of sales that can be shared with customers. The first big success has been with rental-car insurance that travel sites can offer when someone makes a booking. The price from Cover Genius is much lower than what you'd be quoted at the rental car counter. And I believe that Cover Genius is just scratching the surface. As insurance products become APIs that can fit into any digital product or service and any sales process, the lower prices and ease of purchase will have customers ordering lots of "meal deals." 
 
I was also struck by the work at Parsyl, which is just coming out of stealth mode with an ingenious application of the Internet of Things that reifies another of my big themes: that insurance should increasingly be about preventing the bad stuff from happening in the first place. Parsyl, which has formed a partnership with AXA XL, has developed sophisticated, reusable sensors that can be placed in shipments to make sure they stay within certain important ranges, such as temperature in the case of a load of fish. The sensors don't just trigger an insurance payment if there is a problem, as current, simple sensors can, but can signal when an indicator is heading out of range, so that someone might be able to intervene. In any case, the sensors record when and where a problem occurred, so responsibility can be assigned quickly and accurately and so steps can be taken to prevent a recurrence. 
 
The industry still faces enormous stresses as we try to innovate as fast as we can -- stresses that Grace Vandecruze, founder of Grace Capital, summed up neatly as "using tomorrow's technology based on today's business models and yesterday's culture." 
 
Even there, I found reason to be optimistic because of a workshop that our own Guy Fraker, ITL's chief innovation officer, ran for some 60 executives from incumbents that are trying to figure out how to set up innovation programs. He took the group through some exercises that showed them that they could quickly generate lots of hypotheses for potentially important innovations and assured them, "You only need four or five people to drive innovation. You don't need 100. This is not Big Pharma R&D."
 
The cherry on top was that a representative from a major auto maker told the group that he was looking to break out the insurance piece that goes into the monthly price for his vehicle subscription program  -- people who "subscribe" are basically leasing a car but for an indefinite period longer than 30 days and can pick and choose among a certain set of vehicles, such as a sports car line. These subscription programs are growing fast at any number of auto makers, so why wouldn't others be interested in breaking out the insurance piece, offloading the risk and making the monthly price for the car at least look lower? Why couldn't some enterprising company come along with a white label product, expressed as an API that could fit into the processes of all these car makers? You could almost hear the wheels turning in people's heads as they thought through the possibilities. 
 
Maybe someone will announce such a product at next year's ITC. Or, why wait until then?
 
Have a thought-provoking week.
 
Paul Carroll
Editor-in-Chief



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