InsurTech: Taking Insurance Industry by a Storm

In an interview with Insurance CIO Outlook, Richard McCathron, Chief Insurance Officer, Hippo Insurance, discusses about today's insurance technology and its future. Rick is a Chartered Property & Casualty Underwriter and a Certified Insurance Counselor and has held senior executive positions at well-respected insurance companies. Rick has a passion to modernize the insurance industry from underwriting, distribution, product design, to customer service and consumer expectations. Rick found the perfect fit at Hippo Insurance who is leading the way in modernizing homeowner’s insurance.

1. In your opinion, how has the InsurTech landscape evolved over the years? What are some of the advantages of the current technological evolution?

In the early days of insurtech, most new entrants focused on enhancing the experience for the end customer - from the way clients request a quote to how they engage with their provider. Now that we’ve passed the threshold of updating some of the customer experience basics, insurtechs are looking to add value for the customer in other ways. Recently, the focus has transitioned to using data, analytics, and artificial intelligence to provide a better analysis of the customer over time, and more importantly to create underwriting differentiation that can benefit the customer.

The focus has transitioned to using data, analytics, and Artificial Intelligence to provide a better analysis of the customer over time, and more importantly, to create underwriting differentiation that can benefit the customer

Historically, insurance quotes were created through large datasets at the regional level which can inaccurately determine a customer’s coverage needs. At Hippo, through the use of big data and artificial intelligence we’re able to price risk at the property level rather than by looking at risks of similar exposure which adds a deeper level of personalization that hasn’t been available in the past.

2. What according to you are some of the challenges plaguing the InsurTech landscape and how can they be effectively mitigated?

Insurance is a highly regulated and complex industry, and this is often overlooked by new entrants to the market. Oftentimes, innovative insurtechs have great ideas but those ideas are not allowable within the current regulatory environment. To fix this, there must be more compliance with regulatory agencies to look at the industry in a modernized fashion.

3. Which are a few technological trends influencing InsurTech today? What are some of the best practices businesses should adopt today to steer ahead of competitors?

Companies are using new underwriting data sources and models to analyze and modernize the way we look at risk and recalibrate the insurance products themselves. There’s also a trend towards full stack customized technology solutions which gives insurtechs an advantage over those who are simply renting their technology. Often, a third party technology provider with multiple customers will not be able to adopt your desires in a timely fashion. Full-stack offerings provide a nimble solution for growing businesses as your own speed and delivers a holistically innovative product to your customers that’s in line with their expectations and desires.

4. Do you have any advice for industry veterans or budding entrepreneurs from the InsurTech space?

We’re seeing more insurtechs incubated inside existing incumbents because of the significant capital and resources at their fingertips. While this is a viable solution for some, it is important to be mindful about the sources of funding and partners you select in the early days. Taking money from established players often comes with significant parental strings and could ultimately guide your parameters of flexibility and the kinds of customers you can take on.