While partnering with insurance companies has its perks, insurtechs should be cautious about aligning with incumbents and forgoing the advantages of starting from scratch as full-stack carriers, according to a panel of startup CEOs at the CB Insights Future of Fintech conference.
Startups that take on the entire insurance value chain are at a financial disadvantage, but technologically, have an edge. Lemonade CEO Daniel Schreiber said he would not trade places with CIOs at incumbent insurers because it is “radically different than the startup world.” That’s because a lot of the assets that insurers have built up over time — particularly legacy systems and distribution channels, are becoming liabilities.
Jamie Hale, CEO of Ladder, a life insurance company, agreed with the other two panelists that being able to ignore legacy systems is a big advantage for startups. He said there’s a general belief that big insurance companies will have great data warehouses, but that is not the case. “For a lot of legacy reasons, they don’t have the best data,” he said. “Their systems don’t communicate.”
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