August 23, 2016
Startups: How to Find the Right Partner
by Denise Garth
Startups need to find a partner that has an agile, innovative solution that can rapidly get ideas to market.
InsurTech is rapidly growing and evolving, with a wide array of new startups: from technology companies serving the industry, to new distribution and insurance companies meeting new customer and risk needs.
To quote a recent Majesco white paper, “Greenfields, Startups and Incubators … Innovation in Insurance,” “The number of insurance-related startups varies widely across different sources: Venture Scanner tracks 535 companies involved in the ecosystem (which includes investment companies, reinsurers and others), Celent puts the range at 400-1,500 depending on the source, and CB Insights reported in March 2016 that they were tracking over 135 startups in Insurtech across 13 categories.”
These organizations are, as a group, innovative, creative, surprising and competitive. Many insurers are either funding startups, launching their own startups or discussing possible collaborations with startups. Some startups have a great idea but are a few technological steps away from being able to carry it out and have an agile, innovative back end system.
Solution Shopping for Insurance Startups
In a way, the whole market for startups could be compared to shopping for shoes. There are several ways you can buy shoes. You can order them online. You can get fitted at a retail store. With a little practice and some knowledge, you can even make your own shoes. You may only need a simple sandal. You may need something as complex as a hiking boot.
The unifying element in shoe shopping is that most people buy their shoes because they need them, want to wear them right away and don’t want to have to go through the expense and time to make their own. They seek out a trusted brand, and they purchase through a trusted source.
For insurance startups, it is important to have a partner that has an agile, innovative solution that can rapidly get your ideas to market without using a large portion of your seed or launch capital. If the partner has a ready-to-use cloud solution that can be deployed quickly in any situation (from the simple sandal to the sophisticated boot), then the solution will fit now, during launch and in the future, during growth.
Speed to Value for a Rapid Launch
Startups aren’t just launching systems; they are launching a business inclusive of products, services and more. In today’s new InsurTech world, startup costs often roll into product development, branding, distribution channels, user experience, filings and talent acquisition. But startups can’t afford to skimp on a having a front office and back office insurance solution with the content, capabilities, flexibility and scale needed today and, potentially, in the future.
See also: How to Plant in the Greenfields
So what options should be considered? At the top of the list, startups should consider a partner with a robust cloud insurance platform as a launch pad for their innovative business plan that provides a variable cost model with pay-as-you-go that can deliver speed to value. Not only are traditional technology expenses reduced or eliminated but, more importantly, a cloud insurance platform provides startups:
- The ability to leverage best practices to establish business operations;
- Ready-to-use insurance content to meet basic regulatory needs;
- Support distribution channel flexibility and expansion via a flexible front-end digital platform;
- Operational efficiency and economies of scale;
- Lower total cost of ownership; and
- The ability for capital optimization of business growth.
Most importantly, startups should seek an out-of-the-box, repeatable, scalable cloud platform that supports launch through growth with a partner that assumes single accountability.
Selecting a Trusted Partner
Startups need a solid partner that understands technology and insurance from a high level — down to the details of products, rules and code. They need a partner with experience to help startups from initiation and launch through growth. They should seek a partner with a focus on innovation through integration of new technology capabilities provided by them or their trusted partners.
In today’s world, some system traits become critical attributes. “Ready-to-launch,” “pre-built,” “easily adapted to change” and “plug-and-play” are requirements. For startups, this is crucial, especially to product development launch and growth. From product design to quote, service and claims, an insurance platform must be able to address any or all parts of the insurance value chain. A trusted partner will be knowledgeable about common startup questions such as: “How do we deal with service?”; “How do we approach claims?”; “How do we integrate alternative distribution channels?”; and “How do we ensure effective customer engagement for our products and services?”
When growth happens, startups also know how to scale up to meet demand, add capability where needed and continually keep an eye on the rapidly evolving technologies that will make a competitive difference.
Involving Your Trusted Partner Early in the Process
Insurance startups need early access to industry expertise and experience. Traditionally, established insurance technology partners have a methodical (and sometimes slow) process of learning about a company’s technology history. There is often a great deal of time devoted to coming up to speed on how we do business. Call it a learning curve or relationship building — the partner works at fitting its teams properly into the customer process.
A startup insurer has a unique opportunity to capitalize on involving a trusted partner early, collaborating with the startup to create something new and unique. An experienced partner can bring expertise, best practices, ideas and more to the table. This will give the new startup additional product advantages and superior operational differentiation. This is especially true regarding process automation. Rules-based processes and deep insurance capabilities can be eye-opening to startups that may have never considered the full realm of possibility. An experienced partner thinks 10 steps ahead. The partner knows why certain roads of development are dead-ends and others are preparatory measures to ensure a robust, exciting future. These are the nuggets of knowledge that will give the startup real agility and value as they grow.
Finding success in solution shopping, then, is more than finding an out-of-the-box solution. It is more a matter of finding a trusted partner with experience, expertise and a flexible cloud-based platform that can provide a rapid launch with speed to value from initiation and through launch and growth.