How can insurers partner successfully with InsurTech start-ups?
23 February 2017
In a world where InsurTechs are seen as enablers, the process of partnering is crucial. Especially as insurers increasingly look for partnerships to deliver results for them.
As part of my secondment to Startupbootcamp InsurTech I have been working on a project to ease the partnering process (specifically proof of concepts) between insurers and start-ups. It has been a fascinating piece of work that I have greatly enjoyed and that I hope has added some real value for both start-ups and insurers.
In my discussions with insurers it became clear that their pain points in the partnering process could be placed under two umbrellas:
1. It’s a new process
InsurTech, and insurers’ engagement with InsurTech, is still in its infancy. As such, many points of frustration boil down to the pain of putting in place new processes and securing the internal buy-in of key stakeholders. This can range from putting in place appropriate legal contracts (especially with regards to data-sharing), getting through procurement processes that aren’t designed for short Proof of Concepts (PoCs) to prioritising what to take forward. Some insurers are further down this path than others and it is encouraging to see how quickly some have been able to put in place robust processes that reduce administrative burdens and speed the pace of partnership.
2. There are cultural challenges
Start-ups and incumbent insurers are very different beasts. I like to think of start-ups as speedboats (quick and agile but can struggle in difficult waters) and the incumbent insurers as oil tankers (powerful and strong but slower to move and turn). When the two interact it can lead to frustration. Insurers can be slow to move and start-ups can be overly demanding or indeed can overpromise on their ability to deliver. These ways of working are a challenge that some of the more mature insurers in this space are actively attempting to tackle.
Despite these challenges, some very interesting partnerships are beginning to emerge between insurers and InsurTechs, although we are yet to see an ‘Uber moment’, 2017 looks like it could be the year that InsurTech begins to really make waves.
Once I had understood the challenges of the insurers I spoke with a number of experts at PwC to help me define an overall framework for running proof of concepts and partnering with start-ups. As well as some other supporting materials, I pulled together the below top tips for insurers (and start-ups) looking to run proof of concepts:
- Agree scope – make sure both parties are clear on the exact problem that they are trying to solve and who is responsible for what
- Define success – once your problem is defined, work out how you will know if the PoC has been a success in solving that problem. Understand the metrics, even if they are not hard metrics.
- Timebox – keep the timeframe short and be prepared to pull the plug if things begin overrunning
- Know what’s next – if it is a success, what happens next? Make sure both parties are clear about this.
- Clear method / plan – A PoC should be treated as a short project with appropriate project management mechanisms in place
- Collaborate – perhaps most importantly of all it is essential to collaborate. Across the business and between the business and the start-ups.
If you'd like to discuss how start-ups and insurers can partner successfully in more detail feel free to get in touch.