InsurTech is Dead, Long Live Insurance Technology—Carpe Data CEO

In his keynote at Data In Paradise, Max Drucker related a history of InsurTech that ends with a new normal when it comes to the expectation insurance carriers have for their suppliers.

(Photo by author.)

The Golden Age of InsurTech is now a long way off, and it’s not going to return, according to Max Drucker, CEO of Carpe Data (Santa Barbara, Calif.), delivering his introductory remarks at the company’s Data In Paradise user group meeting in Santa Barbara, Calif., this week, the first held since 2022. “InsurTech is never going to be exciting again,” he commented. “InsurTech is never going to be a thing again like it was before.”

This pronouncement came within a discussion of the history of the InsurTech movement, which Drucker characterized as having gone through three major phases: a Golden Age, The Covid Years, and the Dark Ages. “It’s both a sad story and an exciting story… so hopefully we’ll laugh, we’ll cry, and we’ll find redemption,” Drucker said.

The Roaring Twenties

InsurTech emerged around 2015, characterized by insurance carriers in a state of readiness to innovate and partner with startups, seeking to push the envelope of what could be done, Drucker related. It was about, he said, “how we can think differently, do different things and innovate both internally and externally.”

Drucker likened the first phase to the Roaring Twenties. He called it, “wild times,” and recounted “working with customers, great carriers who really want to partner and work with you.” He continued, “Those first five years were a lot of fun, with a lot of investment being made by carriers…lots of experimentation, lots of real risk-taking from insurance carriers—and they hadn’t really thought in that frame before.”

Max Drucker, CEO, Carpe Data discusses The Covid Years. (Photo by author. Click to enlarge.)

However, the fun didn’t last, Drucker lamented. The Covid era began well for carriers, with the frequency and severity of losses dropping because of policyholders diminished travel and other activities. That was a kind of calm before the storm, after which, “people got back out and started wrecking their cars again.” And whereas carriers had been thinking about partnering with startups to do different things, now they were wondering about the future of their business and figuring out how to survive.

InsurTech’s Dark Ages

Since then, InsurTech has entered a Dark Ages phase, according to Drucker, characterized by unrelenting inflation, soaring costs, fixed premiums and, as a result, large losses. In this business environment, Drucker noted, “We can do all these great, wonderful things for you” is not a sales pitch that carriers want to hear. “It comes down to to ‘How do we cut costs, how do we cut costs, how do we really get control of this business,’” he said.

“This is an era that we’re still seeing pieces of, but hopefully we’re on the other side of it,” Drucker commented. “But at the end of 2022 and last year, it has definitely not been fun for the carriers, and definitely not fun for anybody that really provides services to the carriers for very clear and obvious macro reasons,” Drucker added.

An Age of Apathy?

Inflation is waning and rates rising, but that isn’t leading to a return to the heyday of InsurTech, Drucker suggested. Rather, we seem now to have entered a fourth phase: the Age of Apathy. “What do we do now,” Drucker queried. “Do we put our head in the sand?”

While things have taken a positive turn, the last thing many carriers want to do is take on the expense of major projects, he notes. “‘The last thing I’m looking to do is really have to really engage in something big again because the last two years have been pretty rough and so now we’re really just trying to stabilize,’” Drucker said. “So, is that where we want to be?”

“I know that if you’re at Data in Paradise, you are not subject to the Age of Apathy,” Drucker continued. “Because that is not this group that’s in this room here. Because this is a group that’s going to make big moves.”

Heeding the Oracle of Omaha

Drucker said that attendees should take the advice of Warren Buffet, when he said to “be fearful when others are greedy, and greedy when others are fearful.”

“The majority of the Fortune 500 companies came out of recessions or real down times,” Drucker said. “This is the time to lean in, be on our toes. Stillness is not a tenable position. Invest, innovate now to create that advantage—or ultimately really fall behind.”

Max Drucker, CEO, Carpe Data.

In a prediction toward the end of his address, Drucker made a prediction: “InsureTech is never going to be exciting again,” he said. “InsureTech is never going to be a thing again like it was before. Companies like Carpe Data are going to be vendors to insurance carriers. Whether we’re providing data, whether we’re providing software, whether we’re providing services, we’re vendors.”

The expectations of vendors are going to revert to a more traditional buyer/supplier relationship, where what matters is the impact that they’re going to drive at a carrier, in terms of tangible ROI. “I don’t see the experimentation, the risk-taking coming back in the same way as before,” he said.

A New Normal

“But that’s fine, because being a company that’s forced to communicate the value proposition, the impact—that’s what everybody wants to see anyway, and that’s what we’re going to see moving forward,” Drucker continued. “Frankly, we’re looking forward to it. The world, I think, is going to be really normalized moving forward in this regard. And so, it’s not going to be the Roaring Twenties anymore, but it will still be the companies that understand how to drive this impact for the carriers that are going to really succeed.”

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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