2. The current consumer isn’t satisfied
Travel insurance surveys reveal that global consumers are dissatisfied with the customer travel insurance experience – from service offerings, claims, and Covid-related insurance perspectives. A recent survey conducted by Cover Genius revealed that 43 per cent of travellers intend to switch to an alternative channel rather than where they previously purchased travel insurance. This indicates a disparity between the traditional insurance provider’s offering and the customer’s needs. While the census-balanced survey of over 15,000 global consumers spotlighted pandemic-related claims, it’s clear to see that traditional one-size-fits-all insurance misses the mark on the new types of scenarios travellers need coverage on. This calls for solutions that allow customers to get insurance bundled with products and services that matter to them and where they matter most.
3. Identify key business challenges first
Traditional insurers exploring insurtech partnerships should first determine key business challenges before seeking tech solutions. One of the greatest factors of a partnership’s success is whether it addresses an identified business need and use case. Ensure that there’s a clear connection between the insurance company’s needs, the insurtech start-up solution, and of course, the key player within the traditional insurance company who will be the owner of implementing this solution.
Only by understanding and prioritising the company’s problems can an insurer find the right partner – one that helps develop and deliver a solution that the organisation needs and can integrate into its business.
4. Research potential insurtech partners
Thanks to the market growing in size and maturity, it’s getting easier for insurers to scout their Insurtech options and make connections. Insurers should consistently monitor the market and develop relationships within the industry by attending conferences, working with data and insight providers, as well as networking with venture capital investors and tech accelerators. This will allow insurers to gain a deeper understanding of the solutions available and also track trends around emerging technologies and products.
Once an insurer has identified a potential partner, it’s essential to determine whether the organisation will be a good fit. Some questions to ask include:
- Is the start-up ready to partner with a large insurance company? Have they worked with insurers previously?
- Do they have the internal structure, security, and resources to operate successfully?
- Who are their investors – and how much have they raised? Are they likely to still be in business in the next six to 12 months?
- Are they willing to adjust their offering to meet the insurer’s needs?
- What is their business model? If the partnership scales up, can costs be controlled?
- Do we have the technical capability to actually partner with this company (e.g. via cloud, APIs) or does the startup offer innovative ways to pilot a partnership without using large resources?
Before signing off on an insurtech partnership, it’s critical that you do a complete background check on a potential insurtech partner. Some key aspects include:
- Security features
- Alignment with goals
- Costs of implementation and renewal.
5. Have a coherent strategy
Many insurers lack a strategy for engaging with start-ups, and when partnership discussions are underway, this can easily lead to mix-ups. Having a key point of contact to help insurtechs understand the insurer’s innovation strategy will allow everyone onboard to navigate internal processes. It is also beneficial to set out specific needs or challenges the insurer is currently considering and a clear demonstration of how the business is working collaboratively with the start-up.
6. Set clear goals and measurable KPIs before execution
Insurance firms must have a clear idea of the goals they hope to achieve when initiating a strategic partnership with an Insurtech start-up. Different Insurtechs have different strengths and flagship technologies, and not all will be suited to the specific requirements a firm might have. Without a clear understanding of their goals, insurers might try to force tech solutions to fit when they actually provide no apparent benefit to their company.
According to a report by CapGemini, both Insurtechs and insurers recognise the value in partnering up – with some of the most important benefits of collaboration from the insurer’s perspective being building new digital capabilities (46 per cent) and faster time to market (59.5 per cent). Insurance companies should set goals internally and then work with Insurtechs to understand how these can be met to get the most out of the partnership.
Setting out measurable KPIs will also pave the way for a positive collaboration. Without identifying key metrics for success, it can be challenging to evaluate the success or failure of an Insurtech investment. In the absence of having something to measure, an evaluation will easily and often become subjective and difficult to justify. Define what success looks like from the get go. For instance, if the goal is to bring down operational costs – how much do you want to reduce them by? Then set up weekly or monthly reviews regarding these metrics to keep both teams focused on the end goal.
7. Ensure all innovations are customer-centric
Consumers are seeking digitised, simplified, and holistic experiences. In the travel and healthcare insurtech sphere, Air Doctor’s findings show that up to 20 per cent of international travellers get sick whilst abroad, but only 15 per cent of these will actually seek medical care. Much of this can be attributed to the hassle, cost, and uncertainty behind medical processes abroad, as well as cultural and language differences. Technology-led approaches that allow customers to conveniently get the services they need are the way to go.
In addition, Cover Genius’ survey reported that travellers rated post-claim neto promoter score (NPS) at -25, with credit card insurance programmes receiving a dismal post-claim NPS of -34; and online insurers and traveller providers/agents receiving -15 and -9, respectively. On the other hand, insurtech start-ups receive scores well above industry average for both health and insurance. This clearly shows that start-ups can build future-ready services structured around customer-centricity. However, insurers should ensure that they plan to innovate, putting customers at the centre of the experience.
8. Pursue ‘cross-cultural’ understanding
There is a business-cultural divide between traditional insurance companies and insurtech start-ups. Legacy insurance companies and insurtech start-ups often have very different ideas about cultural norms for behaviours, such as risk tolerance and how decisions are made. And this divide has undeniably been a major barrier to innovation for insurers as well as growth for Insurtechs. Before insurers decide to pursue partnering with an Insurtech, they should pursue cross-cultural understanding. Businesses on both sides of the table need to understand how things run and operate on the other. Often it comes down to the common goal of finding a win-win proposition that benefits the customer.
9. Look for dynamic business models
There are many ways to form insurtech alliances, but insurers need to choose a business model that works for them. There is no single best way to structure a joint business relationship. Understand the trade-offs. In some cases, the relationship may depend on the amount of control either party is willing to give up, and in others, it comes down to the investment. Ultimately, it’s about finding an insurtech with dynamic business models that fit into the insurer’s ecosystem.
10. Have a scaling plan
Any insurtech solution should be easily scalable – start-ups and scalability should go hand in hand. Often, these partnerships break down once the parties move from pilots and testing to scaling the solution for a wider rollout. For various reasons – technology, infrastructure, nature of the business model – solutions can fail at scale.
Insurers should first start with a pilot and then move on to full production. Create a scaling process for moving the solution through the production pipeline, from what investments will be made by whom, which party owns which responsibilities, what metrics will be used, etc. This ensures the partnership operates with a mutual understanding of what must be achieved in order to continue moving forward.