Video transcript
Adam Klauber: U.S. insurance revenue on an annual basis runs roughly 2 trillion. Yes, that is 2 trillion! Right now the technology running the business is old and antiquated so we see a massive opportunity for a nimble technology players over the next 10 years to upgrade the industry. The result of this big opportunity: In the last five years we've seen roughly $15 to $20 billion put into hundreds and hundreds of startups by venture capital investors and private equity investors.
Now taking a step back, what's the issue with insurance technology? You really have two big issues. Number one, insurance is relatively bifurcated. So the selling of the industry is really handled by insurance agents, which are separate from the insurance companies. The result is that you have tens of thousands of insurance agents on varied technology platforms that are trying to talk to different technology platforms at thousands and thousands of insurance companies. So that's number one, a very disparate system. Number two, particularly with the insurance companies the several core systems have always been built on different platforms. So the claim system is different than the policy management system is different from the billing system. As a result, they never function very well. So we've seen three major areas of technology players aligning up to really attack this problem. The three are what we'll call number one, distribution technology. Number two are software and analytic players, and number three, are vertical disrupters. I'll give you a small slice of each one. The vertical disrupters are really new insurance companies who have built tech stacks from scratch over the last five to 10 years.
On the distribution tech side, we see a range of digital companies, digital media companies, companies with very advanced high-tech call centers such as Goosehead, really creating a much more efficient and consumer friendly insurance process. Then the third part is we've seen a whole range of new software companies, who are really helping the large insurance companies solve their technology problems. So as we think about the insurance industry over the next five, 10 years it's in a way still going to look the same. They're going to sell products that insure homes and businesses, but really the underpinnings, the technology that runs it is going to be total—totally replaced, and watch out for a bunch of great companies who are doing that upgrading.