Brent Hammer is the AVP - Innovation Officer at Grange Insurance, a leading insurance carrier in Ohio, providing peace of mind and protection during life's unexpected events. Brent was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc in collaboration with The Future of Insurance Newsletter.
Brent, why do you believe it’s essential to the success of the insurtech movement that investment comes from industry incumbents vs. industry outsiders?
“Simply put, insurance is a very difficult business. It's filled with tons of complexity and nuance. The fact of the matter is you just don't know how difficult it is until you're actually in it and acting as a practitioner trying to eke out the smallest bit of profit, which carriers do. There's an art and a science in innovation that ends up finding success within the industry. In insurtech companies, they bring a totally different perspective than the incumbent carriers. They're brimming with creative ideas. They don't know what they don't know in some situations, but their intentions are very good with industry incumbents. They bring with them years of deep knowledge and experience about risk, strong balance sheets and a healthy, yet necessary level of skepticism to help level out the entrepreneur's perspective. When these two parties are able to combine forces and most importantly, collaborate effectively, this creates the best possible ecosystem to generate new ideas while iterating, refining and improving on those over time.”
Why are carriers in a better position now than 5 or 10 years ago to effectively deploy capital?
“Insurance carriers are data-driven decision makers, and they're not always the fastest movers. The more data they have, the faster they're able to move. I think that the insurtech ecosystem was being fueled early on by a lot of hype and a lot of fear of missing out. In those early stages, there was just an abundance of ‘innovation theater’ taking place. Over the last five years, we've been able to witness a very gradual maturation in the industry from theoretical value and very elaborate slide decks, to actually becoming practitioners with tangible products that have measurables that can be validated. The amount of observable data points has also been heavily bolstered with a number of IPOs (initial public offerings) from several high profile insurtech companies over the last several years.
This is directly correlated with the carrier's comfort level in deploying their own capital. It's really about increasing comfort levels around the measurable value of the insurtech enablers and understanding the economics of those potential insurtech disruptors. When you combine that abundance of data with the fact that there are many carriers out there that are well capitalized, you have the rise of the insurtech enablers, as opposed to disruptors. This has really put carriers in a much better position today to invest in and support the development of insurtech.”
What’s allowing industry veterans to more effectively identify “innovation theater” from legitimate enablers?
“It's a culmination of a number of things. You have more carriers investing in their own dedicated, internal innovation programs. Some teams are very small, dedicated teams. Other carriers are investing in huge armies of innovation teams, and they're all looking to partner with entrepreneurs, insurtech companies that are strategically aligned to engage in proof of concept and pilots with them, perhaps even joint ventures. This is providing carriers with real time insights into the potential value of a particular solution or the lack thereof. Again, as I said in the last question, there were a lot of carriers evaluating PowerPoint decks in the past, and now they're evaluating real solutions that they can test and pilot. You combine this with more corporate venture capital firms really targeting insurtech and this creates focused insurtech funds.
This increased both the breadth and the depth of the due diligence that's being performed around companies that are receiving funding. Finally, as I mentioned earlier, there's a lot of new information available from those companies that are no longer operating in stealth mode and those companies that went public with IPOs recently that provides carriers and incumbents with information they otherwise would not have known publicly. The culmination of all of these is accelerating us through the proverbial hype. It's really helping insurtech as a whole begin to reach this new plateau of productivity through collaborative solutions.”
Where is Ohio demonstrating exceptional strength as a supportive ecosystem for innovation?
“Being born and raised in Ohio, I am admittedly a little biased, and I also very admittedly love this question. First, you've got a concentration of industry talent and knowledge based on the volume of industry carriers and incumbents that are headquartered here in Ohio. I won't list them all off, but again, from Cleveland to Columbus to Cincinnati, there’s immense talent and knowledge that has a deep history and lots of data to go along and support that talent. In addition to that, we have established pipelines that are injecting new, young talent into the insurance workforce. Finally, when you combine all of this with strong support from state departments, like the Ohio Department of Insurance and JobsOhio, plus a mix of venture capital, I don't think you can have an ecosystem that is more supportive of advancing innovation within the insurance industry than you can find here.”