This was the first year I attended Insurtech Connect 2017.
At the conference we unveiled our new company: Life Epigenetics, Inc. At the conference, I had the opportunity to participate on a panel entitled “Underwriting 2.0: Opening Pandora’s Box of Life Insurance.” The panel provided me with the chance to be the first person to speak to about the power that epigenetic analysis holds for the global life insurance industry. I can almost guarantee you that almost no one (other than a few PhDs in the room) in the audience had even hear of the term “epigenetics” before that panel. The idea that we are the company bringing this science forward as a means to accurately interpret and be predictive with regard to human health and conditions is thrilling. Epigenetics is the study of molecular conditions that occur as a result of your human condition – meaning how much you exercise, your diet, your bad habits, as well as your good – overlaid with your permanent genetic code. This after all, is the sum total of who you are, at any one time.
We live at an extraordinary time when the “science of things” is increasing at an exponential rate in conjunction with the corresponding increase in computing power. This science was simply not possible five years ago – as the computing power and technology was simply not there or otherwise cost prohibitive. Remember, the human genome was first sequenced in 2003 at a cost of over $2.7B. And today, a mere fourteen years later, this same sequencing can now be completed for under $1k, and its cost is falling still. Along the human gene, there are 23 chromosomes that have an estimated 3.2 billion bases that contain 20,000–25,000 distinct protein-coding genes that need to be analyzed or “sequenced.” At each of these base gene locations, scientists have discovered that there are over additional epigenetic sites (known as CPGs) that serve to mute, amplify, or otherwise change the genetic expression (i.e., from your behavior). So, this means that the computing power necessary to review the magnitude of sites required is on an exponentially greater order than first required to sequence the human genome. This is why, only now, is epigenetic science now beginning to further unravel the mystery of our human biology.
Each conversation I had at the Insurtech Connect 2017 conference proved to be great opportunity to explain both the baseline science and the powerful implications for a very large global industry. To that end, the global consultancy of Oliver Wyman, organizer of of the conference produced an excellent industry report: Insurtech Caught on the Radar. This report does an excellent job of identifying segments of the insurance industry through a well distilled framework:
Our framework follows the insurance industry value chain from proposition, to distribution,
and operations. Within these three segments, we have identified 19 distinct InsurTech
business model categories. We are assessing these by analyzing their individual market
potential as well as their chances of success, especially their capabilities of matching needs
and behaviors of all parties acting across the insurance value chain, namely customers,
suppliers and all other partners a risk carrier is interacting with.
This report is a must-read for anyone seriously interested in the changes occurring within the rapidly evolving Insurtech landscape. To understand the opportunity in the life insurance sector that relies on the ability to accurately underwrite all-cause mortality risk, one must try to wrap their heads around the sheer magnitude of the industry.
With over $2.5T in annual premiums written globally, and over 10% of that business being written in developing markets, we see an overwhelming opportunity to provide value to an industry in the midst of unprecedented change. The Report’s conclusion is instructive to anyone following this change.
Among other things, the Report concludes:
- The change is a radical structural transformation – and that the industry will look much different a decade from now.
- The change is driven by new technology and new players – both of which are here to stay.
- The challenge is that this industry is HUGE, regulatorily complicated, and expensive to operate in – which makes its particularly difficult for new entrants. As result, as the authors note, most of the change has been evolutionary vs. revolutionary, and the real disruptors so far are rare.
- And, finally, the future of insurtech will be driven by more creative and ambitious entrants who will expose profound opportunity!