How to partner with InsurTechs – A low-risk and low-cost approach
Blink CEO Paul Prendergast was one of The Digital Insurer’s Digital Innovators for Europe and a panellist at their Global LiveFest 2018 virtual conference in November. Here he explains how to leverage the new startup community to innovate core travel insurance product quickly without major capital investment and delivery risk.
Travel insurance is bigger than digital music. More than $15 billion a year in revenue and still no major technology innovation for the past 20 years. While travel insurance companies are excellent at running their core business, the challenge is on to innovate whilst still focusing on operating a highly complex demanding organisation. Innovation, although important, takes a significant amongst of time and a change in culture.
One possible way to add innovation quickly, without major capital investment and the cultural change required to deliver real innovation, is to partner with InsurTechs.
There are a large number of InsurTech organisations building new product offerings and new customer experiences in the space already today, such as Lemonade, Slice and Trov. In many cases these companies have start-up DNA and do not have to balance the day to day demands of running major companies with 100% focus on innovation.
Why it makes sense?
InsurTech are raising billions of dollars in funding. The good news is you can access this technology with no capital investment. While there is a high risk for large insurance companies to build and deliver innovation themselves, it does need major investment and a major cultural shift. InsureTechs are good at innovation but do not have distribution channels of an insurance company– a partnership that can add real value to customers makes a lot of sense.
How to engage
Talk technology. Most InsurTechs are driven by technology. You need to have someone on your team that understands how tech companies are built. Think Microservices, APIs, AWS …. if you don’t understand, then you may need to add this resource to your team.
InsurTechs have to move quickly. Taking six weeks to sign a NDA signals that you are not really serious about partnering. In terms of commercials, funded start-ups want to show their backers momentum. They typically do not need major revenue initially but do need to show that this partnership has value in the future.
What are the Pitfalls?
A lot of InsurTechs are hammers looking for a nail. They may have technology but have not worked out what value they add. This is a red flag. In addition, there are a huge number of consultancy or innovation companies that have never launched a start-up before, but who claim they can manage a startup on your behalf. Tread carefully. Managing a large enterprise software project and an early stage InsurTech startup is very different.
You need to trust that the start-up is going to be around in years to come. I’m a big fan of visiting their office and getting a feel for the culture of the company. Looking at their investors or track record of the founders is a reasonable indication. Talking directly to their investors may prove useful.
All in all there is a great opportunity for travel insurance companies and others to build real partnerships with interesting early stage technology companies that are focused on insurance. If you can engage correctly it can be a low-cost high impact route to innovation in this ever-changing insurance landscape.
About Blink: Blink is one of 10 InsurTech startups that have partnered with Munich Re Digital Partners and was the first InsureTech to be accepted into the FCA Sandbox programme. Blink launched their first product www.blinkblink.io in 2017 in the UK market and have partnered with a number of large travel insurance companies to launch products in 2018.