a16z Podcast | Reinventing Insurance

TL;DR

Insurance companies are being disrupted by startups leveraging data and technology to create new customer experiences and innovative insurance products.

Transcript

welcome to the a 16z podcast I'm Michael Copeland we are sitting here in our somewhat cramped podcast room with Frank Chen who runs our deal team and Mike Paulus who is on the deal team welcome guys thanks so much for having us great to be here Frank last year around this time you wrote a piece for our 16 things package and it was about insurance o... Read More

Key Insights

• 👨‍💼 Startups like Zenefits are disrupting the insurance industry by offering innovative business models that combine software and insurance products.
• 👶 New technologies like wearables and APIs are providing opportunities to collect more data and create unique insurance products.
• 👶 The sharing economy, including platforms like Uber and Airbnb, has created new insurance needs for drivers and homeowners.
• 😮 The rise of cyber risk and the prevalence of data breaches are leading to a growing demand for cyber insurance.
• 🐕‍🦺 Insurance companies need to adapt and improve customer experiences, including marketing, customer service, and claims processes.
• 👻 Data and technology allow insurance companies to better assess risk and personalize policies for customers.
• 🐕‍🦺 Insurance companies have the opportunity to promote preventive measures and offer value-added services to their customers.

Questions & Answers

Q: Why are entrepreneurs and startups focusing on insurance, which seems like a mature and traditional industry?

Insurance presents an opportunity for startups to completely reinvent the customer experience and change every aspect of the relationship between an insurance company and its customers. This includes using data to personalize policies, create new insurance products, and improve pricing and claims processes.

Q: What advantages do incumbent insurance companies have over startups in terms of data?

Incumbent insurance companies have historical data that they have been using to evaluate risk. However, startups are able to leverage new data streams, such as activity data from mobile phones, to better understand and price risk. As new data streams become available, the importance of historical data in insurance will decrease.

Q: What are the new categories of insurance emerging due to changes in behavior and technology?

The sharing economy has created new insurance needs, such as insurance for ridesharing drivers and homeowners who rent out their properties on platforms like Airbnb. Other emerging categories include cyber insurance for retailers, insurance for drones, and insurance for cryptocurrencies like Bitcoin.

Q: How will the emergence of driverless cars impact insurance?

The emergence of driverless cars raises questions about liability in case of accidents. Currently, companies like Google, Volvo, and Mercedes have taken on the liability while their cars are in self-driving mode. Startups are also exploring insurance opportunities related to driverless cars, such as insuring against cyber risks and ethical decision-making by self-driving cars.

Summary & Key Takeaways

• Insurance companies have traditionally had limited interaction with their customers, but startups are looking to completely reinvent the insurance industry by using data to personalize policies and improve customer experiences.

• The use of big data allows insurance companies to evaluate risk more accurately and price policies in a fairer way, while also helping customers prevent claims.

• The emergence of new technologies, such as the Internet of Things and driverless cars, is creating new categories of insurance, such as cyber risk and self-driving car insurance.