Joel Albarella founded the venture capital unit of New York Life in 2012 and manages venture investments, business development activities, strategic partnerships, and innovation efforts across the organization. Joel has led the team in executing over 65 venture capital investments, working with over 235 start-ups to facilitate “proof of concept” tests with teams across New York Life, and forming strategic partnerships with a select number of these businesses.
Joe Albarella: InsurTech has profoundly altered the life insurance industry to date and the impact will only accelerate in the years to come. Having launched New York Life Ventures in 2012, we had an active role in the establishment of InsurTech as a sub-theme within FinTech which gave us tremendous perspective.
Initial startups in the space were often those with direct-to-consumer insurance offerings that touted themselves as disruptive and directly competitive to incumbent insurers. Since then, we’ve seen a significant shift from singularly competing with traditional insurers to enabling them by enhancing the value chain across the front-, middle-, and back offices while also acknowledging the human elements of life insurance.
This shift is meaningful because it recognizes the importance of the advisor, the policy owner, the beneficiaries, and the families involved—all while setting a new standard for what the customer experience could and should be: more seamless, customer-centric, and digitally enabled. In addition, this shift has attracted a lot of new talent focused on the intersection between technology and insurance, a trend we believe will be a boon to the industry as a whole going forward.
Within InsurTech today, there are many technologies with relevancy to insurers that aren’t focused on the business of insurance specifically speaking, but more on the operational aspects of running large and long-standing organizations regardless of industry vertical. This has always been a core focus for New York Life Ventures and includes areas like machine learning, cybersecurity, cloud enablement and architecture, HR Tech, Regulatory Tech, and more.
Again, since New York Life Ventures was founded before the term InsurTech came to life, we’ve certainly benefitted from having developed our own perspectives while playing a role in shaping InsurTech as we know it today and where the space is headed.
Prince: In your opinion, what have been the biggest shifts you have seen in the industry, and how has New York Life Ventures differentiated itself from its competitors over the years?
Albarella: Compared to 10 years ago, traditional, incumbent insurers are well-aware of the need to take a deliberate look at innovation and better understand the tremendous value that the offerings and insights of startups can deliver. Additionally, there has been a significant shift as leading entrepreneurial talent is now more focused than ever on building technologies that enable traditional insurers instead of attempting to directly compete with them.
When we launched New York Life Ventures, the conventional wisdom was that to succeed as a corporate venture capital team, we’d need to commit to either being a strategic investor focused on startups with relevance for the business, or one focused on financial returns. Our objective since day one was to be both. At the 10-year mark, which in and of itself is noteworthy in the corporate venture capital world, we’re proud to say that we have succeeded beyond all expectations by consistently refining our model to best leverage partnerships with start-ups while delivering best-in-class investment returns.
From a strategic perspective, the value we’ve brought to the businesses across New York Life and to our startup partners is significant. A proof of concept alone is a unique opportunity for our business units to learn and get a different perspective from startup founders and vice versa. In a significant number of instances, a proof of concept has turned into something more. This might include a venture investment, an implementation where New York Life becomes a user of the technology, or both. I’m proud to share that New York Life has averaged a proof of concept every 2.5 weeks over the last decade and signed an average of one implementation every quarter with a startup over that same timeframe all while delivering top-quartile returns on our investment portfolio.
Another area where we create impact has been our ability to drive the evolution of innovative mindsets across New York Life and support internal strategic initiatives by applying human-centered design principles and techniques—a key upskilling required to create additional innovation.
Another differentiator is our focus on the corporate aspect of corporate venture capital. We would not be in the position we are today and have made the impacts we’ve delivered without the strong support of New York Life and the company’s long-term orientation and mutual ownership structure. These traits created a fertile basis for our corporate venture capital to thrive while being committed to evolving in the face of the changing world.
Prince: Covid-19 has had an impact across all industries. How do you think the pandemic has influenced the corporate venture capital industry generally, and also at New York Life?
Albarella: The pandemic certainly accelerated existing trends within enterprises, including the need for employers to offer greater hybrid and remote work options, as well as the need for more digital and agile technologies. While already top of mind, many businesses had committed to digital transformation pre-pandemic. This commitment accelerated with employees working from home, but also with the expansion of collaboration platforms within HR Tech that we saw emerge throughout the pandemic.
From a consumer perspective, expectations, which were already changing, have shifted dramatically as a result of the pandemic and are now here to stay in many ways. This includes even greater adoption of digital tools that span all aspects of life, from food delivery to banking, and life insurance.
From an investment perspective, we’ve seen many startups experience massive valuation inflation across all stages of venture. We remain committed to maintaining strong investment discipline within our corporate venture capital model and our ability to drive multiple streams of value allows us to be patient and long-term oriented.
Of the many trends we watch, two of particular interest to us at New York Life Ventures are the democratization of access to and the re-bundling of the financial services stack. We expect tremendous innovation in these spaces and are excited about what this will mean for traditionally underserved communities.
Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals. Connect with him on LinkedIn.com.