Insurance incumbents don’t have the data advantage they claim:

Not all Incumbent insurers have the data advantage they claim.  Some carriers don’t have the right fit of talent and technology to unlock this advantage.  The size of the advantage can vary by each carrier depending on product lines sold, where the incumbent is in the value chain, how progressive they have been with cutting edge technology, their scale, and the data associated with the underlying lines of business.  If this was a race between InsurTech and Incumbents, some insurance incumbents don’t have the data advantage they claim.

But they have a track record, proof of concept, and historical performance to rest their hat on…vs. their potential disruptors…

Data as an Asset

For a number of reasons, but the culture for most incumbents never viewed the data as an asset, Assets at insurers were limited to balance sheet and people.    IP and data many are coming to realize are assets that haven’t been tapped.

Many are starting from scratch building out systems or modifying how they capture and utilize their data going forward.  If starting today, where is the advantage between New Co. InsurTech players?


Insurance incumbents don’t have the data advantage they claim for some of the following reasons:

  • Unstructured data in various systems,
  • difficult to use,
  • difficult to access,
  • difficult to clean and
  • difficult to retrieve

Data Projects

The data is one of their most valued assets.

However, incumbent insurers would have to spend massive internal resources and time to utilize this data and convert into structured formats.  It is possible with the help of data science, but costly and expenses aren’t an area where insurers have room to slide up on results.

See article about Industry of the future.  Expense ratios will all be much leaner.

InsurTech Solution

The good news, there are 1000s of companies in the InsurTech space who are looking for proof of concept, funding, and revenue to help solve this problem.  If both sides would put away their swords, be less adversarial, and realize they need each other to co-exist, there would be success on both sides.

InsurTech would get the data and revenue needed to be a viable business, not just an idea, and the according Tech multiple to their business.

Incumbent Insurers would get clean structured data, a trusted partner, better systems, and not fall into the mistakes they have made time after time around IT projects.  Plus lower expense ratios that could be passed onto customers.

The Future

Once incumbents get a handle on their internal unstructured data, watch out…until then it’s a race…

The blend of underwriting and data science will produce some powerful results.  Allowing best in class incumbents (who can execute) to partner with best in class capital.

The companies that can attract the best talent for the future will be well positioned.

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Arnold Smith

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