Brewer Lane’s Notaras expects AI adoption in insurance to be more evolutionary than revolutionary

By James Thaler

June 17 - (The Insurer) - AI adoption could be more evolutionary than revolutionary in insurance, Brewer Lane Ventures’ Martha Notaras told The Insurer TV, adding that she expects more collaboration between startups and incumbents.

The veteran venture investor, who has backed companies including Lemonade, Cowbell, Embroker and Cape Analytics, made the comments after a panel session at the inaugural Equal Ventures Insurance Capital Summit last month.

"Quite a few of us who've been investing for a while felt like this was, in fact, an evolution that would seep into insurers, into the insurance ecosystem, and would change it over time,” Notaras said.

“What's important is that all of us agree there are changes. It's happening. I think the other AI topic was whether AI companies are actually demonstrating real product-market fit,” she added.

“We are seeing amazing growth from them, and much faster growth than we see from a traditional insurtech. But one of the skepticisms is: are they growing because insurers are curious, or are they growing because this is durable revenue?” she continued.

“One of the things that's so hard for startups is: if you get a $100,000 or $500,000 contract, you think that's a big contract. Well, here's news: that's not a big contract for AIG. It's fine. That's probably taxi fares,” she joked, adding that successful investments she has made have been in firms that have been able to show future clients the value brought to existing ones.

POTENTIAL TO DISRUPT

Another topic raised was whether advances in AI have the potential to “finally kill off” major incumbent industry service providers.

“I came down on the side that, no, we're not going to kill them. What we can do is isolate them in certain ways so that they're less annoying; but I think that we'll have AI that puts in and extracts information, providing a lot more flexibility to the rest of the insurance ecosystem,” she explained.

“There'll be some shift in the power between startups, insurers, and these very established insurance platforms,” Notaras said.

“Now, they may very well change over time, presumably by buying up some little companies, and I think that they are very open to that, because I think that they're quite aware that they have not always kept up on the investment.

“And I think if you see how long some of the implementations take, you recognise that they have not been able to keep the speed of development the way that I'm sure they would prefer to as well,” she added.

She also said the current wave of insurtech startups are much more about enabling existing insurance businesses like carriers and MGAs, rather than disrupting the existing industry structure.

“When they are able to come in, there is so much value that an insurtech can leverage for the insurance carriers and other parts of the insurance chain in ways that they really can't do it themselves,” Notaras said.

"Working with a startup ... has energised some of these established entities in a way that has made them capable of achieving more, and that they're willing to pay for," she added.