Many insurance policyholders are probably accustomed to only engaging with their providers when they go to the dentist or somebody dies – in other words, when they’re putting in a claim.
A new breed of FinTech startups focusing on the insurance space are hoping to change that. At Sun Life Financial’s Insurtech Expo in Toronto on Monday, several young firms gave their best elevator pitches to a room full of the 150-year-old financial services firm’s line of business employees. Each of them offered cloud software that could help insurance firms become a daily part of their customer’s lives. Sometimes by helping customers improve their health by tracking their diet, and exercise habits, sometimes by managing family health data. Often the web-based interfaces more closely resemble Facebook than a financial organization’s site.
For Fred Tavan, the global head of innovation lab at Sun Life, the event was an opportunity for his enterprise to pair its insurance domain expertise with the new ideas being brought to the table by technology startups.
“We hope that when our people go back to their business functions, that they realize innovation can be about partnerships too,” he said. “The big tent approach will help us accelerate that process… it broadens the discussion because multiple people can brainstorm about multiple problems at the same time.”
The event was organized through Sun Life’s partnership with Plug and Play Tech Center, a Silicon Valley-based technology accelerator and venture fund that has built a portfolio of 700 startups, making 150 investments per year. Sun Life partnered with Plug and Play in July 2016 as a corporate member of its insurance vertical.
Plug and Play chooses its startups with the help of a partner ecosystem to pick focus areas, explains RJ Carver, the founder of the New York satellite office. Out of 1,000 startups source, 60 are selected to come in for a pitch day and then 30 are accepted into the program. While venture capital money is always great for these companies, a partner like Sun Life can be even better.
“A corporate partner that can help identify that there’s a market need for a product,” he says. Plug and Play asks its corporate partners to dedicate a vice-president or director to the relationship, and facilitates meeting opportunities between the startup and the corporation.
The Plug and Play partnership is exactly what Sun Life’s strategy of being more client-focused requires, Tavan says. There’s a lot of opportunity in working with the increasing number of Insurtech startups coming through the accelerator, but first Sun Life has to make sure its internal culture is ready.
“We don’t want to let things happen like on the FinTech side where banks waited and waited and then were disrupted,” he says. “Insurance companies are trying to disrupt themselves.”
Jane Wang, the CEO of Toronto-based Optimity Inc., could probably help with that disruption. Optimity offers insurance companies a white-labeled policyholder engagement platform that incorporates wearable technology and artificial intelligence. It takes a micro-learning approach to coach users on how to improve their overall wellness and it incorporates social features too.
“We’re part of this new generation of tools that change how insurance companies engage with their clients,” Wang says.
Optimity offers a mobile app that integrates with apps like Google Fit and your calendar. It will then actually schedule fitness activities into those times for you and send a nudge when it’s a convenient time to get moving. From the insurance company point of view, the policy manager can organize segments based on customer data (ranging from BMI, weight, age, steps, etc.) and then send them customized content about different topics.
The platform is opening up to consumers in the New Year. From there, they can manage relationships they might have with life insurance providers, or group insurance benefits, and so on.
For insurance providers, Optimity can help them improve some key performance metrics such as churn rates.
“Two of the other things we track are adoption, so how many of the users in the wild will we bring to the platform,” she says. “Then there’s retention – how long are you going to stick with the platform?”
Who owns the data?
Asked how data ownership was handled in a situation where a startup is providing a white-labelled solution to an insurance provider that maintains direct client relationships, different startups had different answers.
- At Optimity, the startup owns the data, but users have the power to see all the insights into their own risks, Wang says.
- At Life.io, an engagement platform that includes social features so policyholder users can invite their friends and family to create accounts, the insurance carrier owns the data. Life.io owns the aggregated and de-identified data so it can learn from it.
- At LifeSite, which acts as a digital safe deposit box for families to store their health information and collaborate with service providers, the end-user owns the data, says Chris Wong, CEO, of LifeSite. Again, LifeSite aggregates de-identified data for learning purposes.
How do technology pilots with these startups work?
The startups all agreed that pilot projects with corporations were worth pursuing. The younger the startup is, the more likely it is that a corporate client would want to prove out that business case with an experiment. But working in this mode seems to have its limits.
- “I hate pilots,” jokes Wong from LifeSite. He’s actually open to them – the firm has been working with some senior care facilities to deploy Amazon Echo devices with its Alexa Skill enabled. “In the long run, this will save us a lot of money and hone in on the value proposition for this particular segment.” But pilot projects should be set up with clear objectives and boundaries in place.