XL Innovate is a corporate venture fund focused on the P&C vertical and investing in startups that are addressing emerging and underserved risks. XL Innovate is also seeking out disruptive new insurance models that parse data from new sources such as IoT enabled devices and social media. This, in addition to developments in advanced analytics has prompted XL Innovate to seek out startups applying these techniques to property insurance.
In addition to capital, XL Innovate invests energy, experience-based expertise and the operational resources of XL Catlin to help scale early stage ventures that have new technologies but lack the scale and distribution channels required to reach a mass market. The XL Innovate fund also takes equity positions in companies that provide new market opportunities for the XL Group throughout the world.
Tom Hutton, managing director of XL Innovate has summarised XL Innovate’s approach: “XL Innovate have made seven investments to date, including Lemonade, Embroker, New Energy Risk, Notion, and Slice Labs with a few more in the pipeline.” As regards XL Innovate’s investment philosophy, Tom says XL are “focused on early-stage startups, particularly those with innovative approaches to underwriting and client-facing distribution. Change is needed, and we believe the InsurTech movement over time produces these changes”.
In terms of investment philosophy, it seems XL Innovate has embraced a three-pronged approach in investing in InsurTechs globally:
- Provide InsurTechs with attractive capital returns through strategic investments.
- Provide access to next generation technologies and value to XL Catlin’s core business, including new sources of underwriting premium.
- Provide visibility into developments throughout the InsurTech industry, even in fields or sectors where we are not currently active.
Ultimately, XL Innovate is pursuing InsurTechs of strategic importance to XL Catlin. Although many insurers have established similar funds, XL Catlin’s focus on usage-based insurance models (driven by new data streams and advanced analytics) is differentiating XL Innovate in the market.