This story by Staff Writer John Stearns originally appeared on Hartford Business.com November 27, 2017.
Hartford would be the capital for more than state government if various executives fulfill their vision to make the city a hub for insurance technology, for which key early seeds are about to be planted.
On November 29 and 30, up to 10 global startups will be selected to participate in a new downtown Hartford accelerator program. They will work alongside local insurers, which can pilot the technology, and be coached by myriad business experts and mentors as they try to advance their business models and technology for the benefit of insurers and the startups themselves.
London-based Startupbootcamp is running the InsurTech Accelerator, part of what’s being called Hartford InsurTech Hub. The accelerator is funded by grants from CTNext, a quasi-public entity that oversees the state’s new Innovation Places program and which picked InsurTech as a sector to grow, and matching grants from insurers and others.
The idea for the accelerator hatched from local insurers and government and business leaders as an opportunity for Hartford to capitalize on the InsurTech boom, in which investors poured $1.7 billion in insurance-based tech startups in 2016, according to industry data tracker CB Insights.
The goal is to bring some of those investment dollars to Hartford, which is still considered an insurance mecca, to create an ecosystem of innovation that attracts new talent and technology startups on par with InsurTech strongholds globally, while keeping the region’s large cluster of insurers competitive at a time when rapidly evolving technology is upending the industry.
“What we are trying to do is build Hartford as the InsurTech hub in the U.S.,” said Sabine VanderLinden, CEO of InsurTech business for Startupbootcamp, who plans to spend about half her time in Hartford when the accelerator, to be located in the new Upward Hartford co-working/incubator space in the 20 Church Street “Stilts” building, launches January 8.
Her company vets about 4,000 InsurTech startups worldwide, in this case, looking for the best fit for insurers like Travelers Cos., Cigna and The Hartford, which are the major funders of the Hartford accelerator. During the week of Nov. 27 Startupbootcamp will bring about 20 finalists to Hartford, from which insurers will select up to 10 for a three-month accelerator program. They can stay an additional two months as they initiate programs with the insurers, with some ideally opting to relocate or set up offices here.
“There needs to be this match-making between the corporate entities and the startups, so we have to do the work to really understand the problem the corporates want to alleviate and then find the startups that can alleviate those problems,” VanderLinden said.
EVOLVING TECHNOLOGY PRESSURES INSURERS
Startupbootcamp bills itself as a global network of industry-focused accelerators in sectors that include FinTech, Internet of Things, digital health and energy. It gives startups direct access to an international network of partners, investors and mentors in their sector. Startupbootcamp has 21 accelerators in 16 locations around the world. On average, about 80% of its startups succeed, VanderLinden said.
The linkage between insurance and technology may be a foreign concept to some, but in reality, insurers, which produce reams of big data ripe for machine analysis and predictive analytics, are major investors in and supporters of technology innovation.
According to PwC’s 20th CEO Survey released earlier this year, 67% of insurance CEOs said creativity and innovation are very important to their organizations and 61% said they are exploring the benefits of humans and machines working together.
And when asked what was their most important business area to strengthen, the top choice was digital and technological capabilities.
Local insurers have already been active in investing in technology and tech companies. In fact, The Hartford and Aetna both have had their own venture capital arms. And one of the reasons Aetna said it was moving its corporate headquarters to New York City was to be closer to a more vibrant technology cluster that could transform its business.
According to a recent PwC report on Connecticut’s insurance industry, insurers plan to heavily invest in data analytics and mobile technologies that streamline back-office operations and improve risk analysis.
They’re also adopting apps to help consumers identify and mitigate risks that could lead to costly claims.
Insurers are also considering artificial intelligence, robotic process automation and Internet of Things technologies.
AI, for example, is being used to automate simple claims and underwriting processes, freeing up employees to work on more judgment-based decisions.
Just last week, specialty insurer Hartford Steam Boiler announced it was teaming up with a Silicon Valley insurance startup, At-Bay, whose technology allows it to price insurance coverages based on up-to-the-minute risk assessments, rather than relying on historical actuarial data.
Other recent InsurTech developments among local insurers, according to the PwC report, include:
- The Hartford’s adoption of a new risk management information system, TREO, that uses data and analytics to help its largest property and casualty commercial customers and risk managers better identify cost drivers.
- Aetna launched an initiative with Apple to make the Apple Watch available to Aetna employees and, eventually, large employers to help workers and customers better track their health and, hopefully, reduce their need for medical care.
- Cigna has a new program, One Guide, that combines predictive analytics, a mobile app and personal guides to encourage customers to make healthier lifestyle choices.
Interestingly, Hartford’s efforts to tap into the InsurTech ecosystem has spawned two separate promotional efforts.
VanderLinden’s work in the Hartford InsurTech Hub accelerator was preceded by grassroots efforts by Stacey Brown, who founded a separate organization, InsurTech Hartford, to create InsurTech events, educational seminars and “meet-ups” in the city. He launched a website in February and held his first event in April. Several hundred people have attended at least one event since then and InsurTech Hartford has thousands of followers, some overlapping, between its website, meetup and LinkedIn groups, and Twitter followers, he said.
He views his organization as a platform to advance the insurance industry through new innovations and talent cultivation.
Brown has taken it upon himself to be InsurTech’s day-in-day-out representative in Hartford, working to build connections, culture, events and momentum year-round, complementing VanderLinden’s planned professional accelerator programs each year.
The two are not competitors, but collaborators, they say.
“At least in conversation, we’re all supportive of each other, we’re collaborating, we’re talking, we’re trying to figure out how to make Hartford the InsurTech capital of the world—and I think there’s a ton of room in the space for more people to come in, and get involved and get engaged,” said Brown. whose day job is digital transformation manager at insurer XL Catlin downtown.
Among those who have attended one of Brown’s events is Mike Kalen, the former president of U.S. individual life operations at The Hartford and former CEO of its Hartford Life Europe operations.
Kalen is now principal of The Sequoia Group in West Hartford, which advises private equity firms, InsurTech startups and insurance companies on how to accelerate the pace of innovation in the industry.
Kalen, who is currently advising six InsurTech startups—three in Connecticut and three outside the state—said the new accelerator and InsurTech Hartford are fueling critical mass in the industry.
“All of a sudden, there’s a step change in the amount of attention that this community will start to get, it’ll bring in investors, it’ll bring in innovators, it’ll bring in jobs and it’ll ultimately bring in companies that are going to take root here and accelerate the pace of change in the insurance industry,” Kalen said.
Brown said InsurTech is booming globally because technology is beginning to disrupt the insurance industry the way it has other industries, spawning significant startup activity in places like Europe and San Francisco.
It made no sense to him to see area insurers flying elsewhere to meet with InsurTech startups, viewing Hartford as ideal for such ventures, especially as the state struggles to retain and grow business.
It’s also about developing InsurTech talent, not only to grow new companies, but feed talent to insurers as they adapt to industry changes and give them incentive to be in Hartford, Brown said.
New York-based founder and CEO of Upward Hartford, Shana Schlossberg, said Brown and VanderLinden each has a different role in promoting InsurTech locally.
VanderLinden will come to Hartford for a few months each year, but Brown unites companies and talent year-round, organizing events at Upward Hartford, said Schlossberg, who’s also working to promote InsurTech among sectors she wants to incubate at Upward Hartford. The InsurTech Accelerator is taking 70 seats in Upward Hartford for five months next year.
Schlossberg said she, Brown and VanderLinden are like-minded, working toward a similar objective and willing to help the other to build an InsurTech ecosystem for the greater good.
Three people are great, but “we need a hundred of them,” Schlossberg said.
Interested in learning more about InsurTech initiates in Greater Hartford?