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COVID-19 and the Insurtech “Junk Drawer”

This is the first in a new series of blog posts by HazardHub CEO Bob Frady on risk, big data, and the insurtech market.

 

COVID-19 has laid wreckage to normalcy. The vibrant insurance conference circuit – where many insurtechs go to meet with potential clients and prospects -- has either moved online or simply ground to a halt. Airplane travel and face-to-face meeting have been replaced by Zoom calls – many times featuring the occasional barking dog or stray toddler. On top of this, there has been enormous personal loss of friends and family.

Someday people will look back in history and say, “At least we’re not in 2020!” 

Unseemly as it sounds, the question is, has COVID been good or bad for insurtech?

We can’t answer that for everyone. But while we’re all struggling with the personal implications of COVID and wish it would go away, COVID has been surprisingly good for HazardHub. The reason? The “junk drawer” problem.

Almost every American kitchen has a “junk drawer” – the place where you throw everything that you’re not quite sure what to do with. People think, “I’ll put it in the junk drawer and deal with it -- someday.” Although the tools relegated to the junk drawer may be incredibly useful, they just don’t have the time or the need to figure out where to put them or how to use them.

Unfortunately, that’s where most insurtechs end up – in an insurance company’s virtual “junk drawer” – because they don’t have the time to figure out how to use them.

For the first several weeks of COVID, the insurance community did not have to commute to work. Many of their standing meetings were cancelled or postponed, so people used this time to tackle projects that they may have long neglected. Both at home and at work, people used COVID time to “straighten up the kitchen” and dive into the junk drawer. This “kitchen cleanup” has brought an unprecedented wave of interest to insurtechs like HazardHub, as carriers now had the time and the need to deeply examine the treasure trove of data we bring to the table.

For example, we had one insurer reach out to us and say, “We keep seeing and hearing your name. We’ve finally got some breathing room to do a deep dive on what you’re offering.” We spent several meetings helping them understand what we have, then signed a contract last month. They are now live on our platform -- all with no face-to-face meetings.

Another company contacted us, saying, “We’re having a big problem with California wildfires.” We ran their exposures and prior losses through the HazardHub Wildfire Model and showed them that not only were more than 90% of their losses were in “F” wildfire zones, but that the difference in AALs from the highest to lowest segment was a factor of 100 – an incredible level of differentiation they did not think was possible. They are now a HazardHub customer.

Insurance carriers may not like to change, but COVID has forced them to do so. Insurtechs are built on the idea of change. While the circumstances of COVID are awful, the need to change has driven carriers and insurtechs closer than ever – and it’s helping them both.

 


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