Insurtech Heat — Prudential pays $2B for 3yr old start-up and Tesla insures own smart cars; plus 14 short takes on top developments
Hi Fintech futurists —
In the long take this week, I analyze the $3.5 billion acquisition (if including incentives) of Assurance by Prudential, which took many industry observers by surprise given the firm raised no venture capital backing. Combined with other insurtech symptoms, like 3D renderings of home damages composed of selfies, 500 million simulated driver situations for auto claims, and Tesla’s entry into the business of insuring its own smart cars, we have a new emerging mental model for risk-taking in the space.
Frontier technology is the bacon bits in the Finance salad. It is the most fun to talk about what *could* be, sci-fi style, because what is already there isn’t particularly exciting (depending of course on who you are). So when we think about futurist themes and emerging tech, the picture is inadvertently extreme, with utopian and dystopian highlights. What if we had maximum data collection, and its associated impact on privacy? What if we had maximum usage of Bitcoin and crypto assets, and their associated impact on governments and banking? What if we all worked in virtual reality, and how would that change what we buy and how we pay?
But as an operator or entrepreneur, you don’t have to take the most risk. Rather, you should do what every smart financial advisor will tell you – figure out your risk tolerance and your ability to execute against it, and then find the opportunity with the best risk/return profile. Optimize the Sharpe ratio for your innovation activity! Just as there is an efficient frontier for investment vehicles so there is an efficient frontier for…