Tag Archives: IPO

How Unknown Insurtech Achieved IPO

On Dec. 4, 2018, the first insurtech IPO in the West happened. It wasn’t, however, in London, Berlin or New York. Instead, it took place in Frankfurt, Germany. Around the world, congratulations rolled in, wishing the company the best with its freshly raised money. Only 12 months earlier, hardly anyone in the international insurance or insurtech community would have been able to pick Deutsche Familienversicherung (DFV, or German Family Insurance) out of a lineup. It was not known outside the country. We changed that. How?

A concise, well-planned, pre-IPO campaign pushed the company into the heart of the insurance community. To give back to the community, we are happy to share our lessons learned.

Robin Kiera, founder of Digitalscouting: When I was contacted the first time by Lutz, to be honest, I was a little skeptical. A small insurer with quite a conservative name run by a 60-year-old insurance industry veteran was planning to conquer the world?

Lutz Kiesewetter, head of corporate communications and investor relations at DFV: For a long time, I had followed Robin on social media. A first call confirmed that he shared a very similar digital vision of the insurance industry.

Dr. Robin Kiera (left), founder of Digital Scouting, and Lutz Kiesewetter, head of IR and PR at DFV

RK: Waiting for Lutz in the lobby, I saw heavy construction going on on the ground floor. There was free Wi-Fi everywhere, easy access for all. Actual investments were taking place, in contrast to so many other companies that talk a lot about modernization but lack any real action. Lutz was also a little younger than I expected, making it clear that young people had responsibility here, not only after serving 30 years.

The conversation with the founder and CEO, Dr. Stefan Knoll, was also quite memorable. The fact that he was willing to share his crystal-clear analysis of the insurance industry was surprising. That he let me film and publish it was even more so.

I was given the opportunity to look under the hood of the company, learning more about the impressive, homegrown, event-based IT system that allows end-to-end, real-time business processes. While the pure business numbers were way above industry average, I was even more impressed by the open minds and agile approach of the employees. Guided by a smart and dedicated CEO, this motivated team was thriving within their work culture, willing to go all in on new communication approaches to ultimately position the company for the IPO.

See also: Insurtech Needs a Legislative Framework  

Lesson #1: Go against all rules and go all in

LK: The publicity for the first IPO of a European insurtech and fully digital insurer in the Western world could not be done with classic, conservative PR. Thankfully, being a little different is part of our DNA, It was, therefore, clear that attention hacking in social media via influencers would play an important role. This strategy led us to work with Robin and deploy his unusual “attention hacking,” which means using a flood of content on social media, vlogging and conference appearances to support our IPO mission.

RK: For me, it was a go/no-go requirement that we would ignore most classic communication rules and go all in on social media, influencer marketing and content marketing.

Lesson #2: Share your story

RK: In a matter of weeks, we laid out our master plan and began to implement. We shot the first set of videos sharing the story of DFV, and we began to flood the internet with relevant, highly targeted content.

I also made a lot of behind-the-scenes introductions to highly influential people within the international community. This was easy for me, because, first, I have known a lot of decision makers personally for years. Some are good friends. Second, the story of DFV was compelling: a seemingly conservative insurer with a long German name embracing modern technology, ripping apart its old IT system, creating innovative insurance products, investing heavily into team and technology and serving half a million clients already, making significant revenue and profit while a lot of other decision makers still were hesitant to invest in change and while a lot of startups presented vanity key performance indicators (KPIs) but not real sales numbers. The story was almost too good to be true.

All around the world, insurance and insurtech experts were interested in hearing more.

LK: The PR campaign kicked off with a DFV event series on April 26. DFV positioned itself as the only insurtech with a working insurance business model to the public, the insurance industry, journalists and the trade press. The live presentation covered features like the in-house event- and Java-based core system, the AI-based service that can settle a claim in 45 seconds, and the use of Alexa as a sales channel. The fact that DFV, with just 100 employees, not only covers the complete value chain of an insurance company but also works 100% digitally and is profitable, with hundreds of thousands of clients, while acting as a risk carrier for its products, was something that garnered attention.

Lesson #3: Meet and serve the community

RK: Sharing your story massively on social media is good. Meeting the decision makers of different ecosystems is even better. We decided to meet the movers and shakers in person by choosing to attend the most important conferences around the world. So, we went for example to Insuretech Connect in Las Vegas and DIA in Munich. We helped DFV share its fresh story backed by real KPIs on the most renowned stages in front of thousands of insurance professionals. Why? After speaking on stage, interested parties approach you; it’s not the other way around any more. Also, we produced social media content from the events that reached people around the world via the Digitalscouting channels.

In addition to speaking at and breathing in the exciting atmosphere of these events, we met a lot of decision makers from my network. Many people welcomed DFV with open arms, keeping their fingers crossed for the IPO. Each time I saw this happen, it moved me personally, because it reminded me how many amazing people are working in this industry.

LK: For the IPO and initial financial market communication, we implemented broad, multi-channel PR. The intention to go public was exclusively picked up by Wirtschaftswoche, one of the leading magazines in Germany. The story quickly spread throughout the world via Bloomberg and Reuters. Our 360-degree strategy included standard media and communication channels, as well as intensive attention hacking via social media and the visits to insurtech events such as DIA in Munich and ITC in Las Vegas. The first insurtech IPO in Europe received considerable attention within the community and also received from the financial and business media.

See also: Insurtech Ingredients? We Just Want Cake  

The last weeks, days and hours before the IPO were dramatic. The first IPO attempt needed to be called off because the order books were not full. For the second date, results looked a little better. But it was not clear until the morning of the day if the IPO would be successful. So, when the stock exchange employee announced the first stock price of 12.30 EUR, the relief for management was huge. With a ring of a bell, DFV raised 55 million USD.

I, personally, was happy to be present and part of this insurtech success story. A small insurer from Frankfurt seized the moment, using tools and tactics that were against all traditional rules to prepare an IPO, helped across the finish line by a supportive community of international insurance and insurtech professionals.

Now the company focuses on delivering on its promises.

Handling Transition to a Public Company

In any given year, many private companies are evaluating the potential transition from private to public ownership. An initial public offering (IPO) comes with a myriad of financial and operational concerns, ranging from public disclosure requirements to additional regulatory/compliance infrastructure, to confidentiality and trade secret concerns. One potentially under-appreciated area for consideration, for those companies considering an IPO, is directors’ and officers’ liability insurance (D&O). Recent claims trends and the March 2018 U.S. Supreme Court’s decision in Cyan emphasize the need to approach the D&O insurance topic with great diligence, and to obtain maximum protection for a company and its key executives. In our experience at Aon, key D&O topics for careful review include the following:

Beginning at the “all hands” initial kick-off meeting and through the road show, company executives are making decisions and representations that could create liability exposures. The private company D&O policy, which almost certainly excludes public securities claims, should not be so restrictive as to exclude pre-IPO preparatory and “road show” activity. Additionally, pre-IPO private company policies should contain carve-out language for “failure to launch” claims. The transition to a public company will also require clear policy language that determines how pre- and post-IPO allegations are addressed. Detailed negotiations of the “tail coverage” and “prior acts” coverage are critical to providing the appropriate protections for both the respective former private company and new public company boards and executives. IPO candidates should confirm that their current private company D&O program, with regard to terms, structure and limits, provides comprehensive pre-IPO coverage to provide a seamless transition to public company status.

Coverage Terms

Ensuring breadth of policy terms is perhaps the most critical component to a public company D&O insurance program placement. Maximizing coverage in the event of a claim is rooted in contract certainty and broadest and best-in-class terms and conditions. Unfortunately, inexperienced D&O practitioners can lead to debilitating coverage gaps and exclusions. It takes an IPO-experienced and detail-oriented brokerage tactician to obtain critical coverage enhancements. Coverage topics such as straddle claims, definition of loss and E&O exclusions can be the difference between maximizing policy proceeds and an outright claim denial. The D&O program coverage negotiations are multifaceted – the negotiations are not limited to the primary layer of insurance but, rather, involve numerous layers of negotiations with your excess insurers, including importantly your Side A insurers. IPO candidates should partner with detail-focused D&O professionals (which can include both brokers and outside counsel), to obtain maximum coverage.

See also: Why Small Firms Need Cyber Coverage  

Policy Structure

Public company D&O insurance can be markedly different in structure than private company D&O insurance. Two very common examples include the separation of limits (i.e., the D&O is no longer tied to other management liability coverages, such as employment practices and crime) and the addition of dedicated Side A difference in conditions (“DIC”) insurance. Additional structural considerations, such as entity investigative coverage, the inclusion of DIC limits within the “A/B/C” tower and the decision to run-off prior coverage or maintain continuity of a program are all structural items of critical importance to review prior to an IPO. IPO candidates should weigh the pros/cons of each approach and select a program structure that aligns with their unique risk factors and corporate purchasing philosophy.


Limits selection is not a “one-size-fits-all” question and can be influenced by various factors, including: expected offering size/market cap, industry risk factors, historical claims activity, merger/acquisition exposure, bankruptcy risk, a company’s risk retention capacity, limits availability relative to budget and board directives. Aon has several proprietary tools to assist clients in making informed decisions around the appropriate limits to purchase at the time of your offering.


Undoubtedly, many insureds experience sticker shock when contemplating the potential cost of a post-IPO D&O program. This is particularly true in the post-Cyan world as D&O insurers consider separate state court retentions and pricing commensurate with increased ’33 Act state court exposures. This environment has led to 2018 D&O pricing (for IPOs) that, in some cases, is more than twice comparable deals in 2018. IPO candidates should prepare senior management and the board to anticipate a meaningful change as compared with the private company program with regard to D&O premium. Candidates should also work closely with their broker to align strategies to maximize the return on this premium. These strategies can include meetings with key national decision-makers at leading D&O insurers, risk/retention analyses regarding potential retention levels and competition via access to national and international D&O insurers. Partnering with a broker that has a proven ability to “make a market” for competitive D&O pricing is crucial to maximizing the marketing opportunity and obtaining competitive pricing results.


While this topic is germane to both public and private companies, the IPO process can be a catalyst to review broad D&O topics, including the need for locally admitted policies. In many countries, non-admitted insurance is problematic and would not be permitted to respond in the event of a claim in such a country. Particularly for D&O insurance, which is intended to help protect individuals’ personal assets, the certainty of available coverage within problematic countries is critical. All companies, particularly IPO candidates, should consider their international exposures and implement locally admitted policies as needed.

See also: The Fallacy About International Claims  

An IPO is an exciting but challenging time, for corporate issuers and their leaders. Partnership with subject matter leaders across several disciplines, such as accounting, finance, legal and insurance, can help a company execute a successful transition to public equity.

All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy. If you have questions about your specific coverage, or are interested in obtaining coverage, please contact your broker.

The Incredible Impact From Superbosses

Please join me for “Path to Transformation,” an event I am putting on May 10 and 11 at the Plug and Play accelerator in Silicon Valley in conjunction with Insurance Thought Leadership. The event will not only explore technological breakthroughs but will explain how companies can test and absorb the technologies, in ways that then lead to startling (and highly profitable) innovation. My son and I have been teaching these events around the world, and I hope to see you in May. You can sign up here.

“I don’t care if you have to take drugs, you have to build it in six months,” said my boss, Khurshed Birdie, when I told him that he was on drugs if he thought my team could create a software development tool set in less than three years. This was in 1986 at Credit Suisse First Boston, one of New York City’s top investment banks. We were rebuilding the company’s trade processing systems to run on a client–server model of computing. This technology is common now, but then it was as futuristic as “Star Wars.”

My team worked day and night to build a technology that became the foundation of the company’s information systems. It gave Credit Suisse First Boston a competitive edge and led IBM to invest $20 million in a spinoff company that was formed to market the tools we had developed.

I was a lowly computer programmer, an analyst when Birdie hired me, a computer geek who didn’t own any three-piece suits, white two-ply cotton shirts or wing-tipped Oxford shoes — the uniform of investment bankers. Yet I was hired on the spot. I had some far-out ideas about how computer systems could be built but didn’t believe for a second that I could implement them. My boss did: He believed in me more than I did, and he bet a $100 million project on my vision.

He allowed me to expand my team from four to 54 people and shielded me from criticism by other teams who had to use my tools to build their systems — and who thought I was crazy. There were a lot of problems along the way, and Birdie allowed me to learn from my mistakes. And then he promoted me to vice president of information technology when I achieved success.

Birdie was what Sydney Finkelstein, a Dartmouth business professor, in his new book, Superbosses: How Exceptional Leaders Manage the Flow of Talent, calls a “superboss.”

As Finkelstein explains, superbosses take chances on unconventional talent. Oracle’s founder, Larry Ellison, hired candidates who had accomplished something genuinely difficult, rather than those with formal qualifications, because he believed they would rise to the technical challenges. Designer Ralph Lauren offered jobs to strangers whom he met while dining in New York City restaurants. Superbosses take raw talent and build self-confidence. They hire for intelligence, creativity and flexibility — and are not afraid of people who may be smarter than they are.

Under Finkelstein’s definition of superbosses, Birdie would be categorized as a “glorious bastard”: someone who cares only about winning. Deep down, he had a good heart —  but was ruthless in setting expectations and driving people to work extremely hard. I’ll never forget him telling me that “Christmas was an optional holiday.” These bosses realize that, to get the very best results, they need to drive people to perform beyond what seems reasonable and achievable.

Even though I achieved a lot, I hated working for Birdie, because I had to neglect my family for months on end. This isn’t something I would ever do to my employees. My next boss, Gene Bedell, was very different. He left his job as managing director of information technology to found Seer Technologies, the start-up that IBM had funded. Bedell convinced me to leave my high-paying investment-banking job to join him in a No. 2 role, as chief technology officer, at the low-paying, high-risk, start-up.

Bedell was what Finkelstein calls a “nurturer”: someone who coaches, inspires and mentors. These superbosses take pride in bringing others along and care deeply about the success of their protégés; they help people accomplish more than they’d ever thought they could.

Bedell managed by a method he called “outstanding success possibilities.” He challenged his executives to set ultra-ambitious goals and then find unconventional ways to achieve them. Instead of managing to what was achievable and possible, we shot for the impossible. And then did whatever it took to get there — without worrying about failure or looking back. It is amazing what you can achieve when you have a single-minded focus. We took Seer Technologies from zero to $120 million in annual revenue and an IPO in just five years — faster than any other software company of that era, including Microsoft and Oracle.

Superbosses create master–apprentice relationships. They customize their coaching to what each protégé needs and are constant fonts of practical wisdom. Bedell taught me how to sell. A year after the company was formed, he sent me to Tokyo to sell IBM-Japan on an $8.6 million deal to fund the creation of a Japanese version of our product. I didn’t think that a techie like me could do these things; he taught me that selling was an art that could be learned and perfected. I helped our salespeople close more than $200 million in software deals. And that is another skill that superbosses have, building what Finkelstein calls the “cohort effect”: teamwork and competition combined. Lorne Michaels, for example, who created “Saturday Night Live,” judged writers and performers by how much of their material actually went to air — but they had to do it with the support of their coworkers, the people they were competing with.

A common trait of superbosses is the ability to delegate work and build jobs on the strengths of their subordinates. They trust subordinates to do their jobs and are as supportive as can be. They remain intimately involved in the details of the businesses and build true friendships. Bedell often invited my family to his vacation home near the Outer Banks of North Carolina. He took me to Skip Barber Racing School to learn how to race a Formula Ford and built a gym in his basement so that his executive team could lift weights together.

You will find the alumni of our project at Credit Suisse First Boston and Seer Technologies in senior leadership roles now, at companies such as IBM, PayPal, American Express and every one of the top investment banks. Many started their own companies, as I later did. There are literally hundreds of people who built successful careers because of my two superbosses. When I became an academic later in life, I was fortunate to have two superboss deans at Duke’s Pratt School of Engineering, Kristina Johnson and Tom Katsouleas, who nurtured me. Superbosses aren’t just in corporations — they can be found everywhere.

Yes, I know that I got lucky in having good bosses; most are jerks who demotivate employees, slow their growth, backstab and take credit for others’ work. You are usually stuck with whomever you get. But there is nothing that stops you from being a superboss. As you begin to achieve success, start helping others and nurturing your colleagues and subordinates. Show the leadership qualities that you’d like your own boss to have. You will gain as much as the people you help — and build a better company.

This article first appeared at the Washington Post.

New Leaders in Race for the Killer App

Last week, we looked at how insurers have missed opportunities, multiple times, to become real innovators and follow through on developing the new killer apps. We took as our inspiration, the book, The New Killer Apps: How Large Companies Can Out-Innovate Start-ups, by Chunka Mui and Paul B. Carroll.

This week, we’re looking forward. Is the insurance industry thinking big enough? Is it starting small? Is it learning fast by experimenting, testing and learning from failures?

If the industry isn’t currently innovating, new competitors entering the market are! There are dozens of examples. Consider Climate Corp. and its re-imagination of crop insurance using mobile, cloud and emergent knowledge. There is Google with its aggregator site, Google Compare, allowing drivers to search for the best car insurance deal, creating an interesting and formidable channel. Then there is Peers, a nonprofit developing products for those participating in the sharing economy. These aren’t just new ways to sell. In many cases, they are groundbreaking models of protection to respond to new models of life.

The rapid experimentation and expansion of social media or peer-to-peer-based insurance companies, introduced by Friendsurance in Germany, now includes new companies like InsPeer in France and Guevara in the UK. Guevara pools customers’ premiums online to save money, and any money left in the pool at the end of the year stays with the group and lowers everyone’s price the next year. Will automotive companies be next with the emergence of connected and autonomous cars? Where are the 21st century affinity models going to lead us?

So how do established insurers out-innovate, let alone compete? How do they become this generation’s emerging insurance leaders? They must look beyond long-held traditional views and become accustomed to major business shifts. Instead of transforming the business using age-old assumptions and traditional business models, insurers must look to reinvent the business model, not unlike how Uber reinvented the taxi model or how the new entrants are reinventing insurance.

Starting at the Core: What Is Insurance?

Todays’ insurers may be tempted to look at surface issues, just like they did in 1998. How do we sell differently? How do we empower our agents? How do we touch consumers? But to understand the real reinvention of insurance, consider how confusing the concept of insurance has become to the consumer.

The insurance industry sells a product that may be legally required, such as auto insurance. The product may not really be deemed to be a necessity, such as life insurance. To the consumer, premiums seem to simply evaporate down a hole, instead of accruing like mutual funds. And many consumers would suggest insurance isn’t even a “product” at all! If an insurer has to spend too much time educating and selling AND it lags behind in digital technology and excellent customer experience, how long do you think it will last when a new competitor comes along and offers a new model of engagement that is simple and easy to understand (and uses the latest technology)?

Insurers need to erase the white board and begin with a redefinition of insurance. How do we protect people in all of the new ways that they live while using digital technology to actually make the experience of buying, owning and using the product we sell more appealing?

There are start-ups and venture capital looking to “uberize” insurance to be that new competitor and disrupt insurance. But traditional insurers still have an edge. Start-ups and “unicorns” (those challenging industry disrupters with billion-dollar pre-IPO values) don’t have the knowledge of pricing, profitability and regulatory requirements or a base of customers. This is where insurance as an established industry can compete and out-innovate.

To do so, we must embrace the digital revolution. We must turn long-held business assumptions upside down. We must reinvent the business model. We should embrace trends and experiment. And we must effectively answer the consumer’s question, “What is insurance, and why is it important to me?”

Instead of implementing modern core insurance systems on-premise and converting your existing business, look to cloud options where you can experiment and build innovative products, new channels and reach new market segments fast and less expensively. Look to your partners to provide an ecosystem of options and capabilities that will help you meet existing customer needs and reach new customers. Look to your peers to see if you can partner or collaborate, leveraging the assets of both organizations in new ways. By doing so, you can find innovative ways to create a business model outside the traditional business, seek new market segments and new regions through insurance as a service model and reach more customers with alternative channels.

Insurance business models, assumptions and practices of the past decades and centuries are less durable in today’s game-changing marketplace. Competitive dominance is no longer achieved by operational efficiency, lower prices, massive advertising, large internal systems or channel loyalty. It is achieved by anticipating trends and pivoting quickly to create and capture the economic and competitive opportunity. To win on the final lap (the one that counts), insurers need to make moves today that will position them as emerging leaders.

In this race, there is no one path that moves you across the finish line. There is no singular destination. There is only a world of possibilities.

So think big! Start small. Act fast.

Unicorns beware. We’re coming for you in this final lap!

What Is the Killer App for Insurance?

Remember the must-read book Unleashing the Killer App: Digital Strategies for Market Dominance, by Larry Downes and Chunka Mui? I was lucky to get a signed copy at a Diamond Technology Partners event and hear them speak about the killer app. It was in 1998, the start of the e-business revolution, with the emergence of the Internet as a platform for a new business model. Every company was holding executive management strategy sessions discussing the book and brainstorming. In the insurance industry, many were putting up their first websites and beginning to think about e-business opportunities that could become their killer apps.

Many insurance companies failed in this effort. Their vision wasn’t big enough. Their desire to upend existing models wasn’t strong enough. Rather, they thought incrementally and cautiously. This resulted in strange hybrid solutions, such as websites with no integration to back-end systems. Requests were printed off and manually put into the systems. Many companies wasted time on vaporware — ideas that never got off the ground because of organizational angst or a lack of leadership.

The late 1990s were an exciting and painful time as we recalibrated our thinking toward an entirely new era of business. In spite of our efforts, we fell a lap or more behind in our race toward innovation.

But some companies succeeded. Think about Esurance and Homesite, startups that understood the opportunities and launched their businesses around this time. These companies exploited the dramatic changes introduced by the Internet and challenged one of the long-held business assumptions, that agents were required to sell and service insurance with direct-to-consumer models. As a result, they emerged as formidable, innovative companies.

Do established insurers have another chance to stay in the race?

Recently, I read the follow-up to the first book, this one titled, The New Killer Apps: How Large Companies Can Out-Innovate Start-ups, and another titled, Billion Dollar Lessons, both by Chunka Mui and Paul B. Carroll. Interestingly, the follow-up takes the view that decades- or century-long established companies can out-innovate today’s start-ups, many of whom are considered unicorns (pre-IPO tech start-ups with at least a $1 billion market value). These unicorns and other start-ups have emerged in the last few years with not only massive valuations but with real business models, real revenue and real customers — unlike in the first Internet boom. Think of Uber, Airbnb, Snapchat, SpaceX and Pinterest.

Even more compelling for insurance is the rapidly growing intensity of change being influenced by these companies. Consider Uber and the impact on auto insurance, Airbnb and homeowners insurance or Snapchat’s new payment options.

The authors are quick to point out what we should all recognize, that being big AND agile is essential in today’s rapidly changing world of converging technology innovations, including mobile, social media, sensors, cameras, cloud and emergent knowledge. They estimate that more than $36 trillion of stock-market value is up for “re-imagination” in the near future — meaning that either existing companies reimagine their business and claim the markets of the future or the alternative may happen and they may be reimagined out of existence!

When the authors compared successes and failures of established companies, they found that successful companies thought big, started small and learned fast. Failures commonly missed on one or all of these points. Is the insurance industry thinking big enough yet? Are companies innovating by starting small? And are they learning fast by experimenting, testing and learning from failures?

The only way insurers stand to catch up in a race where the trophy is not just success but also survival, is to out-innovate the competition, including the new competition from outside the industry looking to disrupt insurance. It’s possible, but it is going to require both wise technology investment and a whole new insurance business model mindset.