Startup culture wouldn’t seem to complement the insurance industry’s intrinsic risk-aversion at first glance. Insurers tend to value proven success before entering into any engagement, which can be at odds with InsureTech’s fail-fast approach to innovation.
It’s not an all-or-nothing game, though. There are many ways that incumbent insurers can evolve to cooperate with and learn from InsureTechs to access their technical expertise, new talent and profit streams, and low-cost ways to test technology.
InsureTechs cited executive and enterprise buy-in as one of the top ways that carriers can benefit from partnerships with startups. The hierarchical nature of many incumbent insurers means that internal innovation champions with decision-making power can influence corporate culture as a whole. Executive buy-in can tie startup initiatives to business objectives, improving the chance of adoption.
Innovation also takes time and resources. It’s not enough to throw money at startups. Partnership requires engagement from decision-makers and internal resources. Innovation isn’t something carriers can accomplish with part-time engagement.
The typical complexity of insurer organizations can be a challenge for startups to navigate, especially for InsureTechs with finite resources and teams that are unfamiliar with the industry. Communication is critical in these cases. Some InsureTechs express interest in an insurer resource—e.g., an innovation team, an internal champion—dedicated to familiarizing them with insurer departments and the organization’s leaders who can secure or contract pilots.
A culture that is open to innovation is another must for startups. Insurers who want to work with InsureTechs may need to overlook a short track record, especially when working with early-stage companies. Corporate leadership needs to take the reins in these instances, steering the company away from operational models that prioritize business as usual.
InsureTechs have expertise to share as well. They may need to educate insurers on fail fast and Agile best practices as well as how to operate with new implementation methods and emerging technologies. (Retrofitting a new process or technology to an old workflow isn’t likely to pan out in the long run.) Many InsureTechs also cite phased rollouts and minimum viable product (MVP) approaches as critical for partnerships with incumbent carriers. These approaches can allow insurers to experiment while keeping the stakes low.
For more on what insurers can do to drive innovation and partner successfully with startups, see Novarica’s latest executive brief: InsureTech Startup Perspectives on Working with Insurers.
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