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Insurer VC and Accelerators Focused on Learning, Financial Return: Novarica Report

Staff Writer | July 06, 2016

Insurers have become increasingly active in accelerators and venture funds over the past year. Startup companies can offer insurers an outside-in perspective on their processes, as well as access to skills and staff they do not currently have.

Strategic advisory and research firm Novarica covers recent developments and provides guidance for insurers looking to “buy innovation” in its newest executive brief, available at http://novarica.com/vc-accelerator-update-2016/.

“For insurers, it’s not just about investment returns: startups can expose organizations to innovation and also provide perspective in solving business problems,” notes Rob McIsaac, senior vice president of research and consulting and lead author of the report. “These investment dynamics can allow carriers to get a ringside seat for observing the operational aspects of companies in start-up mode that may have been invisible to them previously. The ideas associated with speed to market, failing fast and coming back stronger, and making flexibility part of the cultural foundation may well be keys to business success in the future. However, many are not typically present in traditional carrier organizations. The investments can create "lab" experiences that allow for critical new learning and an appreciation for the ever-increasing speed of business change. ”

Key findings of the brief include:

  • There are multiple measures of success beyond return on investment. Contribution to the industry as a whole, exposure of staff to innovation, and addressing business problems are just a few.
  • There are opportunities for regulators, insurers, and technology firms. Regulators may not grasp the potential for value add, insurers may not understand how best to work with firms, and firms may not understand the complexity and pace of the industry.
  • Even smaller insurers can play. Smaller insurers still have enough free capital to interest startups, and startups can provide outside-in perspective and solve business problems.

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