InsurTech is rapidly growing and evolving with a wide array of new startups; from technology companies serving the industry, to new distribution and insurance companies meeting new customer and risk needs.
To quote from a recent Majesco white paper on Greenfields, Startups and Incubators,
“The number of insurance-related startups varies widely across different sources: Venture Scanner tracks 535 companies involved in the ecosystem (which includes investment companies, reinsurers and others),[i] Celent puts the range at 400-1,500 depending on the source, and CB Insights reported in March 2016 that they were tracking over 135 startups in Insurtech across 13 categories.[ii]”
These organizations are, as a group, innovative, creative, surprising and competitive. Many insurers are either funding startups, launching their own startups, or in discussions with startups regarding potential collaborations. Some of them have a great idea, but they are just a few technology steps away from being able to carry it out in having an agile, innovative back end system.
Solution Shopping for Insurance Startups
In a way, the whole insurance systems market for startups could kind of be compared to shopping for shoes. There are several ways you can buy shoes. You can order them online. You can get fitted at a retail store. With a little practice and some knowledge, you can even make your own shoes. You may only need a simple sandal. You may need something as complex as a hiking boot.
But, the unifying element in shoe shopping is that most people buy their shoes because they need them and they want to wear them right away and they don’t want to have to go through the expense and time to make their own. They seek out a trusted brand and purchase through a trusted source. For insurance startups, it is important to have a partner who has an agile, innovative solution that can rapidly get your ideas to market without using a large portion of your seed or launch capital. If the partner has a ready to use cloud solution that can be deployed quickly in any situation (from the simple sandal to the sophisticated boot), then their solution will fit now, during launch, and in the future, during growth.
Speed to Value for a Rapid Launch
Startups aren’t just launching systems; they are launching a new business inclusive of products, services and more. In today’s new InsurTech world, often the lion’s share of startup costs roll into product development, branding, distribution channels, user experience, filings and talent acquisition. But startups can’t afford to skimp on a having a front office and back office insurance solution with the content, capabilities, flexibility and scale needed today and potentially in the future.
So what options should be considered? At the top of the list, startups should consider a partner with a robust cloud insurance platform as a launch pad for their innovative business plan, yet one that provides a variable cost model with pay as you go that can deliver speed to value. Not only are traditional technology expenses reduced or eliminated, but more importantly a cloud insurance platform provides startups:
- Ability to leverage best practices to establish business operations
- Ready to use insurance content to meet basic regulatory needs
- Support distribution channel flexibility and expansion via a flexible front-end digital platform
- Operational efficiency and economies of scale
- Lower total cost of ownership
- Enable capital optimization for business growth
Most importantly, startups should seek an out-of-the-box repeatable, scalable cloud platform that supports launch through growth with a partner that assumes single accountability.
Selecting the Trusted Partner
Startups need a solid partner that understands technology and insurance from a high level down to the details of products, rules, and code. They need a partner with experience helping startups from initiation and launch through growth. They should seek a partner with a focus on innovation through integration of new technology capabilities provided by them or their trusted partners.
In today’s world, some system traits become critical attributes. “Ready to launch”, ”pre-built”, “easily adapted to change”, and “plug and play” are requirements. For startups, this is crucial, especially to product development launch and growth. From product design to quote, service, and claims — an insurance platform must be able to address any or all parts of the insurance value chain. A trusted partner will be knowledgeable with the answers to common startup questions, such as: “How do we deal with service?” “How do we approach claims?” “How do we integrate alternative distribution channels?” “How do we ensure effective customer engagement for our products and services?”
When growth happens, they also know how to scale up to meet demand, add functionality where needed, and continually keep an eye on the rapidly-evolving technologies that will make a competitive difference.
Involving your Trusted Partner Early in the Process
Insurance startups need early access to industry expertise and experience. Traditionally, established insurance technology partners have a methodical, and sometimes slow process, of learning about a company’s technology history. There is often a great deal of time devoted to “coming up to speed on how we do business.” Call it a learning curve or relationship building — the partner works at fitting their teams properly into the customer process.
A startup insurer has a unique opportunity to capitalize on involving a trusted partner early, collaborating with the startup to create something new and unique. An experienced partner can bring expertise, best practices, ideas and more to the table. This will give the new startup additional product advantages and superior operational differentiation. This is especially true regarding process automation. Rules-based processes and deep insurance capabilities can be eye-opening to startups that may have never considered the full realm of possibility. An experienced partner thinks ahead ten steps. They know why certain roads of development are dead-ends and others are preparatory measures to ensure a robust, exciting future. These are the nuggets of knowledge that will give the startup real agility and value as they grow.
Finding success in solution shopping, then, is more than finding an out-of-the-box solution. It is more a matter of finding the right trusted partner with experience, expertise and a flexible cloud based platform that can provide a rapid launch with speed to value from initiation, through launch and growth.
Whether your organization is an insurance startup looking for direction or a large insurer considering a startup approach to growth, Majesco can help take your innovative ideas from inception to industry-leading success with solutions that fit now and are built for the future.
[ii] “Insurance Tech Rising: 135+ Insurance Startups Across P2P, Life, Commercial & More in One Chart,” CB Insights, March 22, 2016