Investment in insurtech is at an all time high - and it’s showing no sign of slowing down. Even areas of the market that have notoriously lagged behind on innovation and change, like life insurance, are beginning to see increased interest from tech investors. 

Despite this, there’s still some degree of reluctance from incumbents when it comes to partnering with insurtechs. Capgemini and Efma’s 2019 World Insurtech Report reports that while 90 percent of insurtechs and 68 percent of insurers feel that partnering is critically important, fewer than 40 percent of incumbent insurers reporting a desire to build tech infrastructure with insurtech firms.

This reluctance might stem from a number of things, including a hesitation to shake up systems and processes that have historically worked or fear of making a poor investment. It could simply be that many insurers don’t know how to approach a partnership with such a different kind of company. 

However, when a partnership is handled correctly, there are significant benefits, including the ability to incumbent insurers to leverage insurtech technologies to address key pain points, optimize their processes, improve decision making, and drive growth. Most importantly, the right partnership brings benefits that directly impact the consumer for the better.

In order to achieve this kind of partnership, both insurers and insurtechs have to be open and prepared to approach the partnership process in an effective way.

Being strategic when approaching a new partnership

Just like you shouldn’t innovate for the sake of it, you shouldn’t partner for the sake of it either. The wrong partnership can lead to frustration, wasted time and money, and complications for all parties involved.

In order to avoid this, both sides of the table should have a clear idea of how to approach a new partnership and have a plan for how they will track success and evaluate whether or not it’s working. It all comes down to figuring out how to get the most from this partnership to benefit the insurtech, the insurer, and, most importantly, customers.

How to prepare as an insurtech

For insurtechs, it’s important to be able to answer certain key questions before approaching a potential partner:

  • What problem are we solving that we know is a priority for this partner?
  • What makes our solution uniquely qualified to address this issue for our partner?
  • How will the process of implementation work?
  • What are the costs and usability factors associated with our solution?
  • What key returns can our partner expect from this partnership?
  • How will we track progress and what are our key evaluators for success?

Knowing these answers before approaching a potential partner means that, when they inevitably ask these questions, the insurtech is prepared with the answers with regards to that particular partner. Forcing yourself to answer these questions ahead of time will also help you determine whether or not this is the right partnership for you to enter. It’s better to say ‘no’ to a potential customer than say ‘yes’ to the wrong fit and be unable to deliver optimal returns.

It’s also important to make it as easy as possible for an insurer to say ‘yes’ to partnering with you. This means performing due diligence when it comes to regulations, compliance, the systems the insurer uses, etc. Be clear about your value proposition and demonstrate that your team is experienced, professional, collaborative, and readily available to assist in an ongoing basis.

How to prepare as an insurer

Just like the insurtech, it’s important for insurers to be able to answer their own list of questions before considering an insurtech partnership:

  • What are the key things and issues that matter to me and my customers?
  • How will I define ‘success’ as it relates to an insurtech partnership?
  • Who from my company needs to be involved in the process and how do we make sure they’re clear on their specific role?
  • What resources do I need to have ready in order to make an implementation successful?
  • What key things does an insurtech need to demonstrate and prove for us to be comfortable with them?
  • How will we track progress and what are our key evaluators for success?

Answer these questions for yourself will mean you’ll be able to evaluate the potential partnership in the context of what you need, and be prepared to ensure its success to the best of your abilities. When meeting with the insurtech, be open and communicative about any concerns your have and evaluate the team to see how they respond to both you as well as to each other throughout the course of the conversation. This is also important when evaluating whether or not the insurtech team is a good cultural fit for your own.

The other thing to remember as an insurer is to set any pilot up to scale after its completed. While a successful pilot is certainly something to celebrate, it’s important that after its objectives are met, there is a process and plan in place to transition from pilot to full implementation.

Benefits to consumers

Insurtech partnerships provide an excellent opportunity for insurers to become more customer centric, which is becoming increasingly important in the insurance industry. In addition to those questions insurers and insurtechs must ask themselves before partnering, they must also ask themselves how this partnership will ultimately benefit consumers in a tangible and effective way.

A quote on a recent partnership between New Zealand-based insurtech Montoux and UK-based Scottish Widows illustrates this well:

“The committed blend of actuarial and data science in Montoux’s price optimization offering is compelling. It’s practical innovation that delivers genuine ROI, allowing us to be more responsive to the market, and ultimately provide better products and services for consumers, for the right price at the right time.” 

- Scottish Widows’ Product Owner of Innovation & Analytics, David McLeay

It all comes back to the customer. A well thought out and planned partnership can bring true innovation and meaningful results to an insurer’s company, products, and customers.

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