The Deals and Dollars Nurturing the Current Insurtech Market

With a reduction in deals and dollars, insurtech investment going forward will favor companies with a proven track record and products that will be widely usable across the insurance industry, says Kylie Hubbard, director of innovation at Insurica.

In this podcast, sponsored by Ascend, Hubbard also provides a broker perspective on the state of data connectivity and discusses whether and how the insurance industry will use technologies such as blockchain and AI.

Read the Transcript

Sandy
Welcome to the Leader’s Edge Podcast. I’m Sandy Laycox, Editor in Chief of Leader’s Edge. In this podcast, sponsored by Ascend, I talk with Kylie Hubbard, director of innovation at Insurica. We discuss the current insurtech investment market and what is attractive to investors right now, the state of data connectivity from the broker perspective, where Insuretech will go next, and the future of buzzy tech, including blockchain and AI. I hope you enjoy our conversation.

Kylie, thank you so much for joining me. It’s great to be here talking with you today. 

Kylie Hubbard
Yeah, thank you for having me. 

Sandy
Very excited to dive into some conversation around insurtech. We’re going to start off with a look at the market, a little bit of so we’ve seen. It’s been interesting watching insurtech investing over the past few years. It was crazy for a while, but lately we’ve seen less investment in new startups, but still some investment in those that are proven. So I love your thoughts on what is going to be attractive to investors right now as an insure tech, for sure. 

Kylie Hubbard
Yeah, the market has been pretty crazy the last couple of years. It’s been really interesting to watch and see how all of that goes on. It’s been really interesting from an agency perspective too, just because it feels like the first kind of big couple waves weren’t necessarily surrounded or targeted towards InsurTech. That was even for agencies or brokerages or brokers or MGA’s or anything of that nature. 

And it’s been interesting to see a little bit in my personal perspective, I’m starting to see a shift towards investment in tools and tack that is going to really bring back that value to those core competencies within insurance. I think everybody wanted to disrupt originally and from an agency perspective, there’s a space for all of it, but it’s expensive. Exciting to see some of these. It’s been interesting because a number of deals and number of dollars that are getting pushed into the system and the ecosystem is less right now. Obviously, 2022 is a not great year. As interest rates have gone up, that’s created a huge weird space for investment. But the investments that have happened, the values are generally larger. 
But you’re right, it’s more proven methods that will continue right now, for what the space has. You have to have a much heavier track record. You’re going to have to have more customers than you did in the past whenever you had to start. When you’re starting your seed rounds or starting your investment opportunities, there’s just some standard things that are happening within the InsureTech tools. You have to bring efficiencies to the front lines, whether that be to agents and brokers or directly to carriers. MGA’s. I personally think MGA is kind of that new space where we’re starting to creep in terms of where that tech probably will be going next. 
And data flow between all of the spaces, consumer to broker to agent to carrier, and the data flow connections between those should probably be a big focus because the faster everybody can get that data, the faster we can all work and do more business together. Connectivity is huge. When you think about the tools and the efficiency things that we need from a brokerage and agency perspective, the ability to overcome some of the adaptability and connection issues of the past has become a big target in companies that will bring bigger impact to and value to their investors. So just naturally, being able to overcome some of those things make it a more attractive investment. 

And then, you’ve just got to be able to bring a solution that will cover a wide base of customers. If they’re going to invest in your InsureTech, you better be sure that you can compete in the marketplace in a big way. I think that’s really important right now from the people that we know and we talk to about what’s going on in the market. It’s volatile in general, and so you have to have a proven record and you have to be able to have a wide customer base and be able to break into those big top 100 agencies if you’re agency focused. I mean, I think having big customers is just really going to be a differentiator in somebody’s ability to secure funding or not. 

Sandy
Right now, that makes sense. We started out with, it seems like a lot of companies, some of them doing the same thing. So those that have managed to really get a lot of the clients make sense that they would be the ones that would rise to the top at this point. 

Kylie Hubbard
Yeah, I love to see the little guys win. I love to see and I love to use and work with companies that are just starting. So it’s a little bit harder in this space because it’s a little volatile on where they’re at in terms of stability. Hopefully interest rates eventually stabilize a bit and maybe head to down and maybe we can open it back up to some of this, to some of the smaller tools, too. But I just think it’s getting less towards direct to consumer less direct access type things and much more about efficiency tools and how can we booster and help the core pieces of the insurance industry in general, which I really appreciate for sure. 

Sandy
Absolutely. You mentioned a couple of things that I want to go back to. So one, and I was going to ask you about this anyway. You talked a little bit about what the brokers are needing for this next phase. You talked about needing that smooth data flow, that connectivity. So I’d love to hear exactly where do you think we are in that? How close are we to reaching that nice, smooth flow? And then are there any other things that you feel like are crucial for brokers from the insurtech community in the terms of client service? 

Kylie Hubbard
Yeah, I think we’re getting there. We’re probably middle of the road in terms of getting where we need to be. Middle of the journey and where we need to be in terms of connectivity. I look at connectivity in a couple different aspects, really. You have your client journey connectivity. How are you connecting to your clients? How are you creating a space where they want to be and they want to work in the way that they want to work? And that’s not. Not all customers are the same. Different segments of customers want to act and conduct business in a different way. So making sure that you have efficient connectivity to those customers and those customer journeys which allow you to pivot between one customer type and the next quickly. 
And then I have , your efficiency tool connectivity, it’s. We have applied and we have a vertivore and we have all these giants in this space that we rely on every single day. And most everybody in this market does, too. They’re making strides to make themselves and their platforms that we rely on a lot more connected able to plug and play our third party connections. But I don’t think we’re there yet. I don’t think it’s good enough yet, in my personal opinion. Sorry, guys, I like you a lot, but we can all do better in this space of just working together. I’m a big proponent of ecosystem in this way and making sure that we don’t all have to be the best at everything. 

We don’t all have to be the best at everything we want. As an applied epic user, we’re big applied epic users, we’re all in on that. But we want to make sure that there are other things that we found in the workplace or in the marketplace that are good tools that they’ve just done really well and they’ve built really good things at what they do. And we want to make sure that our ability to use our ams is our accounting system and our system of record and use it in the processes that we’ve made, but allow that flow of data in between those other tools that we think are really great efficiency and customer tools for us. 

The connectivity between some of those systems, just our core competency systems, we’re going to get better. And I know that they’re working on it too, which is great. And I’ve seen some really awesome companies do some really creative things to get around that too, around those kind of plug issues and connection issues. So it’s exciting to start seeing people kind of innovate on ways to get around some of those roadblocks, for sure. I’m looking forward to the future, though. I think that there’s a lot to be done. 

Sandy
Yeah. Oh, yeah, sounds like it. All right, let’s talk about a couple buzzwords. So one is not as buzzy anymore, but it was very buzzy a couple years ago. Blockchain. 

Kylie Hubbard
Yeah. 

Sandy
And we’ve seen a couple use cases where it’s actually being put in policies or claims processes. So I’d love to hear your thoughts on it. Is it gonna become a widely used thing insurance? 

Kylie Hubbard
I don’t think so, honestly. I mean, it might. Who knows? Some of those kind of, I think particularly when it comes to money and payment and all of those things. Like, I think blockchain really has a. And I mean, just obviously just secure data in general. The more we look at data privacy and data security laws and HIPAA and all of the things that we have to do to protect our customers and just general information in general. I like the idea of it a lot. I just think we as an industry haven’t. What’s the right word here? We just haven’t adopted it in a way that we’re just not in a. It’s almost too far of it. It’s just too outside of our comfort zone right now.

It hasn’t been utilized in our industry quite yet in a way that is easily adoptable.It all starts with the carriers. Like if the carriers aren’t adopting it’s really hard for the rest of the industry to adopt it. I kind of tend to watch what the carriers are doing first in terms of kind of those big hype words, if you will. It has a lot of potential. It hasn’t caught on in the way that I think that maybe two or three years ago, I feel like two or three years ago we’re gonna work in blockchain, we’re gonna work in the metaverse and that’s just how things are gonna be. 

Sandy
Yeah. 

Kylie Hubbard
Our industry, although I love it, I have passion for it. Really big into the insure tech world and it just doesn’t move that fast. If it does catch on, it’ll be a while. I don’t think anybody think if you went into an agency right now and said, hey, we’re going to start using blockchain, somebody might panic. But I don’t know. I think that’s one of those that, the jury’s still out. I’m not sure about it yet. 

Sandy
Yeah. 

Kylie Hubbard
AI, on the other hand. 

Sandy
Yeah, let’s hear it. 

Kylie Hubbard
Yeah, I mean I don’t see a future insurance without AI ever again. It’s, it is such an integral, just such a useful tool if you use it right. It’s such a good addition to the tech out there. It has the potential to create capacity in a world that we are having trouble filling seats, we’re having trouble filling bodies, just generally in hiring and insurance. And if you can’t make your people the most efficient that they can be and put their talents, I’m really big on using AI to fill time or create time for people to use for what they’re talented for and what their highest and best use is. And a lot of times you just, there’s not a lot of value in a human sitting there typing out data into a screen from one to the other. 

Like, there’s just a lot of times not value in that. When you have people who understand risk really well and they’re not spending their time doing that and helping their clients and advising and creating new plans and creating new ways that we can, better serve our clients. And if you’re not going to use AI to bring those kinds of efficiencies, I think you’re going to fall behind. I think that it’s just so powerful and it’s not even just like that, data type, redundancy tools, too. It’s, it’s how are we educating our people? It’s how are we educating our customers? How are we able to speed up our communication with our customers? Can we answer their questions on a Sunday afternoon when nobody’s at the office? 

What kinds of data tools and analytics are we going to be able to do? How much machine learning are we going to be able to implement, to be able to make a better decisions? How much better are our loss ratios going to be when we have better predictions of what our claims are going to be like in the future? I mean, I just think it is silly not to be thinking in that direction, for sure. 

Sandy
Are you guys using it currently at Insurica? 

Kylie Hubbard
We have a couple different initiatives going on from an AI perspective. We’re really just trying to build a culture around, accepting it and getting our trust. Yeah, yeah, we’re in the build trust building season right now. Like, we’ve built some just kind of generic tools, but we have our arms around them. That’s in the world of training and information gathering, where this all kind of has started for us. And back to that same discussion of how do we hire fast – we’re growing fast, and so we have really big growth goals. 

We’re going to have a lot of producers come on board this year which come with a lot of support staff and everything else that comes with a large amount of growth. And how do you train all of those people? What are better ways that we can get questions answered? There’s just like the random questions of really green people, too. We’re trying to grow green insurance people, get people excited to start in this industry. And when you do that, you have to be able to answer basic questions: what’s an occurrence? 

What’s the claims made policy those kinds of questions that or process workflow type questions that in life right now we’re picking up the phone or shooting a team’s message to our director of Ops, who is probably in the middle of really important discussions with something else that we need to make sure that they have quick access to the information that they need. And so we’re using AI to structure some assistance in that way and make sure that we have tools directly for our internal colleagues. And then we’re exploring what outside maybe some customer facing AI looks like we’re using some machine learning and some prediction type models for some things that we’ve have going on. So it’s peppered here and there. 
But right now, we are definitely in that trust building mode with our colleagues say, hey, this is cool. 

Sandy
It’s important that trust building is important. One more question for you that you brought up talent, and I have to ask because obviously talent is such a huge issue for every broker you talk to. You guys are very digital forward. So I’m just curious, is your talent search different than it might look at a traditional agency? Do you, do you see a different pool out there or you see, do you have the same kind of struggles? 

Kylie Hubbard
We have the same kind of struggles. There’s no doubt about it. I think it depends on what segment. Right now, we’re still very much in a pretty traditional hiring mode with when it comes to our middle market commercial lines business for sure. That being said, one of our core values at our company is innovation. And so we make sure that we’re trying to build a culture of innovation.I do think that has taken a part. My HR ladies and the wonderful people that do our talent searching probably have better answers for this, but I know that, just as a core competency, we are trying to build a culture of innovation. 

And so that has definitely been a discussion topic in terms of when we hire new people, we need to make sure that they’re adaptable and we need to make sure they’re okay with change because this industry is full of it. And I don’t anticipate that going away. And I think our leadership understands that all the while, we still incredibly focus on just your sheer. I mean, commercial insurance is hard. It’s hard to learn. It takes a long time. I don’t care how much AI you have, learning what a claims made policy is hard. Learning construction exposures is hard. Just learning this industry is hard. So it’s a little bit of both. We’re still in pretty traditional mode now in our digital division. We call that interca direct. 

We definitely put a bit more of an emphasis on the technology and the ability to use technology in that space, but that’s also the area that we hire a ton of green people. They don’t know anything about insurance. They might be changing careers. Yeah. Or right out of college or something of that manner. To where we put a lot of emphasis on if you can bring your ability to change and your ability to adapt technology easy, we’ll teach you insurance. We’ll make sure that you know that part of the business. And we’ve found a pretty nice way to do that. But it still is a struggle across the board of just getting. 

Sandy
Just. 

Kylie Hubbard
There’s just not enough people that. Particularly seasoned people that know the business. 

Sandy
Yeah, yeah. No, it’s definitely a common sentiment that you hear. 

Kylie Hubbard
So I am really hoping that. I mean, I don’t know about you, but everybody just kind of either. You’re either born into it or fall into it. I hope a lot more people fall into it soon. 

Sandy
You know, we have a podcast that we do at Leader’s Edge. My colleague does it. It’s called falling into it. And it people who. They’re young and they’ve now fallen into. It’s a great. I’m plugging it now, but, yeah, no, it sounds great.

Kylie Hubbard
I’ll go listen, because I fell into it, for sure. 

Sandy
Yeah, I think it’s a great story. But listen, it’s been great chatting with you. I feel like we’ve definitely gotten a good state of the insurtech market from you as well as where things are innovation wise, digitization wise. Any last thoughts for our listeners from the head of innovation for insurcut? 

Kylie Hubbard
Oh, I mean, I just am excited to see where this year is going to go. I feel like things. You blink and things are different and changing. I’m excited about the data flow and the data management going on and all the AI tools.I think AI is the name of the game right now. It’s gonna be really fun to watch. And I highly encourage everybody to jump in. 

Sandy
Absolutely. Absolutely. Thank you so much, Kylie. 

Kylie Hubbard
Thanks. 

Sandy
That was Kylie Hubbard, director of innovation at Insurica. I hope you enjoyed our conversation.

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