On paper, it looks like a battle to the death: Legacy insurers like State Farm facing off against a wave of tech startups looking to disrupt their entire business model. It’s Airbnb versus hotels, or Uber versus cabs, all over again.
But Satadru Sengupta doesn’t consider what he’s doing as disrupting the insurance industry. The founder and CEO of Halos Insurance, an insurtech startup, said he’s complementing the industry, helping to create better customer experiences that are also good for an insurer’s bottom line.
Sengupta, an Illinois State University grad, said there’s no inherent conflict between insurtech and legacy insurers.
“The conflict starts when we say, 'The insurance industry is broken. We are here to fix it.' The insurance industry is not broken,” Sengupta said. “The whole idea when you’re building (an insurtech) platform is, how are you helping the consumer? That’s the first question. And then it’s, how is this helping the insurance company and ourselves and all the other stakeholders involved? That’s when you have a business. That’s when we can work together.”
Sengupta was back on ISU’s campus Monday to speak to students and faculty, in a talk presented by ISU’s actuarial program.
Sengupta has been busy since earning his master’s in mathematics from ISU. He worked at Liberty Mutual Insurance and Deloitte Consulting and ran the insurance practice at DataRobot, an automated machine learning platform. Last year, Sengupta’s Halos company was selected for the MetLife Digital Accelerator, in partnership with the Techstars entrepreneurship program.
The Halos platform is focused on loss preventive insurance—encouraging proactive steps to stop losses (and claims) from happening in the first place. Sengupta’s example: You spot a branch leaning on your roof and wonder if it’s a big deal. You take a picture of it with your smartphone, click a button, and an arborist will come and cut it down for you. No tree-falls-on-roof headache later.
“As an insurtech, we’re giving you risk insights, to tell you the story of what are the things that could happen to your house and make it super easy for you to actually get a service provider to come and fix it for you,” Sengupta said. “We’re preventing losses.”
Halos will launch in the Washington, D.C., area later this month.
“Loss prevention is a beautiful thing because it’s a win-win for the customer as well as the insurance company," Sengupta said. "If loss does not happen, the insurance company doesn’t have to pay. So it increases their profitability. And consumers actually have a better experience. Loss is not good for anyone.”
There are many insurtech startups at various stages, most using technology to find new efficiencies or other ways to improve customer experience. Lemonade is one of the most well-known insurtech companies; they usually have less-than-clear brand names, like Valoo, Wrisk, Flock, and Laka.
Legacy insurers like State Farm are in the space too. Last fall State Farm announced a new $100 million venture capital initiative that will invest in tech startups, “with the goal of providing new and innovative products and solutions to customers.” State Farm is already experimenting with its own insurtech affiliate in Rhode Island, called HiRoad, which is basically insurance by app.
In the last quarter of 2018 alone, 11 insurance-sector investors invested $218 million into insurtech companies, up 230 percent from the previous quarter, according to a Willis Towers Watson report. The insurance industry now has a record 31 strategic partnerships with technology companies.
They’re also funding incubators. MetLife, for example, sponsors the Digital Accelerator program that includes Sengupta’s company. Hartford has its own startup bootcamp in Connecticut.
With his experience at Liberty Mutual and Deloitte, Sengupta said he actually sees himself as an insurance industry insider. He notes that Bloomington-based State Farm has 17 percent of the U.S. market share and pays out millions and millions of dollars in claims every day.
“It’s not really possible to build a business that in two or three years will supplant that,” he said.
What insurtech can do, he said, is spur healthy competition and collaboration.
“Insurtech is there to make this whole ecosystem better,” he said.
People like you value experienced, knowledgeable and award-winning journalism that covers meaningful stories in Bloomington-Normal. To support more stories and interviews like this one, please consider making a contribution.