A common panel discussion theme at insurance events recently has been how to structure a great partnership between InsurTechs and Insurers. Securing the right relationship can strengthen the position of both technology companies and insurance organisations, and increase the chances of a project succeeding. Here are a few things that we have learned in our first two years about establishing partnerships with insurers.
Digital Fineprint’s CEO, Erik Abrahamsson and Head of Futures at Hiscox, Matthew Churchill,at the Panel Discussion on ‘Strategic Partnerships with Insurers’.
Measure what matters
You often hear about insurers trying out a new piece of technology with high level goals in mind, such as “getting more data” or “improving underwriting”. However, if the intended benefits are not quantified upfront, it’s impossible to say whether the partnership is being successful or if scarce budgets should be invested elsewhere. In every partnership we have embarked on, we have insisted that we have clear key performance indicators (KPIs) upfront, such as reducing customer acquisition costs or time spent selling, or improving cross and upselling. All of this creates an objective measurement from which both parties can assess the ongoing success of the partnership.
Test the real technology
In an attempt to speed up partnerships with insurtechs, some insurers have tried to shorten the procurement time by offering “sandboxes” or “proof-of-concepts”. While the underlying sentiment is sound, unfortunately it often means that startups end up having to simplify their technologies, and the insurer ends up testing a watered-down version of the technology. A better way is to offer a fixed-term trial of the full technology stack, that the insurer can decide to continue using or cancel after a 3-6 month period. This brings the benefits of simplicity from the POC framework, but also allows the insurer to get the full benefit from the innovations brought forward. One difficulty this adds is having to go through (lengthy!) know-your-supplier questionnaires and procurement procedures. However, this can be overcome if you follow the last tip…!
Remember that you are ultimately partnering with people
It’s easy to forget, but all partnerships hinge on the mutual understanding between two or more people that their respective organisations can gain value from partnering with each other. If no one believes in partnership from the beginning, how are you ever going to get it to work? I recently joined Matt Churchill from Hiscox on a panel discussion at Insurance 3.0. Matt talked about how important it was to know and believe in the partner you are working with, and pick one that listened to your challenges and acted on them. “I took coffees with over a hundred companies, and DFP are one of only two that we are working with”. Being able to find and work with innovation leaders like Matt is crucially important to get partnerships off the ground. Taking this viewpoint makes it easier to work through legal, compliance, pricing and other issues that are inevitably going to come up.
We hope these three tips works well, whether you are a technology company or a large insurer looking to innovate. If you have thoughts or comments, please send me an email at firstname.lastname@example.org, it would be great to get in touch with you!
Written by Erik Abrahamsson