4 Key Trends Emerging from ITC
Every year, I attend InsureTech Connect (ITC), the largest gathering of insurance innovators on the planet. I’ve been speaking at the conference since its very first year and it’s been amazing to see its growth over the last few years. This year brought together nearly 10,000+ from over 50 countries and I was fortunate to share the stage with some incredible panelists (including Bill Pieroni, CEO of ACORD, Arun Balakrishnan, CEO of Xceedance, Farooq Sheikh, Global Head of Insurance at Unqork and Jillian Slyfield, Chief Innovation Officer at Aon) to discuss “The Future of Commercial Insurance Broking”. While there were some great take aways from the panel, learnings from the conference as a whole included:
1) Insurance isn’t just for insuretechs any more
This is perhaps the most surprising revelation to come during the conference. While many of the insuretechs that have gone public have been punished, there were countless startups at the conference that seemingly had nothing to do with insurance. I spoke to a few of them to better understand why they were attending the conference and it was primarily for two reasons 1) insurers were emerging as big IT spenders for them and they felt this was a great way to access a lot of customers and/or 2) they felt insurance was a potential monetization / business development pathway for them. Insurers have long been considered one of the longer and slower sales cycles in the business, but it certainly seems like the times are changing with startups flocking to support their cloud transition. The second point is less surprising to me as investors in companies delivering embedded insurance offerings like Wrapbook and SmartHop. I think we’ll increasingly see “VP of Insurance” as a title in companies representing people/things in the real world.
2) M&A is back on the table after a pullback in multiples
Numerous executives I spoke with said that they had largely been out of the M&A game for the last several years given the astronomical valuation expectations of founders and their investors. This led to an increased focus on investing and incubation, rather than exits. As valuations have come down, they are much more interested in entertaining those discussions, providing a new path to liquidity for an industry that has had very limited M&A. Ironically, it may be that valuations coming down ends up putting more money into investor and founder pockets, given that the last few years left little choice other than growing to the point of being a public company (even if it was economically inefficient to do so).
3) Climate risk is a top priority
This is a space we’ve spent a lot of time on at Equal and haven’t found a way to play (but are very interested in doing so). Changes in climate have attributed to severe weather events that have cost the industry hundreds of billions of dollars. As the industry attempts to move forward, a rapidly evolving climate weakens some of the traditional underwriting approaches taken for insuring property. Speaking with execs at many top brokerage firms and carriers, this is clearly a top priority for development, investment and M&A. As we continue to dive into this theme at Equal, we’ll continue to debate whether climate represents an opportunity for a discreet company or thesis, or if it’s a wholesale shift in approach that needs to be incorporated into all aspects of business. Either way, climate will be very top of mind for insurers.
4) Brokers aren’t worried about disruption
One thing that virtually everyone in attendance said was how good it felt to be back in person. Insurance (particularly brokerage) has ALWAYS been an industry of relationships. While so much of the narrative five years ago revolved around their disruption, one could argue that brokers now have a stronger hold on the value chain than ever before. Successful attempts at digital transformation haven’t disrupted the broker, they’ve enabled them — providing tools that reduce the administrative burden of transacting to focus more on strategic guidance and relationships (as we’ve seen with players like ThreeFlow and Riskmatch). As the insurance and benefits landscape evolves to greater complexity, these brokers have taken an increasingly strategic position with their clients. One might have thought that a year of two of reliance on Zoom would have disintermediated those relationships, but it seemed clear that the role of brokers was more valued, strategic and safe than ever before.
At Equal, we feel it’s essential to be native to the industries we invest in. I’ve been investing in and working with insuretech companies since early 2015 and it’s been amazing to see the growth of interest in the category. While plenty of tourists intruded and subsequently fled the insuretech waters over the last decade, we’ve remained stalwart contributors to the community from its earliest days. Events like these serve as a great way to remind ourselves on the importance of community as an essential part of an industry’s overall transformation. We can’t have transformation without collaboration.
*Read this on Medium here