The Uberization of Insurance and Pac-Man

July 2, 2015 by Erin Hamrick

Much has been written about innovation in the insurance industry as well as Google’s Compare, USAA’s recent participation in Compare, Liberty Mutual’s venture with Nest, big data, etc. Executive Summary Companies whose core businesses had to do with taking pictures, booking travel, selling books and music—along with a host of others—have been upended by technology companies that found new ways of doing those same activities. Erin Hamrick of Sterling James provides a comprehensive “gone list” and suggests that the handwriting is on the wall for insurers that don’t reshape their businesses with a focus on technology at the core.

Executive Summary

Companies whose core businesses had to do with taking pictures, booking travel, selling books and music—along with a host of others—have been upended by technology companies that found new ways of doing those same activities. Erin Hamrick of Sterling James provides a comprehensive "gone list" and suggests that the handwriting is on the wall for insurers that don't reshape their businesses with a focus on technology at the core.

What is really happening here?

It’s simple. The elephant in the room is the rapid pace of technology as the core disrupter that will change the industry forever.

The insurance industry looks to the past in order to predict the cost of insuring the future. The irony is that if we assess the constructive disruption that has happened in the past in virtually every industry except ours, then shouldn’t we be better prepared for technology to gobble us up? Let me explain.

Marc Andreessen is cofounder and general partner of the venture capital firm Andreessen-Horowitz, which has invested in Facebook, Groupon, Skype, Twitter, Zynga and Foursquare, among others. In the WSJ essay, Andreessen, who also cofounded Netscape (one of the first browser companies), identifies the “suicide of Borders” and the complementary rise of Amazon as “the single most dramatic example of this phenomenon of software eating a traditional business.” In addition to recounting some of the examples that Hamrick included in the accompanying article, Andreessen noted that “Disney had to buy Pixar, a software company, to remain relevant in animated movies” and that LinkedIn was the “fastest growing recruiting company” at the time of the article.