Insurance companies are trying to jump-start innovation by working with relevant startups. These partnerships run the gamut from venture capital investments, to spinoffs, to acquisitions – but one thing is clear: Insurers know that there is a desire from external players to get involved in some aspect of the business.
“Many of the forward thinking carriers we’re working with are forming investments in startups, network security, home security, connected car firms — they’re looking across the board at people who are playing in that space,” says EY’s Hollander. “At a minimum, insurers need to understand the landscape of the ecosystem.
There are people out there who are making investments trying to own a piece of the insurance value chain or trying to do something better.”
MassMutual Ventures (MMV), the venture capital arm of the life insurer by the same name, was established in July 2014 and since then has invested in 11 companies.
“It’s very much horizontal and cuts across not only our lines of business but also things like data science, cyber security, HR,” says Mark Goodman, a managing director of the fund. “The fund was established with a couple objectives: principally to identify businesses that can augment or disrupt the strategy of MassMutual; but also from a strategic standpoint to help us ‘see around the bend’ and understand where the business is going see and introduce entrepreneurs into our company.”
Companies that have received some of MassMutual’s $100 million fund include Tuition.io, PolicyGenius, IEX, Picwell, FinTech Collective, Tamr, Recorded Future and Limelight Health. Companies maintain their independence even if they receive financial assistance, and being folded into MassMutual isn’t necessarily the end game.
Doug Russell is another managing director for the fund who also runs MassMutual’s strategy office. He says that MMV helps give the business at large an important window into the trends that will shape customer interaction in the digital world.
“Imagine a world in which an individual customer can marry what they know about your health with wearables giving them real-time information,” he says. “How does that play into how we think about helping on that journey?”
“We think that human beings are going to play a role in our business for a very long time, but it won’t be the same way that it was 50 years ago,” Goodman adds. “We see lots of interesting innovation that can help our agency system. We want to see technology enhance the way advisors can reach consumers. So advances in algorithmic underwriting and other innovation outside our company can be brought in.”