Innovation

Opportunities
in Insurance
Crisis Manifesto:
How insurance
will change post-COVID
In our Crisis Manifesto series, we’re taking a look at
a number of different industries to understand the
short-term realities and long-term implications and
possibilities of COVID‑19. This is our Innovation
Opportunities in Insurance trends report.

About Highline Beta

Corporate innovation is changing faster than ever. And opportunities abound for
big companies to build a portfolio of ventures internally and externally, beyond
their core.

Highline Beta is a corporate innovation and venture development firm. We’re

entrepreneurs, investors, designers and product experts, and we work with the
Fortune 1000 to drive growth innovation. We help companies in the insurance
sector, such as American Family (AmFam), GSC and Aviva innovate with speed
and an investor’s mindset.

We believe in digging deep and taking action, providing clients with the right mix
of innovation services and outcomes to create measurable growth opportunities.
We believe in startup-­corporate collaboration as the ultimate unfair advantage.
Our fund invests in startups that have meaningful relationships and pilots with
our corporate clients. When this works, everyone wins. For more, please visit
highlinebeta.com
CONTENTS:

Introduction 4

Insurance landscape after COVID-19 6

What’s next? 10

Improve digital customer experience 12

Digitize quickly 15

Build for the future: opportunities 18

Future startup investment potential 24

The Big Rethink: Is your company ready? 26

Introduction

“...No insurer ranks among the world’s

top 1,000 public companies by amount
invested in research and development.
Insurers allocate an average of 3.6% of
their revenue to computing technology —
about half the share that is typical for
banks. In a study of 500 innovation topics
across 250 firms Ninety, a consultancy,
finds that many insurers are working
on the same narrow set of ideas. […]
Spotty innovation does not make up for
a stagnating core.”

The Economist,
“The future of insurance is happening without insurance firms”

Life after Coronavirus won’t be the same. This StubHub and Ticketmaster: The divide between
isn’t a temporary blip on the world’s radar and “canceled events” and “postponed events” could
then everything goes “back to normal.” There will have significant repercussions. Not all events
be a recovery, but that doesn’t mean things will are insured but those that are can expect a rise
return to the way they were. Many industries will in claims and possible litigation over denial
be significantly impacted, with disruption accel- of coverage.
erating and new opportunities emerging.
• Business Interruption. There’s a tidal wave
Immediate impact of litigation coming due to the multitude
on commercial lines of insurance: of denied and disputed claims — analysts
at Morgan Stanley have predicted that in-
• Event cancellation. There has been a wave of creased litigation levels will emerge from the
cancellations and postponements of numer- Coronavirus pandemic and its accompanying
ous events, from concerts to large-­scale sports economic downturn. In particular, Business
events like the Tokyo Olympics, which is al- Interruption will be a major issue, where dis-
ready triggering class action lawsuits. Lawsuit putes and lawsuits are mired in whether the
Over Refunds for Canceled Events Targets MLB, pandemic can be considered a bacteria, a fungi,

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 or a virus, and just how to define the “damage” seems to have a positive side: people are more
caused, and political pressure on jurisdictions inclined to shop to save, less likely to engage
to come through with legislative solutions, in risky behaviours, they are driving less, and
both retroactive and forward-­looking. There’s so there are fewer car accidents. Headwinds
clearly uncertainty around whether or not include widespread uncertainty regarding the
insurers and reinsurers would be held to ac- kind of recovery we’re looking at as people’s
count for business interruption insurance and finances take a hit, which may mean an uptick
if they are, this could be cataclysmic in pulling in deferrals, lower premiums, fewer rentals and
away capacity and would have ramifications limited new business.
for other lines of business. The insurance in-
dustry will need to think deeply about how to • In travel insurance, given the state of the trav-
position itself and how to respond to future el industry, new business is expected to slow
economic and health crises in the form we’re down significantly, even if insurers were quick
seeing today, going forward. to adapt and offer refunds on cancelled poli-
cies, there’s still a compounding negative effect.
• Trade credit insurance. Many invoices will go
unpaid due to worsening economic conditions Immediate impact on life
and rising unemployment rates. Depending on and health insurance
the level of insolvencies, and on the success
of the mitigating actions taken by insurers, The heightened awareness of mortality and health
claims ratios could inch closer to the mid-to- risks amidst the pandemic and widespread job
high 80% levels seen during the financial crisis losses is already leading to a surge in demand
of 2008–2009, according to AM Best. Incurred for life and health insurance products. However,
losses and liabilities can be significant. even if more people are on the market for life and
health insurance, they are most likely shopping
• Workers’ compensation. As businesses re- for these products digitally, looking for compre-
open, worker safety becomes a priority and hensive coverage and better rates. This can mean
a concern for employers, especially when it additional pressures on insurers serving vulner-
comes to front-line staff. If an employee claims able populations such as seniors to come up with
he or she contracted COVID‑19 at work, given products that make sense, while mitigating risks
what is known about this disease, this can pot- associated with a potential rise in claims.
entially mean a costly liability for employers.
Some of these claims are already making their Life insurance in particular is a growing and thriv-
way through courts in the U.S. and, given the ing InsurTech ecosystem well positioned to create
backlog, it is possible the uncertainty will per- value, especially in developing markets. Health
sist until the issue gets settled by regulators. is top of mind, globally, and even if it may be too
late for COVID‑19 coverage, consumers are already
Immediate impact thinking about the next pandemic. Improved col-
on personal lines of insurance: laboration between the InsurTech ecosystem and
the life insurance industry will lead to new effi-
• The impact on personal insurance claims has ciencies when it comes to policy administration,
been less severe, with most insurance gaps ex- underwriting, reinsurance and sales channels,
posed within commercial lines. The downturn accelerating innovation in 2020 and beyond.

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Insurance landscape after COVID-19

In this unique point in time, insurance companies more severe and unpredictable, the insurance
need to adapt to the changes in context of their industry has been slow to adapt to change.
business environment. For an industry that is COVID‑19 has exposed innovation gaps in the
used to relying on quantitative data, now is the insurance industry.
time to double-down on qualitative research and
borrow heavily from Lean Startup methodology
to establish a stronger build-­measure-learn loop
to accelerate learning and build better products. It has been known for some
While for the rest of 2020, most insurers will be
focusing on their balance sheets and tooling, it
time that the risks insurers
is imperative for the industry to look beyond its are meant to cover are
data sets and build for the new reality. becoming more severe and
unpredictable
While it has been known for some time that the
risks insurers are meant to cover are becoming

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The weakening economy and low-rates environ- • Global downturn and regulatory uncer-
ment poses risks for many insurance business tainty. Economic activity has slowed signifi-
lines. Goldman Sachs forecasts a 34% plunge cantly amid COVID‑19. On a geopolitical front,
in the U.S. GDP and 15% unemployment in the the tensions are rising. The U. S. is not dealing
US, but the impact of the pandemic has been with the pandemic well, and it will weaken
global. AM Best has revised its outlook on North in ways that weren’t thinkable even a few
American commercial insurance lines and life in- months ago. Meanwhile, China and Russia are
surance to negative, with health insurance barely already stepping into the gap left by the U.S.
holding on to the stable rating, given the market to increase their global influence. The influ-
uncertainty and volatility, equity and capital loss, ence of the West led by the U.S. may go down,
and overall business slowdown. leading to the rise of the East. The Middle East
might become even more messy and unstable,
To get through COVID‑19 and emerge strong on according to Oxford’s Saïd School of Business.
the other side of the pandemic, the industry must It is troubling that President Trump has threat-
focus on putting customers first, rapidly acceler- ened to apply new tariffs to punish China,
ate product innovation and digital transforma- as a reflection of his view of their role in the
tion, as well as invest in strategic partnerships pandemic. The global downturn and uncer-
with InsurTech startups, which have moved fast- tainty around opening borders, coupled with
er to streamline and manage insurance claims pressure on governments and companies to
and leverage data for more precise modelling shift their focus and address more immediate
and risk assessments, as well as personalized of- domestic issues will contribute to the trend of
fers. Indeed, new product offerings have been on de-globalizaiton.
the rise, with InsurTechs leading the way: Slice,
a startup in New York, offers policies to flat- or • New post-­C oronavirus transaction en-
ride-sharers that cover single items for a few vironment: Insurance companies must ask
days. Bought by Many, a British startup, caters themselves who their customer now is post-­
to people with niche possessions, for example Coronavirus and what new needs are likely to
model railways or exotic pets. Brooklyn-­based emerge. Supply chains have been disrupted,
Trupo provides disability insurance to “gig” work- and there’s a trend to de-globalize and close
ers, from makeup artists to Uber drivers. borders, significantly impacting global trade
Some of the most notable changes the world is and industries like travel, food, retail, enter-
already seeing in wake of COVID‑19: tainment and tourism.

• Shorter time horizons for action: Insurance

companies may need to act quickly in the face
Insurance companies of uncertainty and with incomplete data. Big
need to behave more like decisions are on the table: how do you move
startups typically would and your business forward, assess the roadmap for
adapt to the rapid changes the next few months and beyond, and repos-
ition your business? What if the pandemic
in context of their business is a recurring issue for a long time? Could
environment it come back with new strains? Identifying
risks and coming up with plans will involve

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 stress-­testing a multitude of plausible scenar- insurance value chain can bring to clients.”
ios, without the troves of data that the insur- In truly deep uncertainty, companies can look
ance industry is used to leveraging. to leverage existing assets and think of tech-
nology — and specifically working closely with
• Pressure to rapidly accelerate digital trans- startups in InsurTech as key to industry-wide
formation. Now that the future is coming to- transformation.
ward us at warp speed, in addition to new risks
and uncertainty, what new opportunities are The impact on traditional business models,
emerging? Focusing on the customers’ needs oriented to broker-­driven, face-to-face inter-
and partnering with tech innovators to build actions, and the lack of full digitization has
compelling new solutions and customer ex- been significant. COVID‑19 will force the indus-
periences will be paramount for the industry try to transition to digital solutions, speeding
to succeed in this shifting landscape. EY has up digitization as more consumers, isolated
released a report strongly recommending that at home, buy insurance online. The demand
insurers develop their “partnership culture, for different types of products and also ex-
collaborating with organizations outside their pectations of those products being digital will
industry — or even with former competi- accelerate.
tors — to maximize the benefits the entire

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Startup Spotlight

Breathe Life is the Enterprise Distribution

Platform for the Insurance Industry. Its API-
driven Platform is focused on delivering new
business, using advanced analytics and AI to unify
customer data into a single view, helping advisors
find and serve more customers.

Now, more than ever, life insurance companies Historically, the insurance industry preferred
need ways to sell digitally. Our clients are major to build in-house, but that’s not the way of the
insurance carriers and distributors who use our future. Companies like ours build scalable plat-
platform as a sales and engagement tool. This forms that are used by multiple clients, mean-
pandemic will accelerate digital transformation ing we are learning from economies of scale
strategies. In fact, we are already seeing an in- and making improvements that benefit every-
crease in sales and a loosening of some regu- one.Much like what the banking industry went
lations and underwriting rules. As an example, through 10 years ago, the insurance industry is
recently, the upper limit of getting coverage now going through. COVID-19 is accelerating
without having a medical exam was $1M, but, this, companies no longer have a choice but to
in the last 8 weeks, that numbers has gone up go digital if they want to survive and the fastest,
to around $2M. most scalable way to do this is by partnering
with a technology company. The way products
are bought and sold has forever changed.”

Ian Jeffrey,
Chief Executive Officer, Breathe Life

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What’s next?

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 Combining an insurer’s understand-
ing of risk with the data-savvy skills
of a tech-focused company, for in-
stance, might help insurance organi-
zations identify the necessary data
insights to model intangible-­asset
risks and find ways to mitigate and
cost them. Equally, it may be that the
niche focus of capital providers or
specialty insurers could combine
with the reach of a global composite
to deliver added value that none of
these ecosystem players could man-
age on their own.”

EY,
“Why Insurance Industry Needs
to Rethink its Value Proposition”

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Improve digital customer experience

Insurers have the opportunity to emerge as allies

that help rebuild the economy and play a positive
role in people’s lives in challenging times. Once the immediate fallout
A rise in corporate and personal bankruptcies,
from COVID‑19 is over, the
long after the apparently acute phase of the world will enter a prolonged
pandemic, seems likely. The rates of unemploy- period of recovery
ment have been staggering: almost one in four
Americans and Canadians who want jobs do not
have them. Worse: one in three has lost half or
more of their income due to COVID‑19. And China
is facing significant income losses even as it slow-
ly reopens.

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This will present a unique opportunity for in- system to streamline insurance claims. The
surers to invest in modernizing their tools and results will be personalized car insurance for
processes, while also re-evaluating product offer- good drivers, better rates, and a seamless mo-
ings to better serve the emerging needs of post-­ bile app experience. “Owlcam is revolutioniz-
Coronavirus consumers. There will be demand for ing automotive security, and Root is doing the
new, personalized products that make people’s same to the insurance industry. Having video
lives easier at every stage: from buying insurance means drivers no longer need to repeat their
and understanding different products and poli- story multiple times. Root’s emphasis on cus-
cies to making, processing and managing claims. tomer experience and driver safety aligns well
This may mean insurers may have to leverage new with our mission to make dangerous places
digital distribution channels and communication safe and secure with video and data, and to give
tools through InsureTech partnerships to bet- drivers more control when a crash happens.” —
ter understand their customers’ changing needs. Andy Hodge, CEO of Owlcam
Some examples of companies leading the way:
• Metromile Inc., which offers pay-by-the-mile
• Snapsheet app makes car damage claims auto insurance for infrequent drivers in several
easier, allowing car owners to take and share states in the U.S., partnered with Snapsheet,
photos of the damage with insurance compan- another startup with an app that makes claims
ies, and manage settlements and payments. easier. The duo is able to offer a faster, more
Snapsheet now works with 80+ insurance car- efficient, and seamless experience to the
riers including MetLife and USAA. customers.

• Right Indem is offering AI, digital & self-service • Hiscox’s FloodPlus aims to make buying flood
claims technology to ease the burden on call insurance faster and more efficient for con-
centres claims/incident reporting. The com- sumers. The system automates the flood in-
pany has been offering its software for free surance application process, which before 2012
during the COVID‑19 pandemic. was paper-­based and, in the U.S., largely pro-
vided by the government rather than private
• Root Insurance tracks drivers’ behavior and insurance companies. Working with more than
rewards the ‘good drivers’ with better insur- 10,000 policyholders and delivering 10,000
ance rates. The company has announced a part- quotes per week, Hiscox’s product means that
nership and pilot program with Owlcam that an accurate insurance policy quote can be de-
will utilize Owlcam’s video security and safety livered in 20 seconds.

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Startup Spotlight

Cover.com is a mobile-­first insurance platform

that uses artificial intelligence and expert ad-
vice to match customers with a car, house, or
apartment insurance policy that works for them.
Cover sells its own insurance products and acts as
a sophisticated underwriting entity, representing
30 different carrier partners such as Progressive
and Allstate.

There was a trend away from brick and mor- people are hammered by cold phone calls.The
tar, and now those days are probably over for infrastructure we’ve built allows us to develop
good. COVID-19 is going to drive a lot more deeper customer relationships.The traditional
of the existing insurance distribution online. industry tools: call centres and basic e-com-
We’re already oriented that way: 100% of our merce workflows too often lead to someone
policies are sold over SMS or our mobile app. visiting a store somewhere or being inundated
The type of infrastructure needed –– to mes- with phone calls. We’re more ingrained and
sage dozens of customers at a time and handle digital. If you don’t expect all of insurance to
asynchronous customer communications –– is become digital at some point, you’re in the
currently being built by companies like ours. wrong camp.”
People can buy insurance on their own time,
it is not a pushy marketing undertaking where

Karn Saroya,
CEO at Cover

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Digitize quickly

Efficiency will become more critical than ever

before. Operational efficiency has not histor- Most insurance carriers are
ically been a strong suit of insurance, but now
going to have a playbook
to keep costs down and meet profit targets in
weakened economies, insurers must invest in to deal with significant
efficiency — from processing claims and man- economic shocks and health
aging the back-office to improving processes crises in the future
and tools. Most insurance carriers are going to
have a playbook to deal with significant eco-
nomic shocks and health crises in the future. management is front and centre. Old networks
Right now, CEOs and COOs are looking to auto- are being challenged to keep up, and need to be
mate more, CFOs are scanning the organisation assisted by technology more than ever, accord-
for efficiency gains, and exposure and claims ing to Greg Boutin, CEO of Relay.

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Some examples of InsurTechs showing the way: programs. The company works with large
insurance companies such as AIG, Triglav,
• Aon. Drawing from 20 years of litigation cases, and P&V, which leverage its data analytics to
Aon’s software enables underwriters to tailor learn about customers’ driving habits and offer
individual policies to cover the threat of IP liti- customized pricing.
gation, reported Financial Times. The company
also launched an app to forecast COVID‑19 im- • Software company Inrobin has combined IoT
pact for employers in the U.S., using the data and machine-­learning to predict faults in in-
available on the spread of the coronavirus, so- dustrial machinery, helping large Spanish in-
cial distancing measures taken by local govern- surance company MAPFRE and other clients
ments, and the current figures for confirmed offer more precise premiums and anticipate
patients, hospitalizations, deaths, and testing machine repairs.
and treatment patterns.
• AXA XL — the commercial division of the
• Insurance telematics company Amodo fo- French group — has been working with Parsyl
cuses on collecting and leveraging data sets to monitor temperature, humidity, light and
to offer usage-­based insurance — tracking and other factors that contribute to the condition
amalgamating sensor data via IoT and mobil- of shipped goods.
ity data through its smartphone telematics

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Startup Spotlight

Relay is an online Software-as-a-­Service solution

helping ceding teams, insurance underwriters and
brokers to structure and secure reinsurance and
large insurance placements simpler and faster.

“A focus on technological agility, social connec- Relay originated in a collaboration

tivity and quicker access to capacity is needed between our innovation team and
more than ever. COVID‑19 places a huge amount Highline Beta. As we realized the
potential Relay held to deliver efficiencies
of pressure on the system — to link and estab-
and effectiveness gains for the whole
lish trust with new participants and sources industry, we decided to spin it off and
of data in minutes in order to secure the best are excited to witness the rapid market
placement. […] What’s needed is technological adoption of this elegant — and now
agility. Companies are building rigid systems independent — cloud-­based solution.
There is no question that complex risk
that will not flex easily to new market dynamics:
transfers, whether in reinsurance or
leveraging what is known as a waterfall meth- insurance, can benefit from the boost
odology, some IT leaders plan their entire solu- into modernity that Relay offers.”
tion upfront, inventorying and mapping every Dan Reed
little field for every scenario, before building Managing Director, American Family Ventures

anything. This ‘boil-the-ocean’ methodology

virtually guarantees an over-budget, over-en-
gineered, underused system that will need to insurance and reinsurance practitioners.
be replaced within a few years. Relay was de- New systems must be built like Relay: easy to
liberately conceived to avoid those pitfalls, and evolve, connect, and reconfigure. They must
make the job of transferring risk more intuitive, start small with successful usage metrics, and
and thus faster and safer. We knew risk transfers expand from there in an agile manner. Today,
needed to get better, thanks to our research organizations that succeed are ones that listen,
and industry discussions with hundreds of understand, and anticipate human needs.”

Greg Boutin,
CEO, Relay Platform

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Build for the future: opportunities

“Will you build something that’s

optimized for the year 2018, or will you
build something that’s optimized
for the year 2021? If you want something
for 2021, now would be a really good
place to start.”
Seth Godin

COVID‑19 is rapidly accelerating innovation in

the insurance sector. Insurance companies his-
torically felt their primary purpose is to help cus-
tomers recover from loss. However, new risks have
emerged, and with new risk come new oppor-
tunities. The traditional model and worldview immediate market traction, given the lifestyle
is being stress-­tested by the magnitude of risks changes amid COVID‑19: The market is expected
to both tangible and intangible assets coming to grow to $9B by 2020 (CB INSIGHTS), and to
from external factors, such as climate change $15B by 2022 (RBC Capital Markets). Today’s
and possibly other pandemics, and other types most valuable companies are not as dependent
of risks with similar potential exponential impact. on physical assets for their market value. Their
Here are a few more market opportunities worth balance sheets are heavily skewed towards trad-
a closer look: itionally uninsurable intangible assets, such as
intellectual property, data, brand and reputation,
Cyber insurance. It is well known that cyber-­ according to EY. Research firm Gartner expects
attacks can shut down power plants, paralyze 60% of organizations to invest in some form of
firms by demanding ransom, steal customers’ cybersecurity by 2020, up from roughly 35% to-
data and significantly damage companies’ repu- day. With millions of people forced to work from
tations. With 85% of the value of S&P 500 groups home, the cybersecurity risks have drastically
represented by intangible assets such as intel- increased: from phishing email campaigns to
lectual property (IP), many companies cannot video conferencing and remote work security
find adequate insurance cover. The cybersecur- risks through new collaboration tools like Zoom
ity threat facing businesses is gaining even more (Zoombombing) and a host of other privacy issues.

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This new state of work can potentially expose em-
ployers to a new set of liabilities, leaving them
without appropriate insurance coverage. Cyber 60% of organizations
insurance coverage is expanding to meet evolving are expected to invest in some
threats, and attitudes toward policies are also
form of cybersecurity by 2020
shifting, according to the 2019 Global Cyber Risk
Perception Survey released by Marsh, in partner-
ship with Microsoft:

• 47% of organizations said they have cyber in- called PathogenRX since 2018. Demand is now
surance, up from 34% in 2017. spiking, and the company estimates that it
could be worth as much as $1.5 billion in pre-
• Larger firms were more likely to have cyber mium income a year, likely spurring the rest of
insurance: 57% of those with annual revenues the industry into developing similar products.
above $1 billion had a policy compared to 36% Parametric insurance in particular would have
of those with revenue under $100 million. been well-suited to address COVID‑19 fallout
the industry is now facing, and will be highly
• Uncertainty about whether available cyber in- attractive to consumers in the future, who are
surance could meet their firm’s needs dropped now painfully aware of their current coverage
to 31%, down from 44% in 2017. limitations. Meanwhile, the Pacific Island na-
tion of Tonga is setting a record by receiving a $4.5
Usage-based insurance. It is likely that people million payout from its parametric disaster in-
will drive less overall post-­COVID, and perhaps surance policy with the Pacific Catastrophe Risk
it’s time for usage-­based insurance to have its Insurance Company (PCRIC), a regional catas-
moment. Consumers will ask for greater trans- trophe insurance platform that provides govern-
parency and flexibility from insurers, and Usage-­ ments of Pacific Islands with parametric climate
Based Insurance (UBI), enabled by telematics and seismic coverage, focused on cyclones and
solutions would provide the data insurers need, earthquake risks. This will be the largest payout
and data-driven, variable pricing drivers may now to date from the regional catastrophe insurance
want, given the life-style changes with so many facility. Expansion of parametric insurance poli-
people working from home (a trend that is likely to cies in developing countries offers new ability to
continue). Rolling out UBI across different states deploy highly saleable insurance products, sold
and jurisdictions may not be easy, but given the for very low policy premium and correspondingly
transparency built into the UBI model, it looks low cost to underwrite and manage these policies.
well positioned for full-scale adoption. Crop insurance and other low cost policies that
can be deployed in the developing world could fill
Parametric insurance. Today, data science, pow- a tremendous need that will become even more
ered by machine learning may be better suited to apparent post-­Coronavirus.
address emerging risks such as climate change
or another pandemic. For example, large insur-
ance broker Marsh has offered infectious disease
coverage through its innovative parametric in-
surance product (originally viewed as expensive)

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Startup Spotlight

OKO provides index insurance and other farming-­

related services to smallholder farmers in emer-
ging countries. Using state of the art technologies
to monitor rainfall and crop evolution, a direct
interface with farmers and a unique distribution
network, OKO protects farmers and unlocks their
access to financing.

I started working in micro insurance because People in developing countries are some of the
I wanted to be part of the financial revolution most vulnerable in the world. They’re exposed
currenty taking place in Africa. Mobile payment to a lot of risks: health, critical risks like disas-
is becoming one of the main payment means: ters, and often have no access to insurance.
it is used to pay bills, school fees, taxi rides, There are great companies in this space: for
etc. It is replacing cash this is making the life of example, BIMA offers health and life microinsur-
people much safer and easier. M-Pesa in Kenya ance to low-income consumers in Africa, Asia
for example is so popular that ATMs are being and Latin America. Groupama offers livestock
removed. Everyone pays with their phone, and insurance to protect the pasture cattle: if the
nobody uses cards anymore. grass doesn’t grow, insurance kicks in to cover
food for the cattle. My company OKO relies on
What’s the next wave of products beyond pay- parametric insurance, which is also quite new.
ments and remittance? Insurance was the next We do crop insurance at OKO, responding to
most obvious thing. a very strong need, because so many people

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work in agriculture and have no way to protect
their crop and livelihood. In emerging markets,
parametric is an obvious choice for crop insur- In emerging markets,
ance. It makes no sense to send people to re- parametric is an obvious
mote, inaccessible areas to verify claims. The choice for crop insurance
costs of that are just too high. We respond by
leveraging rainfall and crop evolution data and
keeping the products very affordable and easy to
purchase. The pandemic and its consequences solutions for emerging countries. Initially this
showed that moving to online/mobile payments was for COVID only, but it shed light on how more
and having a full digital customer experience insurance solutions need to be developed for
makes companies more resilient to physical dis- people exposed to risks without financial safe-
ruptions. This is a stronger case for our prod- ty nets. We work with SCBF (Swiss Capacity
uct: we make claims validation easier. We keep Building Facility), ADA (Aide au Développement
growing — we have about 100 new customers Autonome) and with AB InBev, who understand
every week now, which is in line with the growth the importance of making farmers more resili-
we’ve experienced before COVID‑19. Given the ent. AB InBev is working with us to bring crop in-
scale and our status of development, we’re do- surance to farmers in Uganda. We will also start
ing well. We also see demand from develop- a new project in West Africa soon with support
ment organizations to create risk mitigation from another large partner.”

Simon Schwall,
Founder and CEO, OKO

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Business Interruption. Small and mid-sized
businesses are struggling amidst the global
shutdown. Many of them have been shocked Post-Coronavirus,
they didn’t have the insurance they thought they consumers will need
had, because it often excludes pandemic cover- greater access to innovative
age. And businesses are now asking themselves, mental health solutions
‘what other forms of coverage can be purchased?’
These businesses don’t have dedicated insurance
and insurance products
departments, and so simplifying the buying of
commercial lines of insurance for small business-
es is critical. Small businesses will be buying in- telehealth services has surged for both physical
surance on the other side of the pandemic, it’s and mental health. AXA recently partnered with
just that they’ll demand more transparency and Tencent Trusted Doctors in China, to provide
accountability from their insurers. 24/7 access to teleconsultations through a dedi-
cated hotline for AXA customers and employees.
Mental health. Equity funding for mental health The insurer also announced that it will launch
startups reached a record high in the first quarter a dedicated mental wellness helpline on the
of 2020. These startups raised a record $576 mil- WeChat platform. Post-­Coronavirus, consumers
lion in funding — surpassing the prior quarterly will need greater access to innovative mental
record by over 60%—across 44 deals in the first health solutions and insurance products, espe-
quarter, according to market research firm CB cially employer-­oriented products to provide
Insights. Amid the pandemic, the demand for adequate coverage.

highlinebeta.com 22
New products via partnerships. The silver lining
in post-­Coronavirus is an opportunity and ur-
gency to reinvent and reimagine traditional busi- EY and a software security firm Guardtime
ness models and processes. It’s prudent to consid- rolled out a joint venture Insurwave,
er new partnerships and leverage collaborations a blockchain-­powered platform to manage
with the InsurTech ecosystem, to close gaps and shipping insurance. The software is already
address shifts in innovation strategy. Can insurers used by more than 25 companies, including
help customers reduce risk and avoid losses in Maersk and AXA XL.

the first place? What new products would cus-

tomers want to buy? How can companies protect
themselves against future risks? COVID‑19 has
put significant pressure on the insurance sector
to digitize and innovate. Highline Beta worked with American Family
Insurance (AmFam), which has taken a true
Large companies will seek strategic alliances and portfolio approach to growing beyond their
partnerships, and turn to the startup and tech- core, built and launched internal startups, and
nology ecosystem for innovative solutions and to invested in startups very successfully through
implement the changes at speed. Some examples: their venture fund. We did a deep dive into
the startup studio model to understand how
AmFam could support the building and scaling
of ventures outside of their company— what we
call startup co-creation or spinning out star-
Collective Health, a health-care technolo- tups. A startup emerged from all of this work,
gy startup based in San Francisco seeks to Relay, with a great team, solid industry backing,
simplify employer-­sponsored health insurance. customers and now funding. Recently the com-
To that end, the startup has raised $435 million pany announced that it had raised $3M in total
to date, with Sun Life among its early back- funding to date from NFP Ventures, American
ers, alongside GV, Founders Fund, Maverick Family, Highline Beta, Plug & Play, and key angel
Ventures, SoftBank and others. investors.

Two insurance giants Tokio Marine Holdings

and Intact Financial Corp. led a $90 million
investment in Metromile Inc., which offers
pay-by-the-mile auto insurance for infrequent
drivers in several states in the US. Metromile
also partnered with Snapsheet, another startup
with an app that makes claims easier.

highlinebeta.com 23
Future startup investment potential

It remains to be seen if investment in InsurTech

startups increases as a result of Coronavirus.

“Overall, there is substantial corporate invest-

ment in InsurTech, including direct investment
by insurance companies as well as insurance
corporate venture capital. There are only 4 in-
surers who consistently made more than 2 in-
vestments, including follow-on investments, in
each of the last five years according to Gener8tor
and OnRamp. In an average year, active corporate
insurance investors made an average of 2.6 invest-
ments and that number has barely changed at all
over the last five years. In other words, insurers
are careful, thoughtful, targeted investors making
investments based on carefully considered invest-
ment theses. Anecdotally, the pace of corporate
insurtech investments slowed in Q1‑and espe-
cially in March — compared to last year. OnRamp
and Gener8tor data backs that up, with Q1 deal
count down 33% and March deal count down
52%. Many of the CVCs are still outwardly bullish,
but we will have to see whether these numbers
are a short term shock or will have a longer dur-
ation. For founders, it is very important to think about which strategic or CVC is the right fit since
it is very rare to secure investments from more
than one strategic. Data from Crunchbase and
Coverager showed that of all the startups that
received investments from a strategic or CVC,
only 1 in 8 (13%) secured investments from more
than one.”

Daniel Price, Partner at Ambina.

highlinebeta.com 24
 At Highline Beta we’re most excited about the potential for new insur-
ance products and delivery models. Both consumers and businesses
will be looking for new coverage in the wake of COVID‑19 and thinking
very deeply about what they are in fact protected against. Paramet-
ric insurance is still fairly nascent, but with its inherent transparency
and simplicity, it has the potential to grow significantly. P2P (peer-to-
peer) insurance is also very interesting, because we expect there to
be growing frustration from customers with their insurance provid-
ers. P2P remains a very small part of the insurance industry today,
but we expect an explosion of startups trying to crack this model
going forward.

Crises have a way of accelerating new business models, and we be-

lieve that will be the case in insurance as well. Whether it’s UBI, P2P,
digitized marketplaces, value-add services (delivering more than the
policy itself) or all of these, there will be immense change in the global
insurance industry over the next decade.

highlinebeta.com 25
The Big Rethink:
Is Your Company Ready?

Big insurers need to behave more like startups. They need to build ventures
in-house, partner with startups and focus on pilots and commercialization.
They need to invest. They need to acquire companies and get really good
at integrating them in. And they need to support startup creation on the
outside as well. Getting the balance right between all of these options isn’t
easy, but at Highline Beta we absolutely believe it’s possible. We’ve seen it
in action. On the other side of COVID‑19, companies that move fast and
out-collaborate the competition will be well positioned to thrive.

Our approach to validating new opportunities moves through an agile

and rigorous process, guided by decades of entrepreneurial and investor
experience.

Reach out to us if you’re interested in:

• Identifying new growth and startup collaboration to help build your

business resilience

• Developing a strategic portfolio of ventures

• Actioning your innovation strategy and building a tight integration into

startups and technology companies in retail and beyond.

Contact:

Marcus Daniels — [email protected]

Benjamin Yoskovitz — [email protected]

highlinebeta.com 26
 highlinebeta.com

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