I attended InsureTech Connect 2018 in Las Vegas recently and found it to be the most dynamic and interesting one yet. Here are 5 thematic takeaways from ITC 2018.
- It’s getting big, really fast
- Beam was honored to be included as a panelist at ITC 2016; the first year of the conference to celebrate all the activity in the insurance tech sector. Just two years ago, ITC fit inside a relatively small space and had under 1,000 attendees. This year’s ITC was confirmation of the rumor with over 2,000 companies in attendance... this conference, buoyed by extreme global interest in the sector, is growing rapidly. In my view, this is also a proxy for general interest in InsureTech as well.
- Not a place for EB brokers to hang...yet
- ITC still trends toward a P&C focused conference, though there felt like more balance with life & health this year. As such, employee benefits brokers are not showing up to the conference in large numbers yet. There are probably a few reasons for this, including a bevy of other established conferences that target the broker specifically, but I suspect this will change as brokers look to get a front row seat for *what’s coming next* in their market.
- One of the most easily observable slants to ITC was the sheer number of VCs wandering the halls, meeting privately with companies, and attending sessions with a clear focus on finding the next big thing in insuretech. I wouldn’t be surprised if the ratio of VCs to actual founders was 2:1 at the conference. Interestingly, VCs looking in insuretech seemed to be much broader than other industries, with a disproportionate international presence, as well as corporate. The money is getting smarter as well; after raising venture rounds in 2014, 2017 and 2018, the level of sophistication of investors circling the space is markedly different. It used to be very difficult to find a VC even interested in a company taking risk at all, much less asking me about how we built our third party administrator product.
- The incumbent insurers had a large presence themselves at ITC, and I found them to be very curious and not confrontational about the new entrants to their markets, even the competitive ones. In fact, multiple leaders in incumbent insurers told me point blank that they expect to be thoroughly beaten on a medium term basis by certain companies and technologies being featured at the conference. This could be cultural, pure bluster, or authentic, but it definitely seemed different from other industries where incumbents were either unaware, or unconcerned by their upstart competitors.
- One of the potential reasons for this dynamic may be that disruptors and upstarts have shown a lot of interest in collaborating and partnering with the incumbents. By looping in mature carriers as investors and meaningful partners, not just pilot customers or token co-marketing partnerships (prevalent in the digital health space for example), insuretech companies are leveraging their strengths and partnering on weaknesses. This may create strange bedfellows over time, especially when it comes time for M&A activity, but seems to be mutually beneficial thus far. It’s also true that very few insuretech businesses have figured out how to organize these partnerships in a really material way thus far, but I expect this to change in the next 1-2 years.
- During our panel, Positive Selection: Using Underwriting as a Competitive Advantage, Founder and CEO of Health IQ (and Beam Dental customer!) Munjal Shah mentioned that he believes that M&A activity may be slow early on as carriers are culturally very conservative and may wait longer to see clear winners in the market before acquiring businesses. After juxtaposing with Google and Facebook’s ‘buy early, buy often’ mentality, our panel agreed and noted that this may make it harder for a large number of startups to rise quickly, but the end result may be entrepreneurs building better, more sustainable companies.
We may also observe totally unexpected acquirers coming out of nowhere and snapping up startups to get smart quickly in the insurance sector. One thing is for sure after ITC 2018, it’s getting increasingly difficult to ignore the growth of insuretech over the past 3 years.