Connecticut's Insurance Industry: Dominant and Driving Innovation

That insurance is a dominant Connecticut industry will come as no surprise to anyone.  The state ranks #1 in the U.S. in insurance employment as a percent of total employment, #1 in the U.S. in insurance gross state product as a percent of total GSP, and #1 in the U.S. in insurance payroll as a percent of total payroll, according to data included in the 2020 Connecticut insurance market brief, produced for the Connecticut Insurance and Financial Services (CT IFS), a statewide initiative of the MetroHartford Alliance.

The insurance sector is a significant part of the state’s economy, creating more than $16 billion in output in the region, and as was recently highlighted in the publication Business Facilities, “while the insurance landscape continues to evolve, the state’s insurance and financial services (IFS) companies are implementing strategies and technologies to enhance the customer and employee experience and create timely, innovative solutions to today’s challenges.”

The industry, a mainstay for more than two centuries, is anything but stagnant.  As the CT Insurance Market Brief points out, “A few years ago, insurance companies tended to look at InsurTechs as acompetitive, disruptive threat. Now, they tend to see a growth opportunity.”

The Brief acknowledges that the Hartford Region boasts more than 70,396 employees who work in insurance-related jobs, and “1 new job in the insurance industry on average adds 4.4 jobs to the Connecticut economy through induced and indirect effects.” According to the labor market analytics firm, EMSI, with nearly 1,000 actuaries working in the state, Connecticut also has the highest concentration of actuaries in the United States.

“What’s unique about CT IFS is the confluence of C-suite and executive leaders who leave their competitive hats aside to work collectively on strategic initiatives designed to strengthen and advance the industry in our State,” CT IFS Vice President and Executive Director Susan Winkler told Business Facilities. “Since 2003, the CT IFS Board has leveraged Connecticut’s IFS industry across the U.S. and the world as a competitive advantage for growth in economic development.”

Importantly, CT IFS points out, insurers have more recently “started paying much more attention to newcomers. They’ve become some of the largest funders of these startups, recognizing that teaming up with technology firms can be a game-changer.”

Business Facilities reports that one of the region’s “key advantages is the cost of living, which the Council for Community and Economic Research says is 21 percent less than Boston and 37 percent less than New York City.”  The publication went on to point out that “in the current business climate, it’s also significant to note that Best Places ranked Hartford #3 mid-sized city for teleworking in 2020, while in 2019 the New York Times ranked it a top 10 destination for millennials and Bloomberg listed it as a top five location for innovation.”

The CT IFS report also pointed out that “Ongoing issues highlighted by the pandemic include the cost of insurance and consumer inclusion. This pandemic has put a spotlight on the need for people to have access to insurance at a reasonable price. The insurance industry can help lead the charge in making insurance more accessible and inclusive, possibly through products like microinsurance or through technology solutions with InsurTechs.”

Hartford is globally recognized, Business Facilities pointed out, “for its innovative InsurTech ecosystem and the region draws companies from all over the globe. In 2018, multinational information technology corporation Infosys selected Hartford as one of six locations in the United States to house a regional Technology and Innovation hub, helping accelerate Hartford’s and Connecticut’s distinction for its innovation ecosystem.”

Early-stage InsurTech companies choose the Hartford Region because they recognize the value of locating in one of the world’s strongest insurance clusters, where they’ll find the resources needed to solve global issues in life, annuity, property and casualty, reinsurance and digital health markets.

The CT IFS report notes that the aggregate total for Hartford InsurTech Hub’s performance, from June 2017 to June 2020, include: $59M+ in private investment funding received by startups, 31 startups graduates from the program, with on average 61% from outside the U.S., and more than 50,000 website visitors from 155 different countries.  Hartford InsurTech Hub has been described as a “collaboration of insurance carriers, City of Hartford representatives and community stakeholders all focused on industry evolution through collaboration and innovation.”

Dawn M. LeBlanc, Managing Director of Hartford InsurTech Hub, Startupbootcamp/ Rainmaking, references a renowned Hartford resident, in describing what’s happening.

“Break the rules, advised one of Hartford’s most famous residents, Mark Twain. He also encouraged us to “go out on a limb—that’s where all the fruit is.” At Hartford InsurTech Hub, we take these words to heart—taking a fresh look at insurance in order to innovate and discover new solutions to issues that aren’t yet fully articulated. Breaking rules for fruitful outcomes—it’s happening here in Hartford.”

In addition, Launc[H]artford (formerly known as the Hartford Innovation Place Program) is a community-led effort to make Hartford a visible and vibrant hub of innovation and entrepreneurship. Launc[H] partners are providing connections to industry experts across the Hartford region in the fields of InsurTech, Advanced Manufacturing and MedTech. According to Launc[H]artford, over the past three years the region has fostered nearly 800 entrepreneurs and helped or scaled up more than 200 businesses.

Director Michelle Cote notes that “The concentration of insurance companies, as well as industry expertise available here, makes Hartford a great place for companies looking to break into the U.S. market, and grow. We’re looking forward to helping our local anchors keep pace with changes in the marketplace and develop capabilities that help them create new value for their customers.”

InsurTech Hartford is a grassroots organization, founded and run by local insurance professionals. And Upward is a global incubator with a vision to re-invigorate cities through a generation of innovators with ideas that are fostered through connection, learning and experience.

“The concentration of insurance companies in Hartford and Connecticut makes a strong case for startups seeking partners with our local insurers and for companies looking to expand into a market that fully understands the new world of insurance,” Nassau Re Chief Marketing Officer Paul Tyler told Business Facilities.

 In discussing the impact of the coronavirus crisis, the Connecticut Insurance Market Brief states that “The current crisis has accelerated the trend toward automation and digitization, both of which were previously fueled by changing demographics, customer expectations, and competitive pressures.” 

The document points out that “Before the crisis, many insurance companies were already pursuing a digital transformation roadmap. Now they’re trying to accelerate the process, compressing implementation from ten years to two in order to move ahead of competitors and deliver sustainable profits.”  And months of change won’t disappear, the market brief predicts:  “A flexible work-from-home model is likely to become the norm, and everybody benefits.”