As the InsurTech industry approaches the next wave of innovation, experts say this could mean navigating rough waters.

“I believe what you’re going to see is that you’re going to have InsurTechs, the cream of the crop, are going to survive and thrive, and a lot of them are going to have to deliver on the promises they made to their investors and to their partners,” Upasana Unni, chief commercial officer at Sayata, said in this episode of The Insuring Cyber Podcast, which airedin May. “It’s going to be a little bit rough seas, I think, out there in the next quarter to three quarters.”

Unni said that she believes the next phase of InsurTech—InsurTech 3.0—will be largely focused on the ways InsurTechs and insurance carriers can serve each other, and this could result in a more active acquisition landscape as the industry faces consolidation.

“They’re not trying to disrupt, they’re trying to support or improve, basically helping insurance companies evolve,” she said. “And then a few players, I think, will have business models that actually prove out to be truly profitable at scale.”

Jeff Radke, CEO and co-founder of Accelerant, added earlier in the episode that while InsurTech 1.0 focused on the consumer insurance space, the next phase – InsurTech 2.0 – moved toward business-to-business and commercial products.

“3.0, at least as I’ve heard it described and the way we tend to think about it at Accelerant, is a little more broad in that, I think, it’s focused very much on accessing high quality data and making it available across all the players,” he said. “I guess the fancy word for that would be transparency.”

Unni said that the challenge in navigating a wealth of data is analyzing which data points to actually utilize.

“Even though there is a wealth of information … which data points actually make sense to include, which data points do you train your model on?” she said.

Radke said that as InsurTech works to navigate some of these new challenges, it’s important to remember that it’s a fairly new space with plenty of risk as well as opportunity.

“I don’t think it’s even close to maturing,” he said. “While it’s been around since 2010 in one form or another, or at least talked about since then, I would say … we have a long way to go. I view that as a really exciting thing. That’s good news to me.”

He said this means there are plenty of “green fields of opportunity” in InsurTech to help modernize traditional insurance company functions and capture, catalog, manage and understand the quality and the province of the data that’s available.

“Making that available throughout the value chain is really becoming a powerful force, at least in our corner of the market. It’s drawing in much more demand for insurance policies. At the same time, it’s drawing in significantly increased capital supply to back those insurance policies,” he said. “The operations of the typical insurance company, I think, might have more upside from modernization than perhaps distribution, but I’m not sure how much we’ve even begun to scrape those opportunities.”

Unni added that although InsurTech is still a fairly new space, it has seen a shift in thinking among traditional insurers from being a disruptor to a welcome addition to the industry in many cases.

“I think 10 years ago, you would’ve had a lot of insurance executives dismissing the new kids on the block, which is how they thought of a lot of InsurTechs,” she said. “And now, frankly, half of the introductions I get to InsurTechs come from traditional carriers, or executives I know there, introducing me to an InsurTech partner that they’d love for me to meet. It’s a huge turnaround from dismissing them as a fad even a couple of years ago.”

Check out this episode of The Insuring Cyber Podcast to find out what else Radke and Unni had to say, and be sure to check back for new episodes publishing every other Wednesday along with the Insuring Cyber newsletter. Thanks for listening.