FinTech

Michael Niddam, Executive Partner at Kamet, Gadi Tirosh, Managing Partner at JVP, Yoav Tzruya, Partner at JVP, Sebastien Loubry, Partner at AXA Strategic ventures, Fiona Darmon, Partner at JVP Photo Credit: Dror Sithakol

JVP and AXA spearhead insurtech competition to breathe new innovation into an old industry

Is insurance destined to be relegated to the doldrums of a bygone era as the rest of the industry pushes forward, powered by innovation in fintech and cyber?


For as long as humans have been sailing the seas, there has been insurance. Essentially a losing proposition wherein the best outcome is that the customer never has to ask for a payout, the term insurance has long been synonymous with expensive and a hassle.

Looking to join the movement for industry modernization that appears to be affecting sectors across the board  think banking, healthcare, etc. — the insurance world is now on the lookout for innovation. Realizing that they might need a hand at getting this right, AXA, one of the largest insurance companies in the world, has teamed up with Jerusalem Venture Partners to sponsor an insurance tech competition.

Backing up this hunt for top notch insurtech startups is the promise of a $1 million investment from JVP, and the possibility of getting additional funding from AXA Strategic Ventures, the VC arm of the insurance giant. While only one company will walk away with the prize money, all the participants will gain exposure to the major players in the insurance space, including Kamet Ventures with their early stage program that is focused on the insurtech space.

“The insurance industry is ripe for disruption through the introduction of new technologies and innovative business models,” said Gadi Tirosh, Managing Partner at JVP, in his statement to the press. “Our strategic partnership with a global player like AXA will give Israeli startups the opportunity to validate their innovative products in dialog with incumbent industry leaders.”

Speaking with Yoav Tzruya, a partner at JVP, he tells Geektime that change is afoot in the insurance sector as they are feeling the sands shift below their feet.

Yoav Tzruya of JVP Photo Credit: JVP

He says that pressure on the insurance companies comes from the fact that over the past few years, their operations have become less profitable on a macro level, and actually coming in at a loss. While everyone understands that these companies make their money from taking premiums and paying out as little as they can, many people are unaware of the other side of their income: investing their money into the market. This can mean putting their capital into government bonds, the stock market, or other investment vehicles.

Tzruya explains that this revenue stream has diminished for the companies due to low interest rates that were a part of economic easing. As interest rates fell to encourage spending, this was bad news for entities like the insurance companies that were dependent on investments for their bottom line.

Moreover, he tells Geektime that their pain points can be boiled down to two key elements. The first is their inability to properly evaluate risk, where they find themselves over charging on some policies – thus losing customers- or not quoting high enough for others that are far more risky. At the same time, he adds that their internal business expenses, which are continuously growing, are inefficient. “They absolutely need to innovate, automate, digitize, their internal processes,” he says, explaining just one of the many reasons that they are turning to the startup scene for help.

According to research from Deloitte, the industry is putting their wallet where their pain is. Their report shows that the 130 insurtech startups currently in existence have thus far raised a collective of $3.5 billion from VCs, investors, insurance carriers, and reinsurers.

Interestingly while Israel has been the source of new companies in the insurance space like Lemonade and Next Insurance, it appears to have not fully caught the interest of many Israeli startups. Perhaps more clear cut, and with significant margins, much of the focus here has been in cyber, fintech, and elsewhere.

However JVP and their partners see opportunity for the Israeli startups in a range of fields like automotive, health, blockchain, cyber, and Big Data. Tzruya says that he hopes to attract “companies that might be operating in other sectors and didn’t identify the insurance market as an option due to the slow processes that are a part of that sector.”

Then there are already companies that have insurance specific technologies like risk, accumulation, or other specific products, that want to directly address the insurance market. “Through the competition, we open open up them direct access to insurance companies, not just limited to AXA,” says Tzruya.

One such company is Click-Ins, which uses IoT devices to help car insurance providers reduce fraud. The company’s Chairman and CEO, Eugene Greenberg, explains that one of the biggest issues that insurers face is when car owners make false claims that could be easily verified simply by knowing their location. They work with an IoT data provider to help insurers offer their customers discounts on their premiums if they will allow their data to be tracked.

Greenberg is not the only one to see automotive as a source of opportunity. David Schapiro, the CEO of insurance pricing analytics software startup Earnix tells Geektime that, “The introduction of autonomous cars is going to happen in our generation, and there is going to be a transition period that needs to be assessed.”

Figuring out how to set up a whole new system of insurance where some vehicles will have policies placed on their owners who are drivers, who will be on the road with self-driving vehicles, leaves open plenty of opportunities for companies like his to come in and make their mark on the industry before the concrete dries. He explains that he sees insurtech as “a big opportunity for Israel,” owing in part to the advanced analytics capabilities that have become a hallmark of the local scene.

JVP and AXA Insurtech competition launch Photo Credit: PR

Concerns for privacy

While most folks can agree that the flow of information can be a good thing, especially if it cuts waste and passes the savings on to the customers, there are of course serious privacy concerns that need to be addressed.

Where is the line that companies should know better than to cross?

Acknowledging the concern, Tzruya says that the debate over privacy, “will have a dramatic impact on the insurance sector. I agree that there is a certain balance between the sensitivity of acquiring private data and business efficiency. An area of interest for us in the competition is companies that allow us to handle that, like tracking private data within a company, which is done now to a limited extent.”

He believes that there is lots of room for improvement. One area that will prove a challenge is protecting user’s anonymity. Whereas a lot of apps can take user data while hiding their identity, this is impractical in insurance since the data is directly tied to the user’s profile. Tzruya says that insurance companies will have to anonymize this data to comply with regulation like is seen more prominently in Europe. “Finding technologies that can, on one hand, improve anonymization and privacy while not impacting business processes is something that we are actively looking for.”

How exactly this happy medium will shake out is yet to be determined.

So who are they looking for?

“As JVP, we’ve been notorious for building category leaders, trying to build those billion dollar companies,“ says Tzruya, explaining which kind of startups they are looking for. “Even for billion dollar companies, there are differentiations from a set of specific capabilities, from our preference from technological ones. From our perspective, we are looking for companies that have technological differentiators, and based on that, can build long lasting businesses. “

Companies that think they fit the bill and are interested in being chosen for the competition will need to act quickly as the deadline for signup closes tomorrow on January 23rd. The finals will then be held a month later on February 22nd, announcing the million dollar prize winner.

Photo courtesy: WikiMedia Commons

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