S3E12: Nick Gerhart on Insurtech and Innovation
Regulation, disruption, and the future of healthcare.
Returning to the Denim Rivet studio for the third time is Nick Gerhart, now Chief Administrative Officer for Farm Bureau Financial Services. Nick shares details of his transition from Iowa’s Insurance Commissioner to his current role. These positions have given Nick a unique perspective on the intersection of regulation and insurtech. He provides an update on the Affordable Care Act (ACA) and also shares his take on the recent announcement that Amazon, Berkshire Hathaway, and J.P. Morgan Chase have teamed up to form an independent healthcare company for their employees.
Intersection of Insurtech and Regulation
Nick hates the term “disruptors” but admits that it is a term that needs some attention. Insurance is made to help people, and any disruption of that means that somewhere people are going to suffer more. He sees the intersection of regulation and the tech space differing from country to country, and also here in the U.S. on the state level. From his perspective, the U.S. is much more concerned with consumer experience than some other nations are.
The last time Nick was on the show, Donald Trump had just been elected, leaving a lot of question marks about the fate of the ACA. Nick jokes that the state of the ACA is like Rocky 4: painful. Some state markets are having serious issues. He’s seen some markets shifting to groups, even groups of one in some states. The major bifurcation comes down to qualifying for tax credits, because those who do will likely use them on the exchange. Those who don’t qualify tend to go uninsured or try to find a way into a group.
The “Manhattan Project” for Healthcare
With the bombshell announcement that Amazon, Berkshire Hathaway, and J.P. Morgan Chase are forming an independent healthcare company for their employees, many are wondering what their end game is. Nick believes they are looking at fixing healthcare for their employees first and foremost. They have the means for distribution, the capital, and insurance knowledge to do some great things. Whether that is scalable to a much broader audience will take a while to determine. But Nick does believe that there needs to be a “Manhattan Project” for health insurance—something that takes a quantum leap into the future to massively clean up the current state of the industry.
2018 Insurtech State of the Union
Nick says he tends to look at his watch more than the calendar because that is how quickly things are changing. This year he thinks some larger names in the industry are going to fail, even though they have seemed like they were on track to make it. Nick is keeping an eye out for incumbent firms that will start to integrate with more startups and possibly new platforms to emerge. Out of the 2,800 startups around the globe he sees 2,500 not existing in two years. They are startups after all, and like every other industry not everyone can stick around.