We all know the differences between insurtech startups and Fortune 500 companies are huge. We know it so well you could argue the knowledge of this divide is starting to become a problem. In some cases, it’s beginning to manifest in an almost willful misunderstanding between the incumbents struggling to change, and the insurtechs working to change them.
But as collaboration becomes a core principle of the insurtech wave, both sides of the coin need to start taking each other more seriously to make these efforts work. Because, despite the noted increase of funding from incumbents, innovation arms, labs, and inhouse accelerators, there’s still a noticeable lack of results.
Insurers and insurtechs need to work towards a more successful middle ground. So, with that in mind, this article is the first in a two-part series on what the two can learn from each other. Starting with traditional insurers.
To truly innovate, an insurance company needs to do more than just implement new technology - there needs to be a culture shift of innovation, and an openness to the possibility of radical change throughout the business.
For large life insurers, the lack of urgency to innovate is understandable; they can remain profitable without changing a thing. Outside of life insurance, however, the world is changing rapidly, including consumer expectations.
An Insurance Nexus survey from just last year shows a shocking 91 percent of executives feel the industry needs to become more customer-centric, yet 63 percent agree the biggest barrier to change is a company-wide reluctance to update existing processes and infrastructure.
New insurtechs are often born through a relentless focus on improving struggling aspects of the insurance industry, including customer experience. This focus becomes the driving force behind everything these startups do, as they build every aspect of their business, infrastructure, and culture from the ground up. They’re approaching decades-old problems in insurance with fresh eyes, new ideas, and without any long-standing traditions looming over them. For early stage insurtechs, the goal is to survive, and this can often mean taking many risks simultaneously or in quick succession, to find the successful idea.
We know insurance companies are risk-averse by nature, and the idea of encouraging risky trial and error is not in their DNA. But they need to encourage their people to question any operation they find ineffective or inefficient, and listen to suggestions of even radical new ideas for improvement. In giving people the chance to experiment with new ideas, insurers have the opportunity to see the value in both the final outcome of a project as well as the experience, process, and learning reported back.
Communication and internal structure
For insurtechs and incumbents alike, communication and inclusion is key for keeping staff attuned to the company mission.
Insurtech companies are far more likely to have smaller teams working closely together, with business leaders easily accessible, and experts in one field gaining knowledge from others by being actively involved and invested in company-wide progress. This creates a feeling of momentum and purpose, motivating everyone to work towards shared goals beyond the scope of their individual work.
The scope of a Fortune 500 company’s focus is much broader, but by making company goals more widely accessible and understood, teams can prioritize the company’s success and better appreciate the big picture.
For large companies, finding ways to ensure all-hands meetings are a valued use of company time can include celebrating successes and inspiring individuals to think beyond their own priorities. Encouraging different teams to share presentations about some of the projects they are working on can make their contribution feel more valued. They can also be very enlightening to other areas of the business by helping different teams understand the priorities and challenges of colleagues they may not have many regular interactions with.
Hiring and keeping top talent
For insurance companies and insurtechs alike, the demand for skilled industry experts like actuaries, data scientists and business leaders will only grow. While some individuals may hold a personal preference for one business over another, both sectors can learn from each other in trying to attract and retain their best personnel.
For many professionals, they can be lured by the legacy of large insurance companies, as well as the perceived job security and stability accompanying them. But, according to Deloitte’s latest annual survey of Millennial and Gen Z professionals with college degrees working in large organizations, only 28 percent of respondents planned to stay with their employer beyond the next five years, indicating a shift in perspective for the younger generations. The responses for this survey indicated a strong desire among young professionals to work for companies with diverse workforces, including diverse senior management teams. For many of these young, educated individuals, they’re wary of any employer they believe prioritize the bottom line above workers, society, and the environment.
Recognizing and rewarding top talent at a large organization can mean a lot more than remuneration. Trusting personnel to operate with more flexible working hours and conditions wherever possible can give individuals a stronger sense of ownership over their time and, in turn, their work.
Making a commitment to hiring and promoting a diverse range of people across the company, and introducing meaningful corporate volunteer programs that resonate with individuals across the organization, can vastly grow and improve morale amongst socially conscious generations.
In a rapidly changing world, valuing the individuals in a company and figuring out new roles to retain top talent in the event of a strategic shift means team members can be less concerned with conserving their position as a cog in the wheel, and be more open to exploring ways of reinventing the wheel completely.
Next in this series we look at the inverse: what can new insurtech players learn from the companies that wrote the rules of the game to begin with.
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