Chubb CEO Evan Greenberg’s recent comments poo-pooing InsurTechs’ boasts of their powers of disruption and transformation drew polite and measured response from startup investors, advocates and insiders.
Many criticized his points — detailed at the ITC Vegas 2021 conference on Oct. 6 — as missing the mark about what InsurTech startups have already contributed to the P/C insurance industry and what they stand to do in the future.
That said, some viewed Greenberg’s general perspective on technology and how it helps the insurance industry as dovetailing with their own.
Hype Versus Enthusiasm
Greenberg said at ITC , in part, that InsurTech promises of transformation are “just hype.” Caribou Honig, a partner at SemperVirens Venture Capital and chairman/co-founder of InsureTech Connect, asserted that InsurTechs are far more than that.
“Hype and enthusiasm are two sides of the same coin. It should be no surprise that entrepreneurs might come across as of hype, even to the point of unwarranted hyperbole as Evan Greenberg implies,” said Honig, who attended Greenberg’s ITC stage remarks in person. “But the enthusiasm shown by VCs and incumbents for the benefits of deploying tech to insurance is quite warranted.”
Kat Utecht, co-managing partner at the venture capital firm Core Innovation Capital, said she understands Greenberg’s perspective, but added he’s not acknowledging the full picture.
“I completely get where he’s coming from. It’s cognitive dissonance. He must believe that stance,” Utecht said. “Clearly, I believe the opposite, where I am investing in companies that will revolutionize the industry…Whether it’s in P/C, Life, Health — most of these companies have access to human resources and data sources that incumbents wish they had.”
Richard McCathron, president of Hippo, a California-based digital home insurer, offered a positive perspective on some of Greenberg’s key remarks.
“We agree, underwriting is key and critical for success in the industry, which is why Hippo has focused deeply on this area within our business — hiring a world class risk-team, leveraging strategic data integrations and driving toward industry-leading loss ratios,” said McCathron, who attended ITC.
He added: “Keep in mind that, when it comes to underwriting and risk taking, not all InsurTechs are created equal.”
David Gritz, co-founder and managing director of InsurTech NY, a global hub that links InsurTech startups with carriers, brokers and investors, said the Chubb CEO has an intelligent perspective but isn’t looking at the larger picture.
“Greenberg argues insurance will always be about the art and science of taking risk and nothing more. While this is in line with the views of most InsurTech founders, the way the science is applied to taken risk can be done differently than it was 100 years ago,” Gritz said. “Once InsurTech moves from hype to mainstream, what is left will be the carriers that have merged with InsurTechs and the carcasses of those who did not.”
Points of Agreement
Greenberg acknowledged at ITC that insurance technology is making a major mark on all parts of the industry. But those advances, he said, are in support of an unchanging insurance fundamental which he referred to as “the art and science of taking risk.” That’s one thing, he said, that InsurTechs won’t be disrupting.
Honig offered a mixed perspective on these remarks.
“There is often debate as to whether InsurTech is disrupting the insurance industry. In fact. I agree with Evan Greenberg’s implication [that InsurTech] is not disruptive,” Honig said. “Rather, I think it’s proving to be transformative instead, the fundamental nature of risk taking is unchanged, but the ‘how’ of risk taking is changing across the value chain. Those who embrace such a transformation — startups and incumbents alike — will benefit. Those who ignore it will find themselves on the losing end of the shift.”
Honig added that “from what I see on my own little hilltop as an investor and chairman of ITC, Chubb has embraced that transformation in full.”
Greenberg noted as much himself, asserting that Chubb has moved to embrace many digital technology advances (its Blink platform among them). He asserted that Chubb, being “first with so many technologies,” embraces experimentation, testing and adoption of insurance technology as it ripens. What’s more, Greenberg said, Chubb is evolving from being just an underwriting company to becoming an “underwriting and engineering company” as technology becomes an increasingly vital part of insurers’ daily operations.
Honig said he was “heartened and impressed” by that description and that it made sense.
“I’ll admit it dovetails with my own view of what makes for a ‘tech company’ as one that solves problems first and foremost by hiring engineers and deploying software, rather than defaulting to just hiring more functional experts,” Honig said. “In a sense, the future of Chubb and the future of InsurTech startups looks like one and the same.”
Utecht, who was at ITC but missed Greenberg’s live remarks, added that InsurTechs don’t have to disrupt incumbent insurers anyway to make a difference.
“I don’t think InsurTechs have to disrupt the old guys. They can partner with them, and most of our companies are doing just this,” Utecht said.
Gritz himself noted that Greenberg’s perspective on InsurTech is knowledgeable. But his perspective, he argued, is ultimately limited due to his place in the industry.
“Greenberg has a keen view of today’s impact of InsurTech [companies], but his view is clouded by his position as an incumbent carrier.”
McCathron observed, however, that technology/customer-first approaches that InsurTechs provide must balance out disciplined underwriting to maximize gains for everyone. InsurTechs like Hippo know the way, he said.
“Some legacy carriers struggle to put their full suite of business lines through the lens of the customer. The real challenge is finding the right balance between a customer-first approach along with disciplined underwriting and insurance acumen,” McCathron said. “In our business, it doesn’t have to be one or the other; focusing on the customer experience in all our business lines brings each one of them together to work in symphony on behalf of the customer and the business.”