Blog: How insurers and brokers should engage with insurtechs

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Insurers and brokers ask the most ridiculous, irrelevant questions, which starkly highlights how out of touch they are when it comes to IT procurement today, Inzura CEO Richard Jelbert argues as he looks at the current process and some of the questions insurers should be asking insurtechs.

There’s a clear need for more innovation in the insurance market. Across the board whether it be insurer, underwriter or broker, increasingly demanding customer expectations clash with the capabilities of legacy technology, an inability to harness data and a desire to drive down costs. Insurtechs offer a more agile approach, providing the infrastructure level transformation, as well as the customer-centric, data first innovation that insurers and brokers need. Yet time and time again risk averse insurance procurement hampers the conversation at the first hurdle. Out of touch, irrelevant questions such as “do you have six years’ profitability?” instantly rule an insurtech out of the process, driving insurers back to traditional large software houses, and driving down the potential for fast-paced change.

So how should insurers and brokers engage with insurtechs?

Collaboration is key

Insurtechs should be viewed as partners rather than simply technology vendors. Collaboration is key, especially during proof of concept. It shouldn’t be expected that they have the resources of a large vendor; insurers and brokers are not investing in growing resource, they are investing in creative and passionate people. Brokers and insurers should work in partnership with insurtechs and view the relationship as a chance to enhance their business and the insurtech’s for the greater goals of improved efficiency, improved decision-making, improved risk and fraud management, responsive underwriting, efficient claims management and enhanced customer relationships.    

Be realistic about what you’re paying for

There shouldn’t be temptation to drill insurtechs down on price and refusal to pay for upfront customisation. This is an operationally naive approach; it will have a disproportionate effect on their ability to serve and could cost the insurer and broker the very thing they want from the relationship – a true digital strategy and enhanced data and insight about every aspect of the customer journey. The more money the insurtech has upfront, the better the service, and the faster the technology will be delivered.

Don’t hamper innovation by being risk averse

Insurtechs should not be tied down with overly restrictive contracts – brokers and insurers should let them share with their stakeholders and prospects what they are doing with them, this is as valuable as money to them. Collaboration and sharing drives deeper insight and engagement. Likewise, exclusivity shouldn’t be demanded; collective learnings from the diversity of businesses, and the rich data received from the multitude of customers that insurtechs serve is invaluable, and will drive further enhancement and innovation for a business.

The biggest assumption made about insurtechs is that they’re a riskier option than an established software house. However, the software as a service cloud model employed by most insurtechs comes with scalability, security and business continuity out of the box at infrastructure level. 

Finally insurtechs shouldn’t be slapped with unrealistic service-level agreements and key performance indicators. When working with a start-up it would be unreasonable to expect 24/7, 365 support, they don’t have the resources, but investing in them will ensure improvement as the business grows. Likewise, KPIs need to be reasonable. Remember, this is investment in the future and buying experience, knowledge and data, not running a static traditional product. There shouldn’t be an expectation for KPIs to improve though with each iteration of a joint project.

Procure with the future in mind

Throw out the IT procurement rulebook, for the old rules do not apply to insurtech. Applying traditional procurement methods or the same criteria required for old fashioned seat based and on-premise software license agreements will only serve to hamper innovation and creativity. 

The key to engaging with an insurtech is to ask questions that get to the heart of what they can deliver and most importantly shared goals and ambitions. Insurechs and brokers have highly motivated and passionate people sitting in front of them. They need to tap into that and not get bogged down in revenue, profitability and traction and procure with the future in mind.

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