Substantial analysis has been done on the timeline and actions that crashed Silicon Valley Bank (SVB).
So we will skip the timeline and share our takeaway for insurers.
First, Banking 101 – Banks safeguard customer money. Most money is held as demand deposits able to be withdrawn at any time. Banks leverage customer deposits to originate loans. The yield spread between loans and interest paid on deposits covers operations.
What happens if you have more deposits than you can safely underwrite loans (like SVB)
Some banks do nothing and accept lower profit. Other banks invest the money. Investments can range from short term treasuries to more esoteric options like venture debt and mortgage backed securities. Silicon Valley Bank went too long on duration and was too concentrated in esoteric, correlated risk.
Insurers are similar to banks except they receive premiums that are held in reserve for claim payments. Insurers can shield themselves from the risks by:
-Matching duration of risk to duration of investment (e.g. 10 year life policy to 10 year treasury)
-Avoiding correlated risk in a single correlated “mega-class” like VC-backed startups
-Not underwriting beyond their capacity and building redundancy in the reinsurance stack
-Protecting their image and reputation with careful PR and communications
For more commentary on the topic, listen to our podcast with Michael Waitze of InsurTech Asia.
Spotlight: InsurTech Competition Finalists + Conference Discount Expiring
This year we received more than 125 applications to our Global InsurTech Competition. More than 25 judges representing carriers, brokers, and investors reviewed the applications and selected the top nine. Then you voted for the wildcard to make the top ten. More than 3,000 votes were cast across 26 companies.
Top ten startups are: Redkik, Otonomi, InsurX, Kayna, Mitigate, Stream Claims, FireBreak Risk, Journey Sports, Futura Genetics, and Octamile (wildcard).
The top ten startups will be pitching live at the InsurTech Spring Conference on March 29-30. Today is your last chance to save 10% on tickets.
More info and Register: https://www.insurtechny.com/insurtech-spring-conference/
Upcoming InsurTech Community Events and Programs
InsurTech Spring Conference: Competing on Collaboration
March 29-30 | NYC (Chelsea – Pier 60)
700+ attendees – Parallel tracks for: Life & Health and Property & Casualty
Speakers include: NFP President, Munich Re Head of Innovation, Palomar CLO, & TIAA CIO
More Info and Join Registration
InsurTech NY Sponsors
Thank you to our sponsors of our InsurTech Spring Conference in NY.
If you are interested in sponsoring a future InsurTech event, send us a note at firstname.lastname@example.org.
InsurTech East Coast Deals, Partner Events, and Open Roles
Discover a curated mix of January InsurTech financings, exits, partnerships, opportunities, and partner events on the East Coast.
InsurTech News and Deals
OpenEyes ($18M, Insight Partners): Commercial P&C: Full-stack carrier based on utilizing real-time data capture to mitigate risk and reduce costs for commercial fleets.
Opkit ($1M, Global Founders Capital): Health: Verification platform focused on automated data delivery to virtual and telehealth providers.
Assured Allies ($42.5M, FinTLV Ventures): LTC: Platform for traditional LTC carriers to provide support and preventative measures for clients through machine learning and predictive analysis.
Partner Events and Programs
insureNXT Congress and Expo (April 26 & 27)
InsurTech Hartford Symposium (May 2-3)
InsurTech Leaders Summit (May 24-25)
OnRamp Insurance Accelerator (Applications Due April 10)
OnRamp Insurance Conference (June 21-22)
DFS Exchange – NY Department of Financial Services newly-launched engagement platform to foster the growth of responsible innovation in financial services in New York.
See more information and register via our website: www.insurtechny.com/upcoming-insurtech-conferences
Jobs In Carrier/Broker Innovation and Venture Teams
Enterprise Ireland – Senior Market Advisor
Ethos Life – Director, Actuarial
Starr – Internal Management Consultant
Transverse – Program Manager
Verisk – Actuarial Associate
See more information and apply via our blog: https://www.insurtechny.com/jobs