- Andreessen Horowitz‘s General Partner Angela Strange spoke about the history of the insurance industry and the tech companies that are helping to shape its future.
- Strange explains why no new insurance company has cracked the Fortune 500 list since before World War II.
- She’s confident, however, that the industry is ripe for disruption: “The innovation we’ve seen over the last three centuries [in insurance] isn’t going to be nearly as exciting as what happens over the next three decades.”
- The full video of Strange’s presentation can be found here.
At Andreessen Horowitz‘s annual Innovation Summit in November, a16z General Partner Angela Strange spoke about the history of the insurance industry and the tech companies that are helping to shape its future.
Strange explains the difficulties that incumbent companies face, which is why no new insurance company has cracked the Fortune 500 list since before World War II.
With the advent of new data analysis technology however, Strange is confident that the insurance industry is bound for a seismic shift.
“The innovation we’ve seen over the last three centuries [in insurance] isn’t going to be nearly as exciting as what happens over the next three decades,” she said.
Chek out BI’s recap of Strange’s presentation on tech and the future of the insurance industry below (you can also watch the full video here):
We protect against our losses by sharing our risk, or pooling.
Farmers used to pool their crops at the end of their season. They would choose to give up a higher than average yield in good years, in order to mitigate loss in down years. And this is the fundamental concept behind insurance.
The first insurance market was actually a coffee shop in London. Helmsman would insure the content of their ships before going overseas.
The London Fire wiped out two-thirds of homes in the city and insurance went from a nice-to-have to a must-have.
Acquire customers, underwrite them, and manage claims — these concepts have developed, but have remained relatively the same.
Insurance is a $US5 trillion market worldwide.
The government is also behind many other forms of insurance.
These major companies have all been around since before WWII.
Why hasn’t there been more incumbents? Starting an insurance company is hard.
But the insurance industry is on its way to changing.
We’ve moved to a world where we can pretty much get anything we want on-demand.
The level of risk has increased so much that it’s forcing the industry to react more quickly.
The most exciting story in insurance is a data story.
New insurance companies are targeting niche groups. Next Insurance, for instance, has insurance specifically for yoga instructors.
There are also companies focused on the type of insurance. If you buy a hedgehog, for instance, you might want insurance for your hedgehog from Bought By Many.
If you have a home, you’ve probably had to fill out a form like this with 40-60 questions.
Now with all your home’s information online, a company like Hippo can provide an insurance quote with one question: What’s your address?
Betterview simplifies the underwriting process for commercial insurance with satellite and drone imagery.
Other companies, like Health I.Q., are compiling entirely new sets of data to prove to insurance companies that their population of users are healthier and therefore, should have lower rates.
Until new data sets take off, it is difficult to tell who will have better behaviour than others.
Businesses definitely think about insurance.
With new data, insurance will open up more widely to more markets and more people.
Lemonade gives a portion of their profits to causes to cut down on embellished claims.
The types of insurance companies that a16z likes:
Although the industry has grown a lot, the innovation we’ve seen over the last three centuries isn’t going to be nearly as exciting as what happens over the next three decades.
Insurance is going to become more accessible, and risk will be scored at a much more personal level.
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