By James Thaler

June 16 - (The Insurer) - Aquiline’s Max Chee has called large language models “a game changer” in driving operational efficiency, while arguing that new companies founded by insurtech alumni of prominent insurance startups are making the ecosystem “more robust”.

Speaking to The Insurer TV on the sidelines of this month’s Insurtech Insights conference in New York City, Chee highlighted growing insurtech interest in E&S and also discussed the importance of starting companies with an exit in mind.

“I think the one thing that we've seen is a lot of alumni of places like Lemonade or Metromile or Hippo or other insurtechs that have been pretty successful have come back around and now are starting their own businesses,” Chee explained.

“It's that entrepreneurial cycle of seeing a company be really successful in insurtech, and then spinning out of that and starting something else. CoverWallet is another good example of that where you've got a lot of alumni in other places,” he added.

Chee said the cycle of insurtech veterans founding new businesses “feeds into the entrepreneurial ecosystem, and it makes it more robust”, arguing that such founders are more likely to make fewer mistakes, having learned to scale a business while understanding insurance.

“In the first wave of insurtech in 2017 and beyond, you didn't have these kinds of entrepreneurs who had both the scaling experience as well as the insurance experience. This time around I think you do,” he said. “I think that increases the odds of success for many of these companies."

In calling LLMs “a game changer” for driving operational efficiency, he argued that “there's a lot of really exciting businesses” being founded to leverage AI and solve pain points across the insurance value chain, extending from brokers and submissions-handling to claims and underwriting.

“I think the question is: which ones will actually survive and thrive, and which ones are really differentiating? And I think that's a really tough question that I need to ask myself as an investor right now, but it's a very exciting time to be in insurance,” he said.

“I think AI has really given the whole sector a pretty strong boost,” Chee added.

INSURTECH INTEREST IN E&S

He also pointed to the increased interest among insurtechs in the E&S segment, as many industry leaders have said a secular shift towards the wholesale channel is underway.

“I think there's four or five (insurtech wholesale brokerages) that are in the market right now. So, I think we're seeing that as a direct consequence of what's happening in the E&S market,” he said. “And then on the other side, on the cat side of things we're seeing a lot of interesting companies that are trying to solve the capacity problems in cat-prone areas like California and Florida, parts of Texas, et cetera."

Chee co-leads Aquiline’s venture business, which is currently investing out of its second fund. It is largely focused on Series A deals, as well as some seed rounds across financial services, including in the insurance, wealth, asset management, banking and payments sectors.

Watch the full interview with Aquiline’s Max Chee to hear more on:

• How alumni from insurtechs such as Lemonade make the ecosystem “more robust”

• Why large language models are a “game changer” for driving operational efficiency

• Growing interest among incumbents to invest in or acquire insurtechs

• Insurtechs' aim to capitalise on secular shifts to E&S, wholesale and MGAs

• And more…