What 'insurtech' means for Lansing's $30B insurance industry

Important as it is, insurance is a quiet part of most people's lives.

But Lansing has long been an insurance hub, home to eight company headquarters responsible for more than $30 billion in annual premiums and revenue, according to the Lansing Economic Area Partnership.

Now, as the industry pushes into digital spaces, local companies and educational institutions want to lead the way in "insurtech," or insurance technology, which connects people to that billion-dollar industry online.

"It's really the combination of the internet of things, the cloud server power, as well as artificial intelligence and user interface ... to make the insurance process more up to date," said Tony Willis, chief equity development officer at LEAP.

Smartphone apps, chatbots and tools to analyze traffic patterns are all examples of how insurtech has pushed the industry forward, Willis said.

"It goes to growing trends of how people have adopted and adapted more to the digital space," he said.

The goal is smarter, better service for customers — and efficiency for providers — whether that means streamlining the signup processes or providing more dialed-in quotes using customer data.

"How does insurance get smarter?" said Keith Lambert, chief operating officer of LEAP. "You get smarter by having more information from more sources. That's a big part of what insurtech is. These tech startup companies coming into longtime insurance carriers and saying 'You guys are dinosaurs... and we have solutions that have been embraced by a lot of other industries.'"

In 2020, $7.1 billion was invested in insurtech nationwide, according to the Federal Insurance Office's annual report on the industry. During the first quarter of 2021, another $2.6 billion was invested, a 22% increase from the previous quarter.

"Startups are driving the industry globally and getting a lot of venture capital money as well," Lambert said. "That's why it really became a prerogative of ours a few years ago to get with some of these big employers, because they employ over 10,000 people in the area, and if they're not embracing technologies and innovating and staying competitive, that's going to hurt our region in the long term."

For instance, AF Group, a Lansing-based insurance company, built a mechanism that uses third-party data to underwrite small policies and are using wearable technology to mitigate injuries for policyholders. In 2019, AF Group and its brands reached $2 billion in premiums for the first time in company history.

Meanwhile, Dewpoint, a Lansing-based tech company that serves the insurance industry, has expanded from 40 to 400 full-time employees since 2010.

The growth of insurtech in the area is supported in part by educational opportunities around Lansing.

Lansing Community College is the only institution in the state that offers an associate's degree in insurance and risk management. The program's partnerships with insurance companies and four-year degree programs at Olivet College and Ferris State University help develop and retain local talent. The program also has received national recognition, which helps attract new people to Lansing.

"We're getting picked right along with all the four-year schools throughout the country," said Mary Stucko, chair of the insurance and risk management program at LCC. "Everybody now knows who Lansing Community College is and (knows) this area."

The industry is also "hiring like crazy," Stucko said. In the next 10 years, about 40% of the people currently working in insurance are expected to retire.

"I don't see that this bubble is going to burst because you're still going to have people, 10 years from now, who are going to start to retire," she said

Retirements aren't the only thing driving the hiring spree, Stucko said. Insurance companies are growing as they adapt to new technologies.

"Insurance companies are trying to figure out (how to insure) artificial intelligence," she said. "That's a trend we're going to hear a lot more about, how that gets insured...primarily in vehicles."

Even as the industry adapts, careers remain incredibly stable, Stucko said, which is part of the draw for many people who enter the field.

"For our students, it's an area that they can rely on a very balanced life, as far as working 9-to-5 jobs, have options to work at home, a wide variety of companies, just here in Lansing," she said.

Continued growth in a stable field is good news for Greater Lansing, Stucko said, as it will attract more people to the area and support further economic development.

"Insurance companies are kind of quiet," she said, "But if you just look around, there's so many job options."

Contact reporter Elena Durnbaugh at (517) 231-9501 or edurnbaugh@lsj.com. Follow her on Twitter at @ElenaDurnbaugh.

This article originally appeared on Lansing State Journal: What 'insurtech' means for Lansing's $30B insurance industry