Overused as it is, the phrase “start of the journey” absolutely fits where the InsurTech world currently finds itself. This new world is so nascent that it was only during 2016 that we actually agreed on the portmanteau of “InsurTech” to describe it. (Having had a brief flirtation with “InsTech”, and a minor diversion via “InsureTech”.) It’s not just the inconsistency in spelling that makes us feel like the cartographers of bygone years, but also the large parts of the map that are still blank. The maritime cartographers’ phrase “Here be dragons” feels as apt when defining the roadmap for InsurTech in the early twenty-first century as it did when defining the shape of America and Australia in the sixteenth and seventeenth centuries. The unknown is as bewitching, the discoveries as exciting, the stories as apocryphal; but, fortunately, the dangers somewhat less. Yes, most of the first wave of InsurTech startups will, like Icarus, rise rapidly upwards, before crashing to oblivion, drowning plenty of venture capitalists’ money in the blue seas of unachieved customer numbers. And, while those whose dreams are crushed by incumbents (or funding short-falls!) might feel like Britain’s Captain Scott freezing to death in the Antarctic in 1912 there will be no real lives lost. Yes, our families may complain they never see us, but we’re a quick Facetime away, rather than truly out in unexplored lands; and while a diet of pizza and flat whites may not help our cholesterol, at least the tomato sauce prevents scurvy.

I watched the late-nineties mobile and Internet boom as a somewhat disconnected observer, focusing on early jobs and struggling to name a true entrepreneur beyond Clive Sinclair or Richard Branson. But I’m just loving riding this InsurTech wave, with all the thrill of the hunt but no risk of being gored by a wild boar in a previously unexplored forest.

At the start of 2015 there was no InsurTech. There were indeed some fresh new companies smartly using technology to make a difference in the insurance space. But they were stand-out exceptions, glanced at with a combination of curiosity and confusion – not something that warranted the creation of a new noun. Bought by Many had been going for a while in the UK, having spotted the opportunities of social media to cluster like-minded customers – in effect a clever proxy to “big data analytics”. Friendsurance had been operating a tech-enabled peer-to-peer insurance concept in Germany since the start of the decade.¹ InShared was running a “100% internet”, “100% self-service” insurance company in the Netherlands.² These and other similar companies were blazing a trail, but they were so busy getting on with it that they didn’t need a moniker to describe what they were doing. And when asked they simply offered “FinTech for insurance”. So we sat there in 2015, at the centre of a multi-trillion-dollar, centuries old industry, seeing (or more appropriately “hearing”) the assault of FinTech on the financial services world and wondered “What about us?”

Now, don’t let people tell you insurance isn’t innovative. Sure, the underlying product has stubbornly remained the same annual policy based on a small number of data points, and on the commercial insurance side, paper is still prevalent, but this is not an industry that doesn’t know what technology is. Data analytics has been used since 1744 when life insurance contributions were first calculated by two Scottish clergymen using Jacob Bernelli’s cutting-edge “Law of Large Numbers” – leading to what today is the multi-billion Scottish Widows investment company.³ Commercial insurance had kicked off in London half a century earlier. As London sat at the centre of a global empire, coffee shops had become the social media of their day, and, as in the twenty-first century, the network effect kicked in and there could only be a few winners. Edward Lloyd’s coffee house on Tower Street became the place for ship owners to congregate and share information and ultimately identify ways to share risk that over time turned into the underwriting of insurance (risk-sharing individuals signed their names under the information about the risk and thus the term underwriter was born).⁴

While many elements of these 300-year-old models remain, the industry (or industries if you consider life insurance, health insurance, personal lines, and commercial lines as significantly different businesses) continues to evolve. Personal lines insurance embraced the Internet well before banking, with comparison websites being one of the big achievements of Web 1.0. There can be much discussion about whether comparison websites – with their focus on price above all else – have helped or hampered the consumers’ coverage of their risks, but from a use-of-technology point of view, they were cutting edge. Evolution in commercial lines has been slower on the technology front, but the appetite of smart underwriters to look for ways to underwrite any new risk has always driven innovation. We live in a world of cyber attacks, data breaches, intricately connected supply chains, threats to planes from drones, driverless cars, virtual currencies, and commercial exploration of space, not to mention an increasing volume of “old” risks – catastrophic weather events, political unrest, and the like. Underwriters look for all sorts of ways to understand such risks better, requiring them to master everything from blockchain to firewalls to reusable spacecraft.

With such a dynamic industry, it was clear the “FinTech in insurance” map was not going to stay blank for too long and, indeed, as 2015 progressed the explorers were setting out. InsTech London⁵ kicked off in April 2015 with a mere 20 individuals in an overpriced London wine bar. The speed of growth would have made many startups proud. The ecosystem blossomed through a virtuous circle of explorers ready to head into the unknown, cartographers and ship builders supporting the journeys, and kings, queens, and emperors happy to fund the journeys in return for their share of any treasure. In their day, brave, arrogant, white men such as Columbus, Magellan, and Da Gama headed off funded by European sovereigns. Our wave of explorers is more diverse, often more modest, funded less by royalty and more by venture capital funds and incumbent insurers (plus parents, friends, and crowd-sourcing).

The startups have taken various forms. InsurTech companies, which developed innovative distribution models, are a principal focus on the personal lines side – ranging from chatbot front-ends to UBI (usage-based insurance) via robo-broking. Growing equally rapidly is a range of smart home and telematic products offering owners and insurers more information about their risks – in part as a risk reduction exercise, in part as a form of marketing differentiation. There are a few players looking to build full-stack personal lines insurers and take on the incumbent carriers, with Lemonade as the posterchild in early 2017, but most startups are smart enough to see that partnering with incumbents (especially those looking for ways around the challenges of internal innovation) is an easier way to scale.

On the commercial insurer side there is even less logic to building an end-to-end business. There is the well-trodden route of becoming an MGA (Managing General Agent) if you wish to create your own insurance company, and disrupting a value chain dominated by multi-billion-pound behemoths and nimble niche players is typically more than most want to bite off. Thus, most of the startups are looking to where the value chain is in need of a dose of smart, tech-enabled enhancement. We’re seeing exciting point solutions such as low-cost satellite imagery to support the claims process (including views before the claim took place) from machine-learning enabled fraud detection, online news-site scraping to enhance underwriters’ insight, and IoT-enabled monitoring of just about anything that moves or has sensors. To avoid overwhelming people, InsTech London (a networking community I co-founded in 2015) coined the term TRAMBID to cover some of the key technologies – telematics, RPA (robotic process automation), augmented reality, machine learning, blockchain, IOT, and drones – and each of these is becoming increasingly prevalent at multiple points in the underwriting process.

Yes, there is the inevitable talk of bubbles and undoubtedly there are some daft ideas getting irrational funding, and some good ideas that, for a range of reasons, will fail. However, investors learned a lot from Bubble 1.0 and much of the InsurTech investment community “cut their teeth” in the world of FinTech over the last half decade. With the growth of InsurTech-focused investors,⁶ and a community that is increasingly corresponding on the various new ideas, it is unlikely that any InsurTech-specific bubble will grow and then burst. Whether a general backlash against robots, AI, and use of data comes to pass, slowing the speed of change is clearly a far bigger question than merely insurance and InsurTech.

The successful explorers of past centuries are remembered as the winners in the canons of their age, while, with the exception of a few heroic failures such as Britain’s Captain Scott, the losers rapidly descended into obscurity. As we reflect back in a decade’s time on this current wave of frenetic change it will all seem so natural and obvious. Let us not forget, as we stand here right now, that the path yet to tread is shrouded in mist and without doubt “there be dragons” out there.