🔒Amid CT’s pay-for-presence incentives, insurtech tests a different model

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If you're a business of sufficient size or stature wanting to move to Connecticut or expand here, the state's probably interested, so you might be able to land a favorable loan or even an equity investment.

Those state-backed incentives come with strings attached, such as requiring companies to meet certain job-growth and retention targets within state borders, and have the overall goal of growing Connecticut's economy.

But when it comes to the burgeoning insurance technology — or insurtech — sector, the state and its major insurance carriers are testing a different approach to achieve similar economic-development gains: Pick the most promising startups you can find from around the world; bring them to Hartford and introduce them to the insurance industry titans headquartered in and around the city; help them further hone their business strategy and offerings; and then set them free, hoping they stick around to service newly won clients, and grow.

That's the strategy employed by the Hartford InsurTech Hub, the city's nascent business accelerator that is operated by London-based Startupbootcamp and backed by around $750,000 a year in state funding from CTNext.

The program is leveraging Greater Hartford's uniquely dominant position in the insurance industry and aims to create momentum and buzz for downtown at a time when technologies like artificial intelligence are continuing to evolve, creating new opportunities as well as competitive threats for insurers.

Headed into year two, the three-month accelerator has already made a splash, attracting hundreds of global startups that have applied for the program, and nearly two dozen that have come, or are headed to Hartford to participate.

It's still too early to judge if the program will turn Hartford into a breeding ground for new tech companies — at least three startups that participated in the first accelerator that ended in April have taken residence in the city — but it's certainly helped raise Hartford's profile.

“We can offer startups from around the globe something that no other place can,” Hartford Mayor Luke Bronin said during an address at the Insurance Market Summit in Hartford last month. Bronin urged the more than 300 summit attendees to spread the word about the city and to encourage their business and venture capital partners to consider setting up operations here.

“We cannot be shy or bashful about what we're trying to be here,” the mayor said. “We have to be bold and we have to be ambitious. We want this city to be the global hub for insurtech. We want it to be the undisputed capital of insurance in the world.”

For 2019, the accelerator has 10 fresh startups hailing from seven countries.

The companies, vetted and selected by Startupbootcamp and its corporate supporters, are drawn to the program, first and foremost, by the prospect of forging relationships with big insurers that could one day pay them meaningful revenue for their innovations.

“What attracts them is the insurance companies,” said Sabine VanderLinden, CEO of Startupbootcamp InsurTech, which has found a home at Upward Hartford in downtown's Stilts building. “The ability to have partnerships, to shape new offerings with large companies, renowned companies. If they can get the traction, get the clients, investment is going to come.”

While VanderLinden can't predict the future, she said a startup that wins a big new client in the region is likely to put down roots here.

Several companies from her 2018 program have leased space at Upward Hartford as they work on product pilots with area carriers and others.

An insurer's perspective

The region's insurance companies — Aetna, Cigna, The Hartford, Travelers, among others — have been major supporters of the city's insurtech efforts, giving their time and money to the accelerator (just over $1 million last year to match CTNext's support).

The program gives them access, in close proximity to their doorsteps, to potentially promising technologies that might offer a competitive edge in how they handle customer interactions or back-office processes.

Jill Frankle, associate vice president of strategic ventures at The Hartford, one of the accelerator's founding partners, said she and her team helped narrow down the list of candidates for the accelerator, and will offer mentor support.

She's encouraged by the accelerator's progress thus far, and its value to her company and its peers.

The program, Frankle said, “allows us an efficient forum to meet face-to-face with a number of entrepreneurs right here in Hartford. Our engagement and constant exposure to new business models and technologies also helps us continue to drive a culture of innovation within our organization.”

For insurtech startups that secure pilot projects with insurers, secrecy and non-disclosure agreements are often the norm.

Several companies involved in pilots during and after the 2018 program told the Hartford Business Journal they weren't permitted to disclose details about their partners or arrangements.

Asked if The Hartford is doing any pilots with accelerator companies, Frankle said yes, but declined to give specifics.

That secrecy makes it more difficult to assess the impact the program is having, VanderLinden acknowledges, but she said it's a necessary element of the process.

“There is fear,” she said. “They are going into a relationship that may not work, that could damage their reputation, data, all this stuff.”

The reality is, insurers are competitive and seeking first-mover advantage where they can find it, she said.

“They'll talk about it when it's embedded in their business, so it would take anybody else time to catch up,” she said.

Cross pollination

While there is a difference between Hartford InsurTech Hub's accelerator and the corporate incentive strategies of the Department of Economic and Community Development and quasi-public Connecticut Innovations (CI), they are working together in some ways.

DECD and CI, for example, have awarded $250,000 incentive packages to three insurtechs that were in the accelerator's inaugural class: Aureus Analytics, Pentation Analytics and Boundlss.

Meantime, Aureus Analytics and another accelerator company, Rozie AI, also won funding opportunities at CI's annual VentureClash competition, which draws companies from around the globe that compete for equity investments.

And the first-place winner of the inaugural 2016 VentureClash, Toronto-based Dream Payments, has won a spot in the InsurTech Hub's 2019 accelerator — besting 232 startups that applied for the program. Dream Payments plans to establish a beachhead in Hartford.

While the insurtech accelerator is still young, CI CEO Matt McCooe said it's already introducing quality startups to his agency that it might not have otherwise seen.

Offering additional financial support to these companies will make it more attractive for them to stay here after the accelerator ends, he said.

“They work so hard to get these companies to come to Hartford for a few months, shame on us if they just come and then they all leave,” McCooe said.

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