If your email inbox is constantly inundated with pitches from insurance technology (insurtech) companies, then this article is for you. Unsolicited proposals from vendors are a constant. With the rise of insurtechs, the sheer number of these proposals has increased tenfold. As the CEO of an insurtech myself, the number of solicitations I receive is beyond my ability to process. So, most go into the junk folder. Sound familiar?
It is a fair bit of irony that I put many of the solicitations I receive into the junk folder (especially when that seems to be the last resting place of many of the emails my sales team sends). Most of the emails I receive are so low quality, or unspecific to my company, however, that there is no other choice. Barring quality issues, solicitations can be useful-you can determine what the latest and greatest technology is and where the market is going. Why do you need these solicitations when you can do your own research? With many insurtechs being so new, the likelihood of them popping up on your radar without them first popping up in your inbox is low to none.
The insurance industry is rapidly consolidating, the market is hardening, and the overall competitive landscape is leveling up in difficulty. This means that you and your company can no longer ignore insurtechs. It’s just not possible to innovate internally at the scale and speed required. But that does not mean that selecting which companies to work with is any easier; in fact, it’s harder.
Every once in a green moon, I receive a proposal that piques my interest. It’s my job then to qualify them as quickly as possible. Most companies do not have the luxury of a team dedicated to sourcing, qualifying, and conducting projects like pilots or proofs-of-concept with potential insurtech partners (I certainly do not). So the work falls to leaders like us and our team. To help you figure out which insurtechs to work with, here is the three-step strategy I use to know which companies to double down on, and which ones to take a pass.
What is Their Team’s Industry Experience?
People (and by extension companies) that only dip their toes into insurance are unlikely to be successful, regardless of size. With all the complexity within the industry and all the rules and regulations which vary by State, even well-funded startups (note: not insurtechs as many players trying to get into the insurance industry come from other markets) have difficulty performing in insurance.
If the insurtech does not speak the language of your team, how can you possibly communicate? They must be a functional partner. This means that they understand your business after only a quick call. It is important to remember that it is not your job to educate them about the industry. If they do not do the homework, why should you give them a passing grade?
The best partners, and the ones worth working with, have deep industry experience. This applies equally to industry experience as it does expertise in the product they are offering. For example, if they are offering a rating system, does someone on their team have experience building one? Especially in the early stages of speaking with a prospective insurtech partner, this information is not readily available. The best practice is simply to ask. Often, companies are led by pairs of people: one with deep industry experience and one with deep software experience. Having a balanced team with industry experience is one sign you are speaking with an insurtech that will be a solid partner. And perhaps more importantly, be able to deliver.
Are Different Levels of Engagement Possible?
Insurtechs are valuable to the insurance industry because they help everyone move away from legacy ways of doing business, pushing all parties to become customer-centric. You’ve heard a lot of great proposals in your time, but often the thing that prevents them from moving forward is an all-or-nothing approach. You either pay for two years up-front and do a full-scale implementation or there is no way to work together. Insurtechs do not bear all the responsibility for this either. Often, it can your business, the potential buyer, that is not geared for anything other than this approach. Either way, it puts you between a rock and a hard place.
Being flexible in running pilots is an important step for businesses and requires a change in mindset. Pilots are low-cost and relatively low-risk. Ask internally: “Can we just export the information the insurtech needs rather than doing a full implementation?” Put another way, we want an opportunity to ‘sense-check’ the prospective vendor by kicking the tires and looking under the hood.
Taking the pilot approach does not require dedicated staff, rather a small addition to a few individuals’ current responsibilities for a fixed time frame. Some larger insurance companies have dedicated teams for this, and have had significant results, but it is not a requirement by any means. Asking about different levels of engagements should be a first conversation question, and will help you inform your buying decision accordingly.
Can We Implement the Solution at Scale?
Working with vendor partners necessitates being forward-looking. Not just thinking about the immediate scope of work, but looking longer term. Doing this will inevitably lead to the question, “Is this scalable?” Companies that have multiple agency management systems or several core data storage software may find it difficult to take what the vendor makes work in one system, or for one segment of your staff, and apply it elsewhere.
If there will be obstacles to scaling a solution after a pilot, probe what a way forward may look during the initial conversations. If what they propose would not work, or if the insurtech cannot provide adequate answers, then the decision to partner clarifies itself.
The whole reason for doing a pilot is to validate that the partner can indeed provide value. Selecting companies to spend time, energy, and resources on that meet or surpass this test provides a simple way to move potential insurtechs to the top of the list to work with.
Taking an interactive approach to working with insurtechs closes the feedback loop. It helps your business mature its partnership strategy and embeds key lessons into future decision-making. No business is too small to engage with insurtechs. With the right approach, and with a few simple steps, you can engage with the best and gain a competitive edge.