Hartford Business Journal

14 Hartford Business Journal • July 23, 2018 • www.HartfordBusiness.com By Sean Teehan steehan@HartfordBusiness.com T he elevator between Hart- ford Steam Boiler's 12th and 13th floors is a time machine. President and CEO Greg Barats' 12th-floor corner office at One State Street in downtown Hartford is adorned with all the trappings of a century-and-a-half-old Connecticut insurance company: large wood desks; antique fixtures; and a painting com- memorating the Sultana steamboat disaster of 1865. The short ride to the 13th floor brings you to an open, mostly co-working space with flat screens displaying data charts, sleek high-tech devices — in- cluding 3D printers — and denim- sporting 20-somethings milling around desks and glass-encased tech labs. "We come from a … very traditional legacy company that operates and ap- proaches the market in a very systemat- ic way," Barats said while giving a tour of the 13th floor known as The Mashup@ HSB. "But for us to be in the new world, technology is really becoming a huge change-maker in the marketplace." Hartford Steam Boiler's 13th floor opened in May, about 2½ years after the specialty insurance company started working on it, Barats said. It now serves as a future-facing innova- tion lab, and a physical manifesta- tion of Barats' intention to steer HSB increasingly into the direction of problem-solving innovator. HSB, which Barats describes as "an engineering company that got into insurance," has dived deeply into the tech space at its Hartford headquar- ters, mirroring an industry-wide trend in which insurance companies are working with, or buying, startups and housing their own in-house innovation shops to improve upon everything from customer relations to reducing a policyholder's risk of filing a claim. Since its founding, HSB has operat- ed as a specialty insurer and provider of engineering risk management and technology services. It insures things like equipment breakdown, cyber risk and identity theft. With its investment and focus on technology, HSB aims to build a new internet-of-things (IoT) services busi- ness to help small to midsized compa- nies prevent or reduce physical damage to their operations. So far, that's largely been done by developing or investing in sensor technology that helps businesses monitor equipment and infrastructure to prevent or reduce insured losses. HSB, which recorded $1.3 billion in revenue last year, rolled out a $50 million venture fund in 2014 and has acquired multiple startups like At-Bay, which uses technology to provide up-to- the-minute risk assessments. In 2016 it also acquired Houston tech company Meshify, which provides companies with industrial equipment sensor technology that can, as an ex- ample, monitor pressure and tempera- ture to warn of problems that could lead to burst or frozen pipes. Meshify's technology also helps link devices through a cloud-based IoT platform. Over a 40-day period last winter, HSB's monitoring technology prevent- ed frozen pipes and water exposure at one business, which Barats declined to name, that could have caused millions of dollars in property damage, he said. "We basically can turn off equipment remotely from 1,000 miles away," Bar- ats said. "I can tell you if it's working, not working, if it's too hot, it's vibrating too much, how much flow is going." Germany's Munich RE Group, which owns HSB, has taken notice of the Hartford company's innovation and venture work, Barats said. As a result, HSB is likely increasing the fund and expanding innovation efforts. Barats is also leading Munich RE's IoT business strategy. Right now, a Mu- nich RE team he oversees is working with German industrial robots manu- facturer KUKA Robotics and carmaker Porsche on a "SmartFactory" concept. The idea is to build micro-manufac- turing facilities that companies can rent, in an effort to transform manu- facturing into a service, Barats said. "We're not just a user of technology," Barats said. "We're going to become a buyer of technology, where technology actually becomes a part of our offering." Insurtech in Hartford HSB's focus on technology isn't new, and neither is the idea of mixing insurance and innovation. In 2016, about 28 percent of insur- ers were looking at partnerships with tech startups, according to a recent PwC/Startupbootcamp report on the insurtech market. Last year, 45 per- cent of insurers were engaging in such partnerships. The trend of insurance companies working with startups and housing in- house innovation shops is prevalent in Hartford, said Dawn LeBlanc, manag- ing director of the Hartford InsurTech Hub, which launched last year and is run by InsurTech London, a division of Startupbootcamp. "We really see that the trajectory of insurtech is really going to accelerate," LeBlanc said. LeBlanc oversees the InsurTech Ac- celerator — whose investors and/or partners include Cigna, The Hartford, Travelers Cos. and the state quasi-public agency CTNext — which works to annu- ally bring 10 to 12 insurtech startups to Hartford, and provide support through BY THE NUMBERS How do insurers currently engage with insurtechs? Accounting and consulting firm PwC surveyed insurer CEOs last year and found that insurance companies of all types are engaging insurance technology companies more so than ever before. The insurer survey found: 58% of insurers monitor insurtech in order to respond competitively. 45% engage in partnerships with insurtech companies. 30% buy the services of insurtech companies to improve their operations and services. 21% establish startup programs to incubate insurtech companies. 14% set up venture funds to fund insurtech companies. 11% acquire insurtech companies. New Age Insurer Hartford Steam Boiler's tech focus aims to transform specialty insurer into problem-solving innovator HBJ PHOTO | STEVE LASCHEVER Hartford Steam Boiler President and CEO Greg Barats in the specialty insurer's new innovation lab — called The Mashup@HSB — which serves as the latest example of the company's efforts to become a technology innovator.

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