The most common mistakes of an upstart - What new entrants should learn from Fortune 500 companies
For a few years, the insurtech sector was hell-bent on completely disrupting insurance as we know it. The most outspoken change-makers believed established insurance carriers were doing it all wrong - and these new kids had arrived on the block with their tech solutions, set to flip the industry on its head.
But as the initial hype settles down and the sustainable companies with solid solutions prove their value, collaboration is key in ensuring the industry can benefit from the right balance of expertise and innovation.
In the first part of this series we looked at what fresh perspectives decades-old traditional insurance brands should look to glean from these young, innovative, tech-focused companies. Today, we’re looking back the other way, and considering what lessons these upstarts might need to learn from insurance companies in order to succeed in their partnerships and truly revolutionize the industry - together.
Respect the legacy
Startups are innovative to their very core, as every aspect of their business is being formed with a fresh perspective. But while the insurance industry is viewed by many as an old dinosaur, most of it is still very much alive and kicking. New entrants are bursting with brilliant new ideas and tech solutions, but still need to ensure they can be applied within the industry’s rigid regulatory framework.
Traditional insurance companies have stood the test of time, and while the modern age is presenting more challenges and opportunities than ever before, it’s still worth learning from the processes and checks and balances used in insurance companies which have kept them around so long.
While many insurtech founders might argue customers don’t trust insurance companies, the reality is they are literally entrusted with enormous personal funds overseen by strict regulations. Insurtechs can learn from insurance companies’ caution and purposeful decision making, by taking care not to make outlandish claims that can’t be substantiated, and not risk losing the trust of potential partners and, ultimately, customers.
In partnering with insurers, insurtechs need to offer practical solutions which address specific problems and move an incumbent’s business goals forward. Minimizing buzzwords and instead clearly stating what is achievable, gives a lot more credibility to the pitch of a new business opportunity.
If you’re a new industry entrant, how much effort do you currently put into defining a clear vision, and documenting progress milestones and next steps? How clearly do you communicate that to partners?
Internal communication and inclusion
For new companies, a big challenge can be ensuring communication channels remain effective as their teams grow larger, and periodic review of these methods, with feedback from all staff, is important.
While tech companies are far more open and able to adopt new channels, incorporating structure and consistency is key. In such a collaborative environment, usually staffed by self motivated doers, lines are often blurred between responsibilities. Growing companies need to make an ongoing effort to make sure any uncertainty over ownership is addressed and documented effectively – something huge, multinational corporations are expert at.
A commonality between both new entrants and insurers is the excessive use of head-scratching jargon, euphemisms, and acronyms. Insurance companies are infamous for dishing out screeds of confusing language in every customer policy, with the misunderstanding of terms like ‘premiums’, ‘underwriting’ and ‘lapses’ just accepted as a necessary evil.
The lingo used in insurtech spaces can be just as bewildering, and it’s a good idea to be especially mindful of this in growing from a small team of developers to a fleshed out business unit. Collaborating with insurance companies offers insurtechs the opportunity to practice using plain language, and to develop a glossary of common terms for all staff to refer to, both for technical and industry jargon.
Hiring and keeping top talent
Outside the issue of attracting young people to a career in insurance, hiring from within the industry presents different challenges to both insurtechs and traditional insurers. While young, innovative companies often hold more appeal to developers and data scientists, other skilled industry experts such as actuaries and executives may be more difficult to lure away from conventional insurance companies.
In such a complex and highly-regulated industry, new companies can benefit hugely from bringing these industry experts on board, who help navigate the hurdles and potentially fast track agreements with their insider knowledge and network.
While actuaries are particularly risk-averse individuals, they also possess some of the best job security statistics in the market. Actuary Lauren Minches told Montoux she took a ‘calculated risk’ in leaving a large insurance company to join a tech startup, as she was confident she would be able to go back if the opportunity didn’t pan out.
Insurtechs are well placed to present an enticing offer to actuaries of a more casual work environment with more autonomy and future-thinking. But to reel in this invaluable, insightful personnel, they must demonstrate how internal operations are functional and sound, and that strategic direction is clearly communicated.
Professionals who have worked in large insurance companies will be used to having a clearly defined path of career progression, which can be difficult for a small company to compete with. Giving these new recruits the opportunity to grow their managerial skills can be alluring to those who lacked any sense of seniority in their previous position, and may have viewed their leadership opportunities to be a long way up the promotional ladder.
More broadly, a new company should strive to hire individuals with a diverse range of work styles and skills - and value these differences. In a large fortune 500 company, the accumulation of these personality types is inevitable. In a small startup founded in tech expertise it can be too easy to build a team of very similar individuals.
Even when operating with a diversity and inclusion program, diversity of age and personality type can be easily left out and undervalued. If a team works closely and in a very similar manner, the environment can quickly become competitive and even toxic. There is undeniable value in finding new hires who have demonstrated skills in working collaboratively, solving problems in team dynamics, or experienced a variety of work environments over a longer career.
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