Tag Archives: accelerator

3 Steps to Succeed at Open Innovation

2018 was the year that insurance embraced open innovation. From medium-sized insurers to Fortune 50 incumbents, everyone seemed to be launching a challenge, accelerator or incubator — to the point where we now have too much of a good thing. This has led to a certain ennui in the startup and VC ecosystem. Every insurtech startup, the good, the bad and the ugly, seems to have been part of one or more programs. It is hardly surprising that new programs are greeted with a collective shrug. In such a context, how can you create a compelling and differentiated program?

Simply put, a compelling program creates immediate business value for both the program sponsor and the program participant. The keyword is “immediate” — which means the program focus should be on core business processes and customer experience. In other words, ROI should mean return on investment, not reservoir of ideas!

Programs to scout for new business models (like accelerators and incubators) have their place in an innovation portfolio but do not add immediate value — certainly not to the sponsor (and rarely to the participant). In general, it is better to have a narrower focus on digitization and differentiation, before trying to tackle disruption.

See also: Era of Insurance Innovation Is Upon Us  

For the program to be more than PR spin, it should fulfill the following conditions:

  1. The program should tackle well-defined, real business problems. As a rule of thumb, the problem should be costing the incumbent north of $1 million per year. This size of problem ensures that there is scope for a long-term relationship and a significant opportunity for the startup partner. The problem should also be well-defined — the improvement metric should be clear. The Netflix prize, which required a 10% improvement to Netflix’s own recommendation engine, is a good example.
  2. The pilot should be with real data and real customers. The end stage of the program has to be more than a demo day, with abstract promises of next steps. A differentiated program will guarantee a pilot that interfaces with the business and is implemented in a live environment. By definition, this will require certain maturity on the startup partner side, which is a good thing.
  3. The pilot should have a real budget. No more “toy prizes” of $20,000 to $50,000. A pilot should have a budget of at least $100,000 to create meaningingful skin in the game, so that both sides are serious about making the pilot a success.

Finally, we need a new brand for programs that meet these conditions. I suggest “implementation challenges” to make clear that the program is about creating value in the here and now.

See also: With Innovation, Keep It Simple, Stupid  

A well-run implementation challenge can add significant value to both the sponsor and the participant:

For the participant:

  1. A “lighthouse” customer — an actual implementation at a Fortune 500 company makes it easier for the startup to attract both investments and other customers.
  2. Revenue leverage — depending on the type of product, investors attach a multiple of 8X to 10X. Hence, a $100,000 contract can create a $1 million increase in valuation

For the sponsor:

  1. Access to world-class talent and technology
  2. Kickstarting the digital transformation process

I hope to see more implementation challenges in 2019.

Insurtech Ecosystem Emerging in Asia

Building on T.J. Geelen’s blog post about the thriving fintech ecosystems in Asia, I’d like to share with you some insights relating to the emerging insurtech ecosystem in the region. Although insurtech in Asia is in its infancy, since 2015 we’ve seen a surge of interest. By the way, I’m a big believer that Asia has a real potential to power the next wave of global insurance innovation.

Four flavors of insurtech

First, let’s revisit the definition of insurtech to make sure we are all on the same page. Essentially, there will be three major camps of insurtech: one that enhances existing insurance structures, another one that aims to disrupt by providing alternative digital risk transfer mechanisms and the third type coming from existing insurance firms attempting to defend their existing market positions. The first and third types broadly can be broken into the following sub-types:

  • Product sales/distribution (aggregators, online portals, apps)
  • Risk management (IoT, healthtech, blockchain)
  • Fraud detection/prevention (big data, machine learning)
  • Claims management (big data, machine learning, vendor network management solutions)
  • Service management (chatbots)
  • Investment management (portfolio optimization, asset/liability matching)

The second type attempts to drive an end-to-end structural innovation, either removing part of the structure or fully digitizing it.

Why Asia for insurtech

Asia is attractive from both an insurer and an insurtech perspective due to the size of its significantly underinsured population. The region has traditionally seen a large part of the risks self-insured through family and community networks. As the region experiences rapid growth in the affluence of its population, together with an aging population, the risk exposure is becoming even more apparent, and the need for alternative risk transfer mechanisms, including insurance, increases. Insurtech, alongside traditional insurance, can help.

Further, there are near-perfect locations for the launch of a program. Singapore, for one, allows for sandboxed experimentation, regulatory support and advanced tech infrastructure. Limitations of traditional insurance distribution channels and the rapid increase of 4G mobile penetration mean that insurers are also highly interested in exploring innovative partnerships that help them connect with potential customers.

See also: Matching Game for InsurTech, Insurers

Insurtech in Asia

Asia is a very diverse region and has a mix of developed and emerging countries. So far, the major push for insurtech has come from China, India, and Singapore, while Japan, Korea and emerging Vietnam, Cambodia, Taiwan, Philippines, Thailand, Indonesia, Malaysia and Burma have lagged. (While Australia and New Zealand are geographically close and are very well integrated in the Asian region, the markets are much more ”Westernized” and hence are less applicable to this blog post.)

There’s China, and then there’s everyone else when it comes to insurtech. The first full stack (end-to-end) innovator, Zhong An, is valued at a massive $8 billion and raised $931 million. It accounts for more than a third of the global insurtech funding in 2015. It is also worth mentioning TongJuBao (peer-to-peer) insurer and FWD (Asia’s second-richest family’s insurance venture, which is re-positioning itself from traditional insurer to an agile digital insurance competitor).

India, another vibrant insurance market, has seen its insurtech innovation focus mostly on distribution. Not surprisingly, two of the major aggregators come from India: Policy Bazaar and CoverFox have seen healthy level of customer take-up as well as sources of funding. CoverFox has recently expanded its service proposition, now assisting customers with their insurance claims.

Being based in Singapore, I have a particularly detailed view of the insurtech landscape in Southeast Asia. So far, I have gathered the following mapping of Asia insurtech startups as they fit within the insurance value stack. There’s a mix of very-early-stage as well as more mature Series A and listed ventures. The list keeps growing.

Please feel free to comment and reach out if you come across any additional startups that I’ve missed out in the list below, and I’ll update it.

Area:

Distribution

Actual Losses

Operating Insurance Co.

Value:

20%

55% Losses + 5% Fraud

20%

Role:

Aggregators

Leads Generation

Customer Transactions

Improving risks

Fraud detection

Rewarding healthy

Risk assessment

Loss adjustment

Operational/Service Efficiency

Start-ups: Policy Bazaar (Aggregator)

CoverFox (Aggregator)

Health/House-front

Latize (Fraud) JustMove (Health)

Uhoo (Health IoT)

Harti (Health)

WaveCell (Comms platform)

Fixir (Finding repair garage)

MyDoc (Health claims)

Stash.ph (Health claims)

GoBear.sg (Aggregator)

Cxa (Employee benefits)

PolicyPal (Policy mgm.)

UEX (Group policies)

Zhong An (General Insurance) CH

TongJuBao (Peer to Peer Insurance) CH

DirectAsia (Direct General Insurance) SG

FWD (General / Life Insurance) HK

Singapore Life (Upcoming Life Insurance Startup) SG

 

Corporate insurtech

Singapore, with its advanced infrastructure and innovation-supportive financial services regulator (MAS), has secured a leadership position for Asia’s corporate insurance innovation as reflected by the high concentration of insurance innovation centers. Eight of 10 Asian insurance innovation centers are based in Singapore. The innovation centers are powerful corporate change catalysts and typically include elements of awareness building and cultural transformation.

Firm Innovation Center Country Focus Status
Aviva Digital Garage Singapore Digital Transformation Active
Manulife Loft Singapore Digital Transformation Active
MetLife LumenLab Singapore New business models Active
Allianz Digital Labs Singapore Digital Transformation Active
AXA Data Innovation Lab Singapore Big data Active
AIA Edge Singapore HealthTech Active
Munich Re Innovation Lab China General Insurance Launched Q1 2016
Swiss Re

India IoT, AI, Big data Planned July 2016
IAG

Singapore

Rumored 2016
NTUC

Singapore

Rumored 2016

 

In summary, Asia is a region to watch when it comes to insurtech. Whether it be the home-grown insurance innovation from China and India, corporate innovation from Singapore or innovation concepts imported from elsewhere and deployed in Asia, the region is likely to deliver a vibrant insurtech ecosystem during the course of the next two to three years. And when the dust and excitement settles down five years down the road, we’ll have a fundamentally stronger set of competitors.

Wanting to accelerate insurance innovation, we’ve created InsurtechAsia, an action-oriented community of insurance practitioners, entrepreneurs and industry stakeholders across Asia. We are aiming to attract the best minds to tackle the challenges and opportunities in insurance, connect entrepreneurs with the best enablers, validate concepts and help business scale rapidly.

See also: New Insurance Models: The View From Asia  

A dedicated and company-agnostic insurtech accelerator, such as Startupbootcamp InsurTech, which was launched in London in late 2015, would go a long way to spur further insurance innovation here in Asia. We eagerly await the day when Startupbootcamp InsurTech will come to Singapore.

Are you passionate about making a change to the insurance industry? If so, join us at www.insurtechasia.com and follow this great team of like-minded people on Twitter: @insurtechasia.

Matching Game for InsurTech, Insurers

What is it with InsurTech startups and insurance companies?

To any outsider, it’s very clear that InsurTechs and insurers make for very odd bedfellows. InsurTechs are quite ephemeral. They sprout up with the sweet rains of venture capital funding and die as their funding dries up. They are nimble and innovative. They aspire to be the next Google — ready to disrupt the establishment in the best “moon shot” tradition.

Insurers, on the other hand, tend to be corporate immortals, often measuring their tenure in centuries. Their processes appear fixed and hidebound, handed down from ages gone by. Their speed of innovation is positively glacial, and their customer proposition has “rock of Gibraltar” stability. Insurers are the very establishment that InsurTechs are seeking to disrupt.

Opposites attract — or so they say.

The fear of disruption

The insurance industry has seen an ever-growing demand for “creativity,” “disruption” and new digital technology since 2013. AXA was one of the first to declare its intent to become a digital insurer. In April 2014, the company established a lab in Silicon Valley and announced its tie-up with Facebook. At the time, everyone in the industry was waiting in trepidation for the market entry of the tech giants such as Amazon, Google, Facebook, Samsung and Apple. The fear was that those companies would sweep away the traditional insurers in an Uber-like tech tsunami.

Well, the tide came in, but it was no tsunami. Google breathlessly launched into the motor insurance compare market in March 2015. Just a year later, it unceremoniously departed. The industry heaved a collective sigh of relief because there was little or no impact. Yet the tech giants linger and remain the insurance industry’s boogie man.

See also: An Eruption in Disruptive InsurTech?  

Follow the money

The presence of the tech giants has created a created a rush to fund new InsurTech startups. Many of the leading insurance firms have set up VC funds focused on InsurTech. AXA is, again, one of the more notable in this area, providing funding to the tune of €230 million over the last 18 months. VC funding for InsurTech startups has increased 250% year-on-year, from $750 million in 2014 to $2.65 billion in 2015. For insurers, they get financial rewards and get to be at the forefront of any industry disruption if the technology takes off.

But many insurers see the need not only to fund innovation but also to “do” innovation. Hence, we’ve seen a steady stream of insurers around the world establishing innovation labs, collaborative spaces, digital garages and centers for digital disruption. Time will tell if these are fundamental drivers of strategic change or are unmasked as simply “window dressing” for the market.

Widening the net

The InsurTech “boot camp” is another recent phenomenon that has opened up a wider range of innovative startups to the insurance industry. These camps are a cross between an accelerator program, a beauty pageant and a reality TV talent show. For the small price of some equity and the added incentive of some up-front “pocket money,” the InsurTechs get to rub shoulders and gain insights from industry mentors and leading insurers. These boot camps are quite grueling, as they extend over several months. Competition can be fierce, with the best of the best InsurTech teams pitted against each other. The participants get to hone their solution pitches, demos and financial plans for the gathered insurance brotherhood and their fellow InsurTechs. Yet some InsurTech teams are frustrated by the insurers’ lack of urgency and their naïve view of how much effort is really required to make an innovation alliance work.

See also: InsurTech Start-Ups: Friends or Foes? 

A new hope

All of this activity has not been lost on governments wanting to push a “clever economy” strategy, creating sovereign incubators for the development of new or exotic financial services products and business models. The Singapore and U.K. governments are leading exponents of this new way of thinking and have spawned a wave of innovation emulators from Australia to Germany. These innovation-friendly government policies generally encompass a mix of:

  • Seed funding for startups;
  • Provision of “collaborative” spaces;
  • Incentives for the establishment of innovation labs; and
  • Regulations fostering the flexibility/tolerance to try new things in public that may fail.

Breaking new ground, the Monetary Authority of Singapore (MAS) has launched its own innovative boot camp: the Singapore FinTech Festival. It’s a coordinated way to accelerate innovation for the whole financial services industry, drawing on FinTech and InsurTech talent from around the world. Singapore is putting its money where its mouth is, funding a “Hackcelerator” competition as part of the festival. This competition will run 10 weeks, starting in September 2016, and it has more than $500,000 of funding and prizes to be shared — no equity required! All the teams need to do is be in the top-20 at solving at least one of 100 problem statements set by the organizers.

In a similar vein, Singapore insurer NTUC Income has announced its own InsurTech accelerator program. It’s offering funding of S$28,000 apiece for 12 top InsurTech startups. Again, no equity required. The program runs from January to March 2017.

If this trend continues, boot camps will be out of business — at least in their current, equity-gobbling format.

But where are the traditional insurance tech vendors?

In all this activity, where are the insurance legacy tech suppliers (LegTechs)? Many of the traditional consulting firms are doing quite well, tying up with some of the boot camps. But those vendors that were selling mainframe systems, software development services and the like, where are they? The answer for the most part is nowhere — the land of digital transformation. Perhaps it’s indicative of the level of mistrust between insurers and their LegTechs that insurers “go direct” to the innovation source. Perhaps it’s the fear that the innovation will too quickly be commoditized by these vendors and spread to insurers’ competitors. Whatever the case, LegTechs are being cut out of the conversation.

This is a big mistake.

LegTechs are better at partnering. They typically understand the innovation process and have a product mentality, which would really help package what InsurTechs have to offer. There is also an alignment on maximizing profit on technology with a common view of pervasively selling into the market. As a consequence, the LegTechs have a large, well-established, tech-savvy salesforce ready to carry the InsurTechs’ message to the market. This is one of the most decisive reasons why InsurTechs should partner with LegTechs. The final reason is that LegTechs are a goldmine of useful resources. They have an army of developers, lab space, sandpit environments, technology centers of excellence and distinguished engineers/architects with decades of experience — all of which would rapidly bring robust InsurTech products to market.

See also: InsurTech Boom Is Reshaping Market  

For LegTechs, there are also many attractions. Systematic partnering in this way would inject innovation and an entrepreneurial spirit they badly need. InsurTechs would provide an outlet for some of the LegTechs’ brilliant engineers, giving them an opportunity to dabble with the heady challenges of a startup while maintaining their security. This would definitely boost retention and attraction of this scarce talent pool. Finally, the LegTechs could get into new growth areas rather than stagnate on a declining commodity technology business.

The bottom line

Change is the only constant in an industry fiercely trying to catch lightning in a bottle. The lyrics from the Pokémon song are really quite apt for this current stage: “You teach me, and I teach you,” as I doubt we can “catch ‘em all.” We have a vision but have yet to stumble on the magic formula for repeatable innovative disruption. We hope we’ll find it in InsurTech’s perfect match. Or, perhaps, it has already happened but we just don’t know it. In any case, with boot camps, hackcelerators, insurers, VCs, governments and LegTechs all at hand, our visionary InsurTechs will soon deliver further breakthroughs. Let’s hope their beauty and passion rub off on an old industry.

This article originally appeared in InsurTech News.

How to Plant in the Greenfields

If insurance were a map, we would be surveying a whole new world. The fences and boundaries of tradition have fallen. The snow-capped mountains of certainty are melting away. The rivers of market share are changing course, and streams of data are coming directly to our doors. We know there are still products to plant and fields to harvest, but how will our planting change in the months and years to come?

Many insurers will be looking at greenfields for the answer.

Greenfields, start-ups and incubators are different ways of looking at the same essential concept — starting from scratch. Each is a new beginning. Greenfields are new initiatives often aimed at developing new markets. Start-ups are most often new initiatives that will reach existing markets. Incubators are designed to test new products within new or existing markets. For our purposes, we will lump them all together under the title of greenfields, because from an organizational perspective the need for them and preparation for them are similar.

See also: Start-Ups Set Sights on Small Businesses

Cultivating the soil

Think about how insurance has grown, just based on the questions we have asked ourselves over time. Insurers used to ask, “How do we do what we do better?” They were thinking of underwriting, selling and meeting market demand.

As the internet and the digital realm arose, they began asking themselves, “How do we do what we do differently?” They needed to know how to reach the same people with better channel management and improved customer service.

Now, they are asking, “How do we do what we don’t currently do at all?” They want to know how to identify, build and capitalize on new risk needs, new markets and social networks, how to use technology to its fullest, how to become a trusted resource for services outside of insurance and how to reinvent the organization and brand so that it is prepared to be profitable no matter what initiatives lie on the horizon.

It is the preparation that is an important first step. A great idea can’t take root in an organization that won’t support it. How can insurers prepare for greenfield development?

Abandoning silos

Greenfield insurance companies that are starting outside of a traditional insurance organization and those that are starting under the umbrella of traditional insurance companies both value “fresh air” and an environment that is unclouded by tradition.

Starting from scratch allows them to think without constraint, test without constraint and operate without constraint. They do have barriers. Most are operating within a window of opportunity, and all are operating under the assumption that investments need to pay off. But for the most part, greenfields take advantage of the fact that organizational politics, processes, traditional technologies and time-honored ideals are all open to reassessment, replacement or removal.

Organizational silos need to be bridged, if not completely abandoned. The new opportunities where greenfields will work best will be created by cross-functional teams that understand how to integrate new technologies with the best ideas. This is one reason hackathons have recently grown in popularity. They are simply borrowing a common concept from ad agencies, TedX events and jazz musicians…the idea that walls and ideas aren’t compatible. The best fertilizer for ideas is a diverse set of perspectives on how the idea will be constructed and how it will work in practice. Teams need functional area experts, but they also need general leadership with a holistic perspective as well as input from technology partners who grasp what is technologically possible.

Investing in seeds

Seeds are investments, and most investments have phases. The greenfields in insurance are ripe for these investments, and they are bearing fruit. But those that will be most successful will pay close attention to planting methods.

For example, farmers don’t take the newest seeds and plant 1,000 acres. They test them in plots. In insurance, our ideas need to be cultivated quickly, first in small pots, in our incubators and centers of excellence — we can call these our insurance greenhouses. If they appear to be working, we test them in small geographies, then roll them out to larger segments. Seed planting is speed planting. The idea works, or it doesn’t. We scale up quickly or toss the idea out. We invest wisely by investing small, until the investment proves itself and then we invest more.

As we watch seed money flowing into InsurTech, we know that some of these investments won’t pay off. Many venture firms will have invested more in a proof of concept than they should have. Some will attempt a rollout before the concept is mature. The best growth will happen through organizations that know how to phase greenfield investment.

See also: Investment Oversight: Look Beyond Scores!

Greenfields will be capitalizing on technology to save investment funding. This includes reusing technologies and sharing systems. Cloud platforms with a “pay as you go” pricing model are perfect for greenfield development because they answer the demand for agility, innovation and speed (low implementation time, quick speed to market, light or no customization) with lower investment and maintenance costs … allowing the investment to focus on the business, not the infrastructure. Greenfields are creative pursuits to new opportunities. Their back-end solutions will require just as much creativity as their front-end marketing, but they will want solutions that don’t require massive customization.

Greenfields will therefore capitalize on what they don’t need to build from scratch. Modern core platforms will allow them to use pre-built, integrated content and data sources, pre-built best practices and products and pre-built channel options. They will use their creativity to build new business models around pre-built infrastructures, instead of building new systems from the ground up.

The passion for planting

In the coming weeks, we will take a more in-depth look at greenfields, start-ups and incubators. We’ll look at the surprising growth of insurance innovation investment and what it means to existing businesses. We will discuss how deeply the choice of platform can affect insurer preparation, and we’ll also look at the greenfield spectrum that includes new value-chain technologies, new aggregator channels and completely new types of insurance.

Our goal is not to gawk at the high number of entrants into the market, but to glean a whole new perspective on opportunities. You may find that your unique position will allow you to have market-capturing ideas ahead of others. And you may develop a passion for planting your own seeds in the greenfields of opportunity. Is your organization ready for your team’s next great idea?