The funders who are shaping the insurance technology of the future have completely different ideas about what a great deal looks like.
The clashing shopping lists came up Thursday, in New York, at a panel discussion on insurtech venture capital organized by Insurtech NY.
The panel included two insurtech funding executives who work inside life insurance companies: Steven Ueng, a vice president for principal investments and acquisitions at Swiss Re, and Adam Myers, a senior vice president for strategic ventures at Guardian Life.
The panel also included Nitya Rajendran, a senior associate at Tribeca Venture Partners, a venture capital firm that invests in companies in many different industries.
The fourth participant, Farron Blanc, was vice president of innovation at Reinsurance Group of America from 2013 through 2018.
Blanc is now the founder of August Era, a firm that’s investing in small insurtech deals, and on small, non-insurance deals with companies that aim to serve the elderly. Blanc has also started a Gerry, a company that will use expert systems to help families shop for long-term care facilities and services.
Here’s a look at three of the factors affecting how they see deal proposals.
Each of the panelists had different ideas about the ideal deal size.
People in the venture capital and private equity communities refer to the smallest, newest startups as “seed stage” companies. They use the terms “Series A,” “Series B” and so on to refer to a company getting its first, second or later round of financing.
Blanc said August Era is looking for seed stage companies.
Rajendran is interested in seed stage and early stage companies.
Myers, at Guardian Life, said Guardian Life wants to get in at the early stages and have a chance to affect a company’s road map.
Ueng, the Swiss Re executive, said Swiss Re invested in a number of early-stage companies in 2016 and 2017.
These days, he said, Swiss Re will look at a company at any stage but often invests in Series C or Series D companies.
“A story is great, but you need to show us your product works,” Ueng said.
The product has to work both in terms of the technology and the economics, and it has to work at a large scale as well as at a small scale, Ueng said.
Myers said Guardian Life likes the idea of investing in companies that can help it do more with the data it already has on its policyholders, by helping it to identify underinsured policyholders, or to reach out to policyholders with policies that are likely to lapse.
Blanc said that he thinks companies like Bestow, Fabric and Ladder have already done a great job of linking life insurers with consumers. “I think that’s done,” he said.
Blanc said he’s much more interested in investing in companies that can find ways to meet people’s long-term care needs without being regulated insurance companies. He cited the adult diaper market and the respite care market as attractive markets.
Blanc said he thinks that, because different people in different parts of insurance companies tend to have such a hard time communicating with one another, and such different ideas about how insurtech should work, products aimed at meeting one type of executive’s critical need have the best chance to succeed.
If, for example, an insurtech has a great way to help the underwriters getting life applicants’ attending physician statements faster, that could be much easier to get done than trying to fix a company’s entire policyholder administration system, Blanc said.
“Finding an internal advocate is an absolute necessity,” Blanc said.
Ueng said he thinks a project with broader support is more likely to succeed, and that working too closely with one internal champion could lead to problems.
“What happens when that champion leaves?” Ueng asked. “Projects get orphaned.”
— Read Fintech Gambles Lure Insurers, on ThinkAdvisor.new