The insurance industry is undergoing a major transformation, and Ohio is leading the revolution. Sifting through policy paperwork will soon be a thing of the past as millennials, who now outnumber baby boomers, begin to seek and find personalized insurance information in new and innovative ways. Emerging technologies — such as big data, wearable devices, the Internet of Things (IoT), artificial intelligence (AI) and blockchain — are changing consumer expectations and preferences and forcing the insurance industry to change with them.
The use of technology in insurance, simply known as insurtech, is exploding across the globe, with an increasing number of insurance startups choosing to launch and grow their companies in Ohio.
Insurtech Thriving in Ohio
Root Insurance is one of those innovators. Established less than three years ago in Columbus, this rapidly growing insurtech disruptor just announced plans to add more than 450 new full-time jobs and expand to a 65,000-square-foot office. Root developed a first-of-its-kind mobile app that uses smartphone technology and data science to understand actual driving behavior. This gives the company a unique ability to insure drivers based on more than just their demographics, offering safe drivers steep discounts. Since launching, Root has been licensed to offer insurance in 16 states and plans to offer it nationwide by the end of 2019.
A former insurance agent started Bold Penguin, an Ohio-based insurtech company that offers an online tool to help insurance agents quickly find and write more commercial insurance policies. The startup has already grown to 60 employees since the beginning of 2017 with additional growth expected this year.
Elafris, headquartered in San Francisco, recently announced the expansion of its offices to Columbus. Elafris, the creator of advanced AI technology products, developed a virtual insurance agent that links insurers and consumers via messenger applications (Facebook Messenger, Alexa, etc.). The company then uses customer interactions to identify the right insurance coverage and allows customers to process insurance claims through their smartphone or home device.
Why Ohio Attracts Insurtech Companies
What is it about Ohio that attracts insurtech startups? Besides the obvious fact that Ohio is a financial services mecca for top U.S. bank and insurance company headquarters, it comes down to three major reasons: talent, a collaborative financial services environment and a cost advantage.
Root’s CEO attributed the company’s growth to the strong digital-savvy talent found in Columbus. Ohio universities produce 32,000 college graduates annually, including innovation leaders in banking, insurance and financial services. Ohio’s major metropolitans – Cincinnati, Columbus and Cleveland – are continually attracting millennial talent.
Ohio also boasts a collaborative financial services sector. Industry leaders like Grange and Nationwide partner with startups to help them succeed, and companies of all sizes work together to come up with innovations that strengthen not just their own operations, but the industry overall. Ohio’s recently passed legislation on blockchain technology development and its digital banking laws are examples of how state government also takes a partnership versus policy mentality with the financial services industry.
Finally, Ohio offers incredible opportunity at a significant cost advantage. With one quarter the cost of New York City wages as well as rent, it’s no wonder so many insurtech companies are choosing Ohio. By reducing the cost of doing business, companies can channel new-found resources into innovation.
Luckily, more and more traditional financial services firms recognize that change is an opportunity, not a restraint, and are willing to invest in the new talent, technology and ideas that will transform this industry.