Watch Christopher M. Wells, Ph. D., Indico VP of Research and Development, and Michelle Gouveia, VP at Sandbox Insurtech Ventures, in episode 24 of Unstructured Unlocked with guest Jay Novis, Investment Associate at QBE Ventures.
Listen to the full podcast here: Unstructured Unlocked episode 24 with Jay Novis
The latest episode of the Unstructured Unlocked podcast was a bit different because it featured not just one but two experts from the venture capital world who both focus on insurance technology. Over the course of our conversation, it struck me that what makes technology companies attractive for VC investment is pretty much exactly the same as what insurance companies should be looking for in their technology vendors.
One of the participants was, as usual, my co-host Michelle Gouveia of Sandbox Industries, while the other was Jay Novis, an investment associate with QBE Ventures. Both are focused on finding startups for their respective VC firms to invest in, with a focus on companies that offer tech solutions for the insurance industry.
QBE Ventures is the venture capital arm of QBE Insurance Group, a global property and casualty insurer. QBE Ventures was formed to invest “in companies that provide access to differentiated technology which has the potential to enhance QBE’s business model, drive efficiencies and develop new avenues of growth,” according to its website.
So, when you think about it, Gouveia and Novis are doing the same thing as any insurance company when it comes to technology: trying to find companies that can help drive efficiencies and profitability. Consider this conversation, then, a sort of “inside baseball” look at how they go about doing that.
2 Keys: can technology help with underwriting and claims
Gouveia summed up her approach by saying she looks for companies that can help insurance companies make good use of data to drive efficiencies in two key areas: claims and underwriting.
She focuses heavily on the customer experience technology can deliver. “How easy it is for me to submit an application for you to look at and then give me a price?” she said. Or on the claim side, how can technology help customers more easily make claims, without calling five or six times.
“It really comes down to how are you helping the core operations of an insurance carrier or an MGA or a broker,” she said, using the acronym for managing general agent (one of the many insurance acronyms I’ve come to know and love from my conversations on the podcast).
Novis likes when tech companies can lay out a specific use case for their technology that clearly shows the benefit it delivers, including what business units it can help.
Gouveia echoed that sentiment. “The worst thing that can happen is you end a 30-minute introductory call [with a startup] and you have no idea what they do or how they do it,” she said. “What’s the benefit? What’s the value proposition?” A company that can point to some customer wins and specific use cases they’re employing is far more attractive, she said.
To me, that’s exactly what an insurance carrier should be looking for out of meetings with tech companies. They should be able to clearly explain the value prop, potential use cases, and offer up some case studies.
Novis point to one more positive trait in insurtech startups: flexibility. While some may be fixed in their ways, others are flexible enough to work with customers to build something custom. “That can form quite a powerful relationship,” he said. Again, I agree and would argue it’s something insurance carriers should ask about when vetting vendors.
Related content: Insurance automation: How to find the best products and measure their effectiveness
Technology trends in insurance
Novis also noted automation on both the underwriting and claims sides are among the technology trends he’s currently witnessing among startups focused on insurance.
“There’s no system that encompasses everything,” he said, forcing carriers to work with different systems across the insurance value chain, some of which don’t necessarily talk to each other. “Platforms that can be a sort of one-stop-shop is a huge focus area.”
Speeding up processes such as document ingestion, for both underwriting and claims, also means you can win more business, he said. As a result, he’s seeing companies delivering efficiencies in those areas. And yes, he did mention Indico Data – with no prompting from me.
QBE Ventures has also been active in the geospatial area, he said, including aerial imagery technology around property inspection and natural catastrophes, or Nat Cat in insurance lingo.
“Hurricanes, cyclones, we’ve seen a lot of those over the last few years,” he noted. “To have that technology provide a different view to provide more insight pre- and post-incident management in crisis management has been really helpful.”
Such technologies can help carriers understand risks and encourage mitigation before a disaster strikes. “The best way to manage a claim is to avoid one in the first place,” Novis noted. That may mean using aerial and geospatial technology to look at building roofing or construction properties to better understand risks depending on the quality of materials used and how susceptible buildings are to flooding risks and the like, he said.
Gouveia is also seeing startups claiming they can bring new data to the table to help carriers better model for risks from wildfires and other Nat Cats.
Related content: How to avoid AI bias and gather better data for insurance claims and underwriting
Honesty is the best policy
At the end of our conversation, Novis had one last piece of advice for insurtech startups: be honest. VC firms are really investing in the people who run their portfolio companies, including founders, their story, and mission. Investments often result in long-term relationships.
“Honesty upfront is always important,” he said, including around revenue projections and pipeline. “Being candid about where you’re having some difficulties, or some problems you’re facing, isn’t necessarily a bad thing.”
Here again, that’s a good topic for carriers to explore with insurance technology vendors. They should be able to point to a roadmap for how they’re going to deliver on solutions they don’t already cover.
Find the transcript of the conversation here.
To hear more of what Gouveia and Novis had to say, listen to the full podcast (Episode 23) on YouTube or on your favorite podcast platform, including:
