Transcription:
Patti Harman (
Welcome to this edition of the DigIn Podcast. I'm Patti Harman, editor in chief of Digital Insurance. There were approximately 1500 InsurTech firms in the United States in 2024, and this number is only expected to increase as entrepreneurs explore opportunities to transform every aspect of the insurance industry. The adoption of AI is also creating new opportunities for insurers to incorporate even more technology into their processes and procedures. What pain points are these firms solving for insurers? Where are they finding funding and how are they collaborating across the insurance industry? Joining me today to discuss all of this and much more is Astrid Malval-Beharry, founder and president of Strat Maven, a strategy consulting and advisory firm that specializes in that important intersection between P&C insurance and technology. Thank you so much for joining us on the DigIn podcast, Astrid.
Astrid Malval-Beharry (
Thank you so much, Patti, for having me. I'm really excited to be here today and I'm looking forward to our conversation.
Patti Harman (
Well, I think we're going to cover a lot of ground in the next couple of minutes. So to start off, very few people actually start their careers in the insurance industry, and I was wondering if you would just kind of give us a little bit of background on your story and how you ended up launching your company.
Astrid Malval-Beharry (
Yes. So yes, I thought for the longest time, Patti, that like 99% of people in the insurance industry that I fell into the insurance industry. But recently, I actually started revising that because after my MBA, I joined the Boston Consulting Group, BCG India, New York office, which at the time had a really large practice around financial services and insurance. And early on in my career at BCG, I had the option of working on this very glamorous consumer brands project that everyone in the office, the New York office, wanted to work on. And then there was another project for an insurance company, which was around really analyzing and optimizing their distribution model. And something about the insurance project actually, I don't know, called to me in some ways. I do have an engineering background, so I love anything that's related to data science, to statistical analysis. A good friend of mine was and still is, but was at the time an actuary.
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And I had always learned from her what actuarial science was all about and so forth. So to make a long story short, to the surprise of everyone in the office, I chose the insurance project and really the more I dug in, the more I fell in love with the industry and I ended up requesting to be actually staffed on pretty much all insurance projects. So I did not have the typical management consultant career where the idea is to try several industries. I found insurance, I loved it, and I decided I want to stay in it. I think what I realized really early on, even after that first project is that insurance touches really every aspect of our economy, of our society. It touches every human being, every company, every community, and every major life event it touches. And it's this wonderful combination of data science, technology, human psychology and human behavior and of course, business strategy.
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And I think that's what really inspires me and why I am 20-plus years later, I'm still working in the insurance industry. And so after BCG, I had the opportunity to spend many years at LexiNexis Car Solutions and I joined LN at a very critical time in their journey because the company was looking to acquire Choice Point, which at the time was the largest publicly traded data analytics technology vendor to the P&C insurance industry. And I was actually brought in to pretty much help them analyze the insurance business of Choice Point post acquisition. I ended up joining the insurance vertical where I was responsible for a strategy M&A product development and so forth. And I would've probably still been at LexisNexis, but I did reach a point where I was completely burned out and the goal was to take a sabbatical figure out next step. And I did not quite make it one month into my sabbatical. Someone that I had previously worked with at my career was now working for a private equity firm and saw that there was an end date to my employment at LexisNexis on LinkedIn, which that's why I always tell my mentees, update your LinkedIn profile, and reached out to me and said, Hey, we are evaluating the acquisition of this core system vendor. And I had just been a part of the divestiture of Insurity from LexisNexis, and I thought, yeah, that would be great.
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And I did that first project and that led to other projects and that's how StratMaven was born. So, StratMaven was founded almost 13 years ago. And we are essentially, as you said, a boutique strategy consulting and M&A advisory firm. We work exclusively at the intersection of P&C insurance and technology. And I would say what's unique about us is that we serve what I call the P&C insurance trifecta. So we work with insurance providers and I would say they are primarily carriers and MGAs. We also support service providers and tech vendors. And these ranges from precede seed stage InsurTechs, all the way to very well known, very well established data analytics technology vendors. We are very privileged to work with, I would say, the top five of the top eight technology vendors in the industry. And then we also serve private equity investors and we work with seven of the top 25 private equity investors. So by serving this insurance trifecta, we get truly this 360-degree view of the industry. We get to see which technology is working, which one is hype, what are some of the pain points that are really top of mind for insurance carriers and then for private equity investors, which vendor, InsurTech vendor is really gaining traction or which MGA is really getting traction and so forth. So it's fun to get to work every day. I really enjoy what I do.
Patti Harman (
I'm not at all surprised that once you were exposed to the insurance industry that you chose to stay in that field. And it's funny because when I tell people that just get into the industry, I'm like, you're never going to leave. And they'll look at me, and I'm like, no, it's far more fascinating than you ever could have thought. And you're right, it touches every aspect of life and I think people don't always realize how integral insurance is to everything that they do.
Astrid Malval-Beharry (
Absolutely. Absolutely.
Patti Harman (
Yes. So your specialty, as you said is growth strategy. What does that encompass and what kinds of companies do you work with? You've kind of given us the big picture, but could you detail that a little bit more for our listeners?
Astrid Malval-Beharry (
Yeah, absolutely. And I think that's a great question. I think different people may have different definition of what a growth strategy is. And for me, growth strategy is really about clarity. So it's really knowing where to play and how to win. And it's not necessarily about chasing more, it's about chasing the right type of more. And as I said at StratMaven, we work with insurance carriers and MGAs on the insurance carrier front. We tend to work primarily with tier three, tier four carriers, although we've had the opportunity to also work with the innovation group at some tier one and tier two carriers. On the MGA side, we tend to work directly with the C-suite at those MGAs on their growth expansion. And like I said, for the vendors precedes InsurTech all the way to very established vendors. And then like I said, the private equity investors, one thing that I've observed, Patti, is that across these three segments, the questions around their growth strategy seems to be actually fairly similar.
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What is our unfair advantage in the market? If we want to grow double digits over the next three years, which growth path should we embark on? Should we double down on our core competency? Should we expand into an adjacency? Should we use M&A to accomplish our growth objectives? So at the end of the day, whether we're helping an InsurTech find product market fit or we're helping an insurance company with a digital transformation initiative as part of their growth strategy, at the end of the day, we're really helping them to focus. I like to say that there is not a lack of good ideas in our industry. I see it daily inside the four walls of my clients, whether I'm talking on the vendor side or the carrier side, MGA side, lots of great ideas and I think it's really helping our clients identify which ideas are worth betting on.
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And we are able to do that because again, we are at this confluence of all these different stakeholders. So again, we get to see where the needle is moving, but we also use a lot of data-driven insights at this point. I personally have conducted over 2000 customer discovery calls. These are like one-on-one calls with chief underwriting officers, chief claims officers, chief technologies officers, CIOs and VPs of underwriting and also your senior underwriter, your junior claims adjuster and so forth. So just a really rich set of data that we bring to the forefront to help. So I'd like to add one more thing about growth strategy because I think this is so important. So there have been studies done that have looked at industries outside the insurance industry, within the insurance industry, publicly traded companies, privately held companies, and looking at decades and decades of data shows growth.
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And when we say growth, we're referring primarily to revenue growth, which accounts for two-thirds of total shareholder returns. So that's a huge number, but the flip side of the coin is that only 40% of companies in general are able to create growth that is actually accretive in value. Because one thing to remember is that not all growth is good growth. There is also some bad growth if you are entering a segment that is lower margin or you you're betting on an adjacency that your investors are not, we reward you for. And I would say the other thing, two more things about growth strategy is that growth strategy is important not for our industry, not just in the context of revenue growth or margin improvement, but also companies that are high growth actually have a more resilient culture and they're able to attract and retain better talent. And so, there are lots of intangible benefits that come with the growth strategy. And the final point that I will make about growth strategy is that it's never static. Your starting point to that strategy always changes, but also where the market is headed changes, and boy oh boy, is our market changing really fast. I would see even more so with the advent of generative AI.
Patti Harman (
I would totally agree with that. It was funny, I will be with Digital Insurance for two years in September, and people were like, why did you make the change from where I had been to technology? And I said, because this is where the future is. This is what's going to change this industry more than anything else. And you're right, we're just seeing so much growth in so many different areas, and particularly with the InsurTechs, like over the last decade or so. And how have these companies evolved within the last few years? I know that I've seen a lot of changes and are they focusing on solving particular pain points or developing new technologies, or other types of opportunities altogether?
Astrid Malval-Beharry (
Yeah, so let me perhaps start by level setting that. I think when we talk about InsurTech, there are two broad categories of insurtech. So they are what I would call the risk takers or insurance providers. So whether we're talking about full stack carriers or MGAs or distributors like digital brokerages, and then there are, so we'll put all that in the category of InsurTech insurance providers. And then there are the actual InsurTech vendors I would say across both InsurTech insurance providers and InsurTech vendors. We have evolved from InsureTech 1.0 to InsureTech 2.0 and now I believe we are in InsureTech 3.0 and I'll go over perhaps what I've observed from InsureTech 1.0 to 2.0 and now 3.0. But I would say the first wave of InsurTech, the 1.0, typically the founding teams themselves came from outside the insurance industry. They were, most of them for the most part, brilliant technologists who had had lots of success by the way in FinTech. They turn around and they looked at the insurance industry and they're like, boy, this has so many legacy systems and we're going to completely disrupt this one hundred-plus-year-old industry.
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And they came in either as an insurance provider that I am going to disrupt you legacy insurance carrier or as an InsurTech vendor. They said, we have the best technology. So they made all these grand promises and we're going to help you legacy carrier, disrupt the disruptors that are going after your business. And we all know how that turned out. So a lot of those companies have either gone under or some of those companies that are still around, they're still struggling to achieve profitability, and many of them have had to actually bring in that insurance domain expertise. I would also say the third characteristic of that InsurTech 1.0 wave was it was heavily focused on the direct to consumer channel. So let's try to dig to digitizing the distribution of insurance, but it did not expand really beyond I would say distribution. Here and there you have some products, but really it was focused on a direct to consumer distribution channel in insurtech 2.0.
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What we saw is that the makeup of the founding team themselves was different. So now you had a founding team that yes, still had brilliant technologies, but they also had people with deep domain insurance expertise. And so now when they develop products, they understood the insurance carrier's workflows, their data infrastructure, the regulatory requirements, which by the way is across 53 jurisdictions in the U.S. And so you saw certainly more maturity out of that second wave of InsurTech, again from the founding team, makeup from the products, the way they were following their go to market approach. And I would say again, it moved from let's focus heavily on distribution to really looking across the insurance value chain, both in depth and breadth. So we're starting to see, we saw solutions across underwriting, across claims. Some vendors decided we are going to take an enterprise approach and cover both underwriting and claims.
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Others said we're going to start in underwriting, moving to claims, or we are really going to be heavily focused on submission in commercial intake and so forth. But ultimately what these InsurTechs did is that they came to market in a way that was more collaborative with insurance carriers. They were less perceived as a threat if you are an insurance provider in InsurTech and if you were an InsurTech vendor, again, they were more mature. They brought that insurance domain expertise that made for greater collaboration with carriers and MGAs and agencies depending on the segment they serve. And then I would say we are witnessing a wave of insurtech 3.0, that I believe. My hypothesis is that it's really driven by the emergence of Gen AI. So AI, we all know, has been used in the insurance industry for decades and decades. Even generalized linear models that have been used in the nineties are a form of AI.
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But I think the advent of Chat GPT in November 2022, it's hard to believe that it was only a few years ago, but I think the advent of Chat GPT really democratized artificial intelligence across the board, across industries, across companies, across consumers just like you and me, and even in our personal lives. And now, you are seeing AI native InsurTechs that are emerging and the same way they are developing Agentic AI solutions or Gen AI, large language model driven solutions for carriers and MGAs and agencies. They are using those same technologies to run their own operations. And so I find that they are way more efficient than the InsurTech 2.0 at running their operations. They get to scale faster and reach profitability. My hypothesis is that they will also reach profitability much faster as well because they can be themselves efficient in their own operation.
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And I think going back to InsurTech 1.0, I think the biggest aha for many of those InsurTechs was the 12 to 18 month sales cycle, six months proof of concept. There's no way we can make money here. And in fact, many think one of the questions you asked, who's funding them, and I would say some of the generalist tech VCs have actually decided we are going to exit the InsurTech space, which I don't think is a bad thing at all. So now we see more InsurTech-focused VC funds, but we also see more funding coming actually from insurers and re-insurers themselves, which speak to the value that they see in collaborating with InsurTech. But yeah, I hope that's helpful. How I see the evolution from InsureTech 1.0 to InsureTech 3.0.
Patti Harman (
That was a great description of how everything is evolving and as we're looking at the growth strategies for each of these different types of companies, I think it's going to kind of vary in terms of what they're looking for. And I'm glad that you brought up that you're seeing more collaboration between the technology companies and the insurers because that's really the only way that that's going to work. No one can kind of operate in their own little silos, so to speak. So as you're working with companies with their growth strategies, and I'm looking at this in terms of the technology companies, what are they usually looking for? Are they looking for funding? Are they looking for insurance company partners? Do they want to acquire other companies? Do they want to be acquired? I think it probably kind of depends on where they are in their life cycle too, maybe.
Astrid Malval-Beharry (
Absolutely. I would say all of the above Patti, but it certainly depends on where they are in their life cycle. So I would say for early stage InsurTech startups, they are really looking to get a product to market as soon as possible. And so therefore, they are looking for validation from carriers
Astrid Malval-Beharry (
MGAs, or agencies. Again, that doesn't get deployed at scale,
But for them it's really, let's focus on getting that product market fit validated with the carriers we partner with. And I think an interesting data point there, and I've seen it myself. So I've worked with InsurTech founders that had offers from very well-known VC funds to get their funding and they actually chose to go with the corporate VC arm of a very well-known insurance carrier because again, for them it was more important to get to that validation with the insurance carrier. And I think we're seeing a lot of that happening. I would say for the mid stage InsurTech, they are really focused on scaling and expanding and there are different approaches that they can take there. So some of them might be doing sort of what I call a horizontal expansion. So they might be going from where they launch with a peril risk score that was focused on just one peril, let's say a wildfire risk score, and now they're expanding into severe convective storm, and flood and wind, and so forth.
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So that's the horizontal expansion of their product roadmap that they are following or an MGA might have started focusing on a specific line of business and now they are expanding from cyber to small commercial or whatever the case may be. So that's what I see for the mid stage. And I would say the more advanced stage are definitely looking towards an exit scenario, which I believe based on what I've seen and based on my experience, I don't see a lot of InsurTechs that are necessarily going to go the IPO path on the technology side. I can totally see that on the carrier side, but on the technology side, I think it's going to be more M&A that either they are acquired by a strategic buyer, kind of a large incumbent technology vendor, or they are acquired as part of a rollup perhaps with the private equity firm. At StratMaven, we've been very privileged to, we've participated in over 30-plus M&A transactions, but we take a lot of pride in some of the roles we played for some of those InsurTechs.
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I can name a few where StratMaven participated, but also others where StratMaven did not play a role, but I still think are very important ones to call out. So certainly we played a big role in the acquisition of Flywheel by LexisNexis, the acquisition of Bed Review by Nearmap and Nearmap itself by Thoma Bravo, and we did not participate in this one, but I'm happy to see also the exit that Cape Analytics had when it was acquired earlier this year by Moody's. Love what I saw with CCC's acquisition of EvolutionIQ. That was actually one of the largest acquisitions I've seen in this space. And so I do think that we will see actually more M&A activity. And I think part of the reason for that as well, Patti, is that there was definitely a hype cycle in terms of funding and valuation in InsurTechs.
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I would say really the hype of the cycle was really in 2021, there was a correction that happened in 2024, which I actually think is a very healthy correction. Nothing that is hype is sustainable and is going to remain like that forever. And so I do think that now valuations are more reasonable and at the same time, the fundraising environment has become very, I would say they are more careful about the type of investment they make. There's a lot more due diligence that happens. And so a combination of both the fundraising environment valuation that I've relatively seen come down versus the hype cycle of 2021, I think we'll see far more successful mergers and acquisition exits.
Patti Harman (
It's been very interesting because we cover the funding rounds and the M&As, and I feel like I get a 10,000 foot view of what's going on in the insurance industry. And we've been watching all of these different developments and it's really very interesting to see who's acquired, how they're acquired, and just the synergies between a lot of these companies too, I think.
Astrid Malval-Beharry (
Absolutely. Yes.
Patti Harman (
So we're going to take a short break now. We'll be back in just a few minutes.
Welcome back to the DigIn podcast. We're chatting with Astrid Malval Baharry of StratMaven about how insurtechs and insurance companies can collaborate in the world of insurtech.
So we've talked about a lot of the different collaborations that you've seen. What are some of the challenges to consider when companies are looking to collaborate or acquire another company?
Astrid Malval-Beharry (
Yeah, definitely over the years we've seen some patterns around challenges that it's good to recognize them because they are also solutions on how to overcome or mitigate against those challenges. I would say one that is often underlooked and underestimated is actually cultural alignment. Insurtechs tend to come with the mentality of let's move fast, let's break things, learn, rinse and repeat. And then insurance carriers are in the business of managing risk by design. They are very careful decision makers. And so there might be, I have seen partnerships fall through because they could not bridge that cultural gap. But again, there are ways to bridge that cultural gap. And I think one of the ways to do that frankly is to, on the carrier and the vendor side, working jointly to identify the real pain point they're looking to solve. Aligning on the KPIs, the success metrics, the timelines for milestones, and having a clear business unit sponsor inside the insurance carrier I think is very important.
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I work with a lot of the innovation groups at insurance carriers and I love the innovation group of insurance carriers, but I think early on innovation groups were really treated as an incubator or R&D lab and not given really a lot of power in terms of really bringing that technology inside of the business units. I still see some of that in the industry, but I do think that there's been an evolution of that as well where there's definitely greater collaboration between the IT department and the innovation group and the business unit, but it's really important to get a business unit sponsor and not just work with IT to implement your solution or with the innovation group. I would say second challenge is around underestimating integration complexity. So we all know that insurance carriers have a very complex technology stack that is a mixed match of legacy system, more modern systems. A lot of carriers, I would say during that wave two of InsurTech continue their modernization journey, which will actually pay a lot of dividends with that third wave of InsurTech. But still, I think there is an underestimation on both sides, both from the vendor side and the carrier side about how complex these systems are to integrate. Often, we are API driven as if it's going to solve all the problems. And it goes beyond being API driven. It's also understanding, like I said, the tech stack, the data of infrastructure, the business processes around how this is going to be implemented. So I would say that is one of the challenges that I see there.
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Another challenge that I see is I would say speed of execution. So some companies will move fast without proper vetting and then others will be stuck in the analysis paralysis as well. And that's why so many times InsureTech vendors are discouraged because they are this course that only further lengthens the sales cycle. But again, I think really understanding who makes the purchasing decision inside of the carrier, really embedding yourself into the business unit can solve some of that challenge.
Patti Harman (
You've talked about this a little bit, but what are some of the red flags that companies on either side of a transaction should be watching out for as they're looking at the possibility of merging or acquiring or whatever that process may be?
Astrid Malval-Beharry (
Yeah, that is a great question. And again, having had the privilege to participate in over 30 plus M&A transactions, certain red flags are really unmistakable signs to pause and evaluate or investigate further. I would say the first one for me is technology that has not demonstrated scalability. So a technology solution can perform really well in proof of concept in small pilots or for small MGAs and carriers, but if they struggle at the enterprise level of volume and complexity, that is a red flag I would say. Second, especially when you're dealing with AI vendors, it's really important for carriers to ask their vendors, how do you ensure AI model transparency, interpretability and auditability? And let me just explain what each one of those are very quickly. I do think it's very important, but AI model transparency, the focus is really on open disclosure of how this model works.
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And the key question it answers is, how was this model built and is what's in the AI model interpretability really focused on understanding the model's predictions, and the key question it answers is why did the model make this particular decision? And then model auditability really relates to the ability to review the model performance over time. And the key question it answers is, can we systematically review how the model's past decisions, what the model's past decision were and what were their impact? So all three are very important. Again, going back to that first wave of insurtech, and that's where really the black box phenomenon came out of. They used to say, well, this is our IP, this is our secret sauce. And today, if a vendor tells you, well, this is our secret sauce and they cannot talk about these three elements, the transparency, interpretability, auditability, and also the model maintenance, and of course the security around that, then I would say that I would not partner with this particular vendor.
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So I think that's very important. Third, very important for the vendor to be able to demonstrate its clear use cases where their solution is deployed at scale in full production, and they can share the metrics that are relevant to the carrier that you're engaging with. That is really critical, and I think it's absolutely important for carriers. I encourage my carrier and MGA customers to really ask for references, not just a written case study, which is actually very important, but also you want to be able to speak to reference customers of the vendors that you are contemplating partnering or acquiring. With the fourth one and I have actually two or three more red flags that I want to call out. The fourth one would be around lack of insurance domain expertise. As I said, we see less and less of that. I think that crop of InsurTech 2.0 and certainly 3.0, we see that insurance domain expertise come in.
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But I still see, I actually spoke with a vendor, an InsurTech startup about two weeks ago that I could tell did not even get the lingo right about insurance. And I thought my advice was, it's actually good, either have an advisory board member or whoever because he is really in the early stage, but to really even get the lingo right when you're talking about with insurance providers. I would say the fifth red flag that I see is over-reliance on one or two carriers as your customers. So if 80% of the revenue of the vendor, especially I would say a mid stage vendor that has already raised a series A, for example, if 80% of their revenue comes from one or two carriers, that's what we call concentration risk. And that can destroy a company overnight if one or both carriers decide to switch business to a competitor. And then I would say finally what I would call regulatory naivete. So if the leadership team cannot really speak about how their products meet certain regulatory frameworks or if regulatory compliance is an afterthought, that also should be a red flag because it signals that there will be compliance issues down the road.
Patti Harman (
Yes, I think compliance is one of the areas that a lot of times people don't understand the significance of that. And we've seen that's an area where we've been increasing our coverage with compliance and regulations, and everybody has to know, as you said, there are 53 different jurisdictions because it's regulated individually on that state level. You touched on this a little bit, but what are the benefits for insurers when it comes to collaborating with InsurTechs?
Astrid Malval-Beharry (
Oh my gosh, there are so many benefits and I think the data is there to actually prove it. So I mean, I can speak specifically at StratMaven. So we've seen real use cases where a certain InsurTech solution is deployed at scale in production, and we've seen an impact on the expense ratio, the loss ratio, the growth in terms of growth, written premium per underwriter, you name it, faster claims processing and so forth. And then I mentioned earlier, but in 2024, we don't have yet the 2025 numbers, but 2024 was the highest E&O on record for investments by insurers and reinsurers directly into the InsurTech space. And that accounted for about 40%. So still 60% will come from the either InsurTech specific VC funds or more general tech VC funds, but 40%, that's actually a huge number. That number was around initially in the first wave between five and 10%.
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So you can see that evolution, and I think again, it's because they've seen the benefit of it, but I would say first and foremost, Patti, is the most obvious benefit is the speed to innovation. So rather than spending years building those capabilities, they get to partner and access cutting-edge technology and expertise. I mean literally overnight, I mean immediately of course there's an implementation period, and by partnering rather than building, they get to test new capabilities with lower upfront investments, a reduction in execution risk. And as I said, we've seen measurable ROI around more accurate risk assessment, faster claim processing, even access to things like the evolution of parametric insurance products, embedded insurance and so forth. So I think speed to innovation is a really an important one. I would say the second is in general, improvement in customer satisfaction and customer experience, which of course we know is something that carriers have been focusing on very heavily.
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I think in InsurTech vendors or InsurTech MGAs for example, it's almost part of their DNA to keep the customer at the center of everything that they do. And they bring that ethos, if you will, to insurance carriers who then are able to provide the same to their policyholders and whether it's getting a quote faster or getting a carrier to actively help a policyholder mitigate against a risk, whatever the case may be. But you do see an improvement in customer satisfaction, which translates to, by the way, revenue growth, which or premium growth as we spoke about, and in retention as well. The third benefit is certainly around operational improvements. So the right in InsurTech partnerships can help carriers or MGAs or agencies automate certain processes and reduce certain manual workflows and as I said, get quicker to decision making. I was talking to a commercial lines MGA recently, and they have deployed large language model base AI model for their submission clearance and triage and all of that.
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And what they realized is that they were slow to quote, they were really lacking compared to their peers. And what they found is that by implementing this technology, not only were they able to increase the speed to quote, get to quote faster, but that also meant that the quote to binary went up because the first to quote tends to translate into a 50% increase in a conversion that is to a bound policy. And then beyond that, they actually saw an increase in submission volume on top of it. Why? Because brokers like to deal with insurance carriers that are able to quote faster and serve them better, if you will. So that's the type of operational efficiency improvement that I'm talking about. And then I would say the fourth and perhaps final big benefit that I see is competitive differentiation. So, Patti, if we think about the P&C insurance industry outside of specialty lines, I would say it's a fairly commoditized industry.
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That's why carriers spend billions on Super Bowl ads, which I have some issues with that, but maybe for another discussion. But I think having access to these types of technologies is a way for you to differentiate yourself from your peers. And again, the numbers are there in terms of loss ratio, expense ratio, combined ratio, those that adopt those technology perform better than their peers that do not. And that competitive differentiation translates not only to their business operation and their policyholders, but also to the talent they're able to attract and retain, right? Because I mean, we all know Gen Z doesn't want to be looking at a green screen, and that's one way for us to attract and retain Gen Zs, which is the younger talent. Again, I know everyone tends to be cynical when we talk about the looming retirement crisis in the insurance industry, but I know inside some of my carrier customers we are actually seeing it.
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I have a carrier customer that what they did actually, which I think is very smart, and this is actually something they did, but they fed a bunch of historical claims and settlement patterns to a large language model, and the idea was to use that for adjuster training and decision making. And so they also fed into that model a little bit of the way their very experienced senior adjusters that are about to retire are thinking. And what they saw is over the course of six months of testing this, they saw up to a 30% reduction in claim leakage from that younger crop of junior adjusters, if you will. So again, I think again, to summarize the key benefits, speed to innovation, improve customer experience, third, improve operational improvement, efficiencies and so forth. And then fourth competitive differentiation.
Patti Harman (
And all of that helps to change the perception of the insurance industry from being this large entity that says this is the way we've always done things to look at us now, how we're using technology, how we're using data, how we are making this process much more transparent and almost instantaneous in many different areas. And I think I agree, there are so many benefits to this and it's really kind of changing a lot of different things. You have the unique opportunity of maybe being able to see a number of different InsurTech innovations, and I'm wondering if there's anything that you've seen that you think, wow, this is just so innovative or this is the type of thing that will just really create a lot of opportunity and promise in the industry. Is there anything like that that you've seen? And you don't need to name names, but I just want to have a sense of what you're seeing in that area.
Astrid Malval-Beharry (
So what I would say, and I know maybe when people will listen to this recording, they might roll their eyes when I say that, but I do see a lot of people in the industry rolling their eyes when we talk about AI or Agentic AI, and I get it, right? It's been hyped and I'm certainly guilty of it as well, but I don't know if it's because of the privileged position that StratMaven is in where we get to see real technology in action that works, and we also get to see technology that does not work. But what I would say is that I would caution people about being so cynical about AI and Agentic AI in general.
Astrid Malval-Beharry (
So personally, I think that maybe, or even in consumer goods, we tend to use through the word AI without really realizing that there are different types of AI technologies that are applicable to different use cases. And so I think the onus is on us as an industry when we talk about AI so that people don't become blasé and roll their eyes. We explain exactly what type of AI are we talking about, for what use case. But as I mentioned earlier, I think the advent of generative AI really democratized artificial intelligence across the P&C insurance industry. And I speak with CEOs and board members that are absolutely excited about large language models and Agentic AI. Now, there is a difference between it's exciting versus is it useful and how do we go about implementing it? But I have seen more adoption of technology, specifically gen AI technology in the last 12 to 18 months than I have in the prior five years combined across computer vision and LP and all of that.
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So personally, I think we will see more sort of combination of gen AI with other types of AI technology. So the combination of Gen AI with NLP, with computer vision and so forth for more precise and more personalized analyzed pricing and risk assessment. I also believe we are in the early innings of Agentic AI. And personally, my hypothesis is that Agentic AI will be, there will be more insurance specific applications for Agentic ai, and I think there will be also more complex use cases for it, right? So right now you are seeing Agentic AI being deployed in a certain way where they are given a few tasks and maybe as the technology evolves, they'll be able to handle more and more tasks and be in fact more complex. So personally, I'm very excited about that. I see some companies that, I don't want to put them on the spot, I don't know if I have their permission, but that are doing some really amazing things on that front. And I'm very excited for what's to come on that front.
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I just don't want to talk about just AI and Agentic AI, although I told you my position there, but I'm also, Patti, very excited about parametric insurance. I don't think parametric insurance will ever replace a traditional insurance policy, and it has such an important role to play in bridging the insurance gap and honestly helping to build more resilient communities. And I actually think that we will be able to leverage different types of AI to be more precise about the trigger for parametric insurance. So again, a very powerful combination. I'm also very bullish about embedded insurance. BCG just came up with a study. I haven't had time to dig deep into the study, but one thing that really caught my eye is that they estimate that about $13 billion of premiums flows through embedded insurance, and that number is going to reach $70 billion in 2030. So if you think about it, it's like a four or five times increase in literally four and a half, five years.
(
So that's really exciting. And what I see with some of my career customers and MGA customers is that we are moving from an embedded insurance perspective. We are moving from sort of micro insurance policies, think of your travel insurance, your wedding insurance, your pet insurance to actually more complex products being offered through embedded insurance. And I think that's going to actually require a rethinking of the tech stack of insurance carriers, but also their approach to product development that needs to be more dynamic and all of that. But something very exciting on the horizon as well to watch for.
Patti Harman (
Wow, that you've given us so much to think about. And it was funny as you were naming the different things, I'm like, yes, she's right. The importance of embedded insurance and the importance of parametric insurance and all of these are new tools and they are exciting developments that are just really kind of changing so many different aspects of the insurance industry.
Astrid Malval-Beharry (
And if I may add another one, which I think, and maybe that's the geospatial nerd in me, but I am, someone mentioned the other day that 80% of any data associated with an insurance risk as a geospatial component to it, and I actually believe that, but I think we'll see more advances in geospatial analytics where there more sophisticated types of cameras, greater accuracy. We are seeing companies that have launched stratospheric balloons that are constantly getting highly accurate measurements. And I think what's really exciting for me is the combination of geospatial analytics, so aerial imagery analytics, but also IOT sensor data and bringing all of that together again, I think is going to be so critical again, as we faced increasing climate risk and so forth.
Patti Harman (
So as we wrap up here, what's one takeaway that you want our listeners to understand maybe about the collaborations between carriers and InsurTechs, or what's that one little nugget you want to make sure that they have?
Astrid Malval-Beharry (
Yeah. I think my advice to insurance carriers, MGAs, agencies and InsurTechs is that to approach each partnership with curiosity, with genuine curiosity about what each party brings to the table. It's not about disrupting. I mean, we don't even use that word anymore. It's no longer about disrupting, it's truly about collaborating. But the most successful collaborations are the ones that have shared goals, like I said, a genuine recognition for the value that each party brings to the table. They are aligned on the success metrics for that partnership. And I would say finally really bring a thoughtful approach on how they are going to execute that partnership.
Patti Harman (
Thank you so much, Astrid, for sharing your insights with our audience. This is such a fun conversation. Thank you for listening to the DigIn podcast. I produced this episode with audio production by Adnan Khan. Special thanks this week to Astrid Malval-Beharry of StratMaven for joining us. Please rate us, review us, and subscribe to our content at www dig-in.com/subscribe. From Digital Insurance, I'm Patti Harman, and thank you for listening.