(Image credit: Dollar Photo Club.)
Munich Re and its subsidiary Hartford Steam Boiler (HSB, Hartford) recently announced that the companies will be sponsoring Silicon Valley-based Plug and Play’s accelerator for the Internet of Things (IoT) by mentoring and investing in IoT innovators. Operating out of Sunnyvale, Calif., Plug and Play is a business accelerator specializing in growing tech startups. The organization unites entrepreneurs, venture capitalists, universities and corporate partners, including major insurers, technology companies, consumer electronics leaders and global automobile manufacturers, to connect with over 300 tech startups in the Plug and Play network. Plug and Play’s IoT accelerator works with corporate partners and industry experts to select IoT startups and invite them to Silicon Valley. Insurance Innovation Reporter connected with Jacqueline LeSage Krause, managing director of HSB’s strategic corporate ventures group in San Francisco, to talk about why Munich Re and HSB chose to sponsor the IoT accelerator.
Insurance Innovation Reporter : We recently spoke with HSB CEO Greg Barats, who characterized the IoT as a fourth wave of the Industrial Revolution. He talked about HSB’s investment in IoT app developer Waygum, and signaled further IoT-related investments making sense for an equipment and engineering focused company such as HSB. Should we see the Plug and Play relationship in that light?
Jacqueline LeSage Krause, HSB: There are two different reasons for our involvement with Plug and Play and the accelerator, and what you talked with Greg about is one of them. We’re in a period of tremendous innovation of connecting the environment with the Internet. With our business and legacy in equipment, we care about having machines talk to us and understand what’s happening with equipment. Staying abreast of the latest trends helps us to do that, and our investment in Waygum—and other companies in the future—is a manifestation of that interest.
The second reason, which relates more specifically to the Plug and Play accelerator, has to do with the strategic value we derive from engaging externally with innovators and entrepreneurs. In some cases we’re engaging for specific objectives, but also to learn what’s going on with early exponents of the technology and to be able to anticipate what’s going to happen next. The accelerator gives us a window into many startups to understand what’s happening, but also to represent our interest as a corporation and influence what we’d like to see developed.
IIR: What’s the value HSB gets from interacting with other corporate partners within the accelerator?
JLK: The thing that’s exciting is the number of corporations and the breadth of industries that they represent, including insurance, automotive, electronics and pharmaceuticals—many companies with different needs, different takes on the technology. Interaction with the other corporations is a major benefit of the accelerator. It helps us understand more quickly what our customers may need and get solutions vetted faster. Involvement in the accelerator helps to make the portfolio of startup companies that Plug and Play is working with more successful. And that’s great for us, because if they end up being something we can use, it’s a great outcome.
IIR: How do you see HSB and Munich Re contributing in the way of expertise to the accelerator?
JLK: At HSB we have a vision of the future and a great deal of expertise around equipment along with interest in how getting information from sensors and the IoT will be able to impact our business. Being able to share that vision and related use cases with the other participating companies is very valuable. There’s mutual benefit: there’s our ability to influence, and the other companies get knowledge and expertise from customer and channel partners and someone with millions of insureds that would be relevant to them. It can help them iterate their development faster and potentially work with us. We can also contribute our venture capital skills to think about which companies will be more likely to flourish.
IIR: In Munich Re and HSB’s announcement about their involvement in Plug and Play there was reference to technologies that have applicability to the companies’ insurance businesses. Could you elaborate?
JLK: The vision for both companies is similar at the highest level: the ability to have this information coming from our environment, from equipment, whether in the home—such as a washing machine or smoke detector—or in a commercial environment—what’s happening with the power supply, boiler or other equipment. Having access to that information in real time is very helpful to prevent and mitigate risk, and also potentially to iterate our thinking about and pricing of risk. In both the personal and commercial space, there is potential for risk mitigation, new pricing, new product and services.
IIR: What is the potential for sensor technology to enable innovation—or even a revolution—in commercial lines risk management and loss control?
JLK: The real-time quality of the IoT is especially important. The potential exists to make a 10x leap in the power to prevent failures or other large incidents, to maintain equipment and keep it running efficiently. Everything that happens to our clients’ equipment can impact their business, so helping them prevent incidents has great value for their business activities, as well as for our relationship with them. Being able to take real-time data and translate it into insights that can be acted upon is also a critical component to being successful. So it’s not just about monitoring, but also working with the data and deriving new and actionable insights.
IIR: You mean data analysis bringing improvements both in prevention of losses and in being able to price risks more precisely?
JLK: Yes, both of those things and potentially more, with regard to enabling a product and service perspective that allows actions to prevent bad things from happening. The data could be used to suggest new products and services that we wouldn’t have been able to offer—or perhaps even think of—before the data existed.
IIR: On the personal lines side, we’re already seeing many consumer products built with sensors to enable what’s being called the “connected home.” What do these advances mean for insurance?
JLK: It’s similar to the conversation about commercial insurance. IoT capabilities can be about monitoring the home, but in very specific ways, perhaps something that the homeowner needs to pay attention to. Sensors could be used for many different specific purposes, and these could related to broader-based services to help improve security and mitigate risk. In that regard, it’s highly relevant to us.
IIR: Do you see a kind of personal lines risk management and loss control emerging?
JLK: I think the answer is “Yes.” With consumers trying to solve all sorts of issues through sensors there comes an opportunity for a world of services, with insurance companies as one potential provider. The technology creates a shared interest in the data and outcomes. If that’s helpful to the customer, they’ll want to participate. I think there’s a whole world of opportunity to add new services around insurance products, for both personal and commercial lines, and these could change things dramatically. We’ve already seen how a similar kind of cooperation between insurer and policyholder has worked in vehicle telematics. I think that’s analogous to other aspects of how IoT technologies will hold opportunities for insurers and their customers.