August 12, 2020
5 Hurdles to Insurtech Success
by Bob Frady
Here are five things that stand between insurtechs and success -- but, please note, your mileage may differ.
We like to joke that we started an insurtech because we wanted to make money as slowly as possible. It’s an exceedingly painful joke.
We were asked recently to discuss issues that insurtech companies face. We came up with five things that stand between insurtechs and success. Here they are, but, please note, your mileage may differ.
1) The math – All insurtechs have one super-challenging math equation to overcome –
Risk = Bad
Insurtech = Risk
Therefore, Insurtech = Bad
Insurtechs are busy trying to make themselves more inventive. Which only makes them riskier. As this equation shows us, that’s a bad thing. Much more attention needs to be paid to how insurtechs can de-risk themselves and make it easier for insurance professionals to rely on them.
2) Insurtechs are talking revolution to an industry that makes evolution look fast. Most insurtechs believe that they are going to revolutionize the insurance industry. Unfortunately for the revolutionizing insurtech, insurance has been around for 300 years without them and can probably be around for another 300 years without them. Insurance is an incremental improvement industry. It’s evolution over revolution.
3) Insurtechs don’t understand who they’re selling to. If you’ve never been to an insurtech pitch-fest, it’s filled with T-shirt and torn jeans entrepreneurs pitching to suit-and-tie-wearing insurance executives. We’re not saying that the insurtechs should be wearing suits, but a nice pair of pants and a coat wouldn’t hurt you. And we’re not even broaching the subject of industry knowledge here.
See also: Insurtechs Are Specializing
4) Insurance companies are slow. When an insurance company talks about doing something this year, the earth will revolve three times around the sun before that something happens. They’re called insurance-years. They’re like dog-years but in reverse. Insurtechs have to plan for their first real sale being three years away, not three months. Blaming carriers for their slow sales cycles means you haven’t prepared properly.
5) Even the best mousetrap will not cause insurers to beat a path to your door. Insurance companies and the law of large numbers work together very well to make money. It’s very hard to break through the status quo, even with the latest and greatest whatever-it-is. Insurance employees aren’t normally rewarded for taking chances on something unproven. This lack of urgency to do something different can kill your insurtech.
Success IS possible in insurtech! Between new data, new processes and interesting technologies, insurtechs ARE winning. By understanding some of the hurdles you’ll face before achieving success, you might be able to shave some time off one of the most daunting sales challenges ever invented – selling to the insurance industry. Good luck, and we’ll see you in the marketplace!
This article was originally published on HazardHub.