Far from the Silicon Valley hub of financial technology, the next great insurance tech idea may be hatched in Des Moines, Iowa.
Since 2015, insurance technology startups from around the world have converged there to learn how to grow their businesses. The Global Insurance Accelerator is a 100 day early-stage startup program backed by major firms including American Equity, Principal and Mutual of Omaha. They’re working on tools make the claims process run better, and new ways to assess risk and detect fraud. The program will graduate its third class this year, and interest among major insurance carriers continues to grow.
“When you look at insurance companies, at the end of the day they’re data companies, and the products they deliver are virtual,” said Brian Hemesath, managing director of the Global Insurance Accelerator, whose fund offers participating startups $40,000 of seed funding in exchange for a 6 percent equity stake. The program is part of a larger trend where insurance carriers are developing their own venture capital arms to support new products from startups.
Hemesath notes that Des Moines, a major hub for the insurance industry, is a good fit to host the program, given that over 60 companies are headquartered there. Cost was not a driving factor, he said, but the low cost of living allows the program to offer free housing to the cohort. In addition to the accelerator program, earlier this year, ManchesterStory Group, a venture capital firm backed by a group of insurance companies from across the country, just began operations in Des Moines.
The startups are developing products for insurance carriers, including those that improve business processes, security and underwriting methods. The 2017 class includes InsuranceMenu, a platform to help small businesses connect with health insurance providers and RE-Sure, a tool that integrates blockchain technology into the insurance sphere.
Roland Chan, a current participant from Toronto said that in addition to workshops on market strategy, underwriting and regulation, what made the program stand out was the networking aspect. Chan is the founder of Find Bob, a machine-learning powered succession and partnership planning platform for insurance agents and financial advisers.
“The first three weeks were speed dating networking,” he said. “We were introduced to over 90 industry stakeholders, carriers, insurtechs and government agencies.”
A demonstration day later this month and presentations to an international conference of over 450 insurance executives will mark the culmination of these efforts.
Hemesath said some key issues are how to develop better underwriting technology (for example, how to assess a customer without a credit score), data sharing including the exchange of APIs, and how the industry can use data from emerging technologies such as wearables.
While early insurance technology innovations were in the consumer space, Chan said the next frontier for them will be to help large companies more easily deliver their services.
“A lot of the early bets have been made on disrupting the consumer experience, but the next wave is going to be about supporting other aspects of the value chain,” he said. “Insurance is one of the oldest segments of financial services that has had the least amount of innovation in the last hundred years — there’s going to be tremendous opportunities.”
