Q&A with Chris Downer of XL Innovate

Do you see any notable shifts or surprises over the last 18 months regarding commercial insurtech investment trends?

What has surprised us is how little activity commercial insurtech has seen, relative to personal lines. Our analysis, based on CB Insights data, shows that over $1 billion has been invested in companies that are addressing commercial insurance since 2015, which equates to roughly 10 % of total insurtech investment. What does that mean? Regardless of how you slice it, commercial insurtechs have been woefully under-financed relative to insurtechs addressing personal lines, distribution, and other areas. As a result, commercial insurtech is heavily under-penetrated relative to the broader insurtech movement. Even existing commercial ventures have been concentrated in more obvious areas like distribution and auto. In fact, since 2015, those two categories account for over half of commercial insurtech funding to date. Very few startups are looking at more complex areas. This has to—and will—change.

XL Innovate portfolio companies—Cape Analytics, Pillar Technologies and Windward—all share the capability of transforming real-time data into risk management insight on properties, construction sites and maritime operations respectively. Do you see brokers as a channel to deploy these tools in addition to insurers?

Absolutely. Brokers cannot be satisfied with the status quo and will need to continue to integrate new technologies into their offerings in order to add value to the end client. Brokers can leverage this wave of technology to differentiate themselves in the market and prove they have their finger on the pulse of insurtech. For the broker, the customer is the centerpiece and insurtech is a vehicle in which to ensure that centerpiece remains a client.

Embroker, a digital commercial broker, is obviously of keen interest to Council members. Three years into the company, what aspects of Embroker and their value proposition to customers has XL Innovate, as an investor, most excited?

Where do I start? We think Embroker has a huge lead in dealing with larger, more complex customers and larger more complex insurance products—something competitors in the market don’t have experience with. Embroker also recently launched a customized digital insurance product through their new digital Startup Program. Their new program, which includes D&O, EPLI and fiduciary liability insurance, allows customers to buy complex coverages directly online, without paying brokerage commissions and policy fees or dealing with archaic manual underwriting processes. What took startups at least three weeks, takes 60 seconds with Embroker. That’s pretty cool.