We recently wrote an article urging insurance companies to prepare a partnership strategy for working with insurtechs - before they even have a potential partner in mind. Being ready to launch into a new partnership when the right opportunity comes along is crucial for getting ahead of competitors, and reaping the maximum benefits from the insurtech’s solution.
Today we are turning to address those insurtechs who are looking to partner with these large insurance companies. While you might have the technology side all figured out, and be accommodating modern consumer expectations like no other, working in an effective partnership with a large insurance company can require a whole new area of expertise.
As we stated in the previous article, a report from PwC found 56 percent of surveyed insurance companies believed they might be at risk of losing up to 20 percent of their revenue to insurtechs, while Accenture found 44 percent of insurance companies globally are planning to work in partnership with insurtech startups over the next two years.
The willingness to partner with insurtechs is certainly there, and to get the most out of a big opportunity it’s essential you put the right framework and success metrics in place, and clearly define your next steps upon completion of a successful pilot and proof of concept.
Be clear on your value proposition
When your technology is planning to enter the market, it’s important to assess your messaging and ensure you are conveying a concise value proposition. You must be very specific on what purpose your technology holds: who are you serving, what is the problem you are solving, how are you solving it? This is where being disciplined about your elevator pitch is important, keep revisiting it, find the hook that actually gets a response.
According to an EY report, 38 percent of surveyed insurtechs say they have tried to form partnerships with between five to 20 insurance companies, demonstrating the significant effort required. By being value-led right from the beginning, you ensure all your communication with various areas of the insurance company comes back to these key value propositions, and increases your chances of being seen as a worthwhile opportunity. Avoid the temptation to be vague, or to say that you can solve too many things. Specificity is key here – What exact value can you provide? Which leads us to the next point:
Understand your partner
Insurance companies’ established processes and administrative systems are highly complex. Departments often operate independently from one another - and if it’s the business department you are making an agreement with, you may need to mitigate resistance from IT if they see your technology as competition. Commenter Dani Katz said on the Daily Fintech, “There is often a desire by IT to keep everything in-house, so even though [they] may be busy or lack experience in an area, they will often juggle their priorities to be able to compete.” Being prepared to sell the benefits of using your solution to that specific department may be crucial. Consider this, rather than replacing them, how might you make their existing jobs easier, and enable them to become more productive or function at a higher level? Ensure the people who will benefit most from the solution fully understand the benefits in store for them, so you have the best chance of them being supportive of a quick implementation.
Gaining the best understanding you can of how insurance companies operate is very important in gaining an insurance company’s trust and navigating a successful partnership. If your existing team is lacking experience or knowledge in this area, it might be hugely beneficial for your business to bring an industry consultant on board to help you through the partnership process. Each large insurance company will differ from the next, so forming an initial relationship with one person in the organization can also help you to gain an understanding of which line of command drives the firm, what their organizational direction is, and get an understanding of how company culture might affect your approach to tailoring your value proposition.
Make it easy to say yes
Insurance companies’ approval processes are necessarily arduous. You are looking to collaborate with very large and very risk-averse partners, operating within strict regulations, so expect for every step to take much longer than you might imagine. In saying that, there are things you can do in preparation to make it as easy as possible to get approvals granted.
While you need to ensure you’re offering a price point that will be taken seriously and conveys your value, being able to offer a pilot for a low cost may be worth the tradeoff of getting the expense approved more quickly by the insurance company.
It’s also in your best interest to make sure your insurtech is fully compliant with industry regulations, and if you can prove this upfront going into your first meeting, you will likely see far less hesitation from the insurance company.
With so many departments operating in an insurance company, you may be at risk of getting swayed by different views and requests. By clearly defining the scope of your partnership and anchoring this to your value, you can avoid losing focus and keep your scope non-negotiable.
You must be clear on how you are going to satisfy the insurer’s return on investment in the partnership, and how you will ensure customer success. EY’s report explains that incumbents may perceive insurtechs as having a tendency to overstate their capability, so being very specific about what your solution offers will help to build confidence throughout the partnership process, and also build your credibility for future deals.
Know what’s next
Finally, as part of your success metrics, you need to include in your agreement upfront with the insurance company, what it will mean for your partnership if you meet the targets, so you can proceed smoothly with the renewal of a contract, and ensure ongoing revenue for your company.
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