This article is by travel insurance InsurTech Blink CEO Paul Prendergast, one of The Digital Insurer’s Digital Innovators for Europe and panellist at our Global LiveFest 2018 virtual conference in November. Here Paul explains how to leverage the new startup community to innovate core travel insurance product quickly without major capital investment and delivery risk.
Blink is one of 10 InsurTech startups that have partnered with Munich Re Digital Partners and was the first InsurTech to be accepted into the FCA Sandbox programme. Blink launched their first product www.blinkblink.io in 2017 in the UK market and have partnered with a number of large travel insurance companies to launch products in 2018.
Travel insurance is bigger than digital music. Over $15 bn a year and no major technology innovation over the past 20 years. Major travel insurance companies are excellent at running their core travel insurance business. The challenge is how to innovate whilst still focusing on operating a highly complex demanding organisation. Innovation, although important takes a change in culture and revenue is very uncertain.
One possible way to add innovation quickly, without major capital investment and the cultural change required to deliver real innovation, is to partner with InsurTechs.
A large number of InsurTech organisations are building new product offerings and new customer experiences e.g. Lemonade, Slice, Trov. In many cases these companies have startup DNA – and do not have to balance the day to day demands of running major companies with 100% focus on innovation.
Why it makes sense?
- InsurTech are raising $billions in funding. You can access this technology with no capital investment
- There is a high risk for large insurance companies to build and deliver innovation themselves. It needs major investment and a major cultural shift
- InsurTechs are good at innovation but do not have distribution – a partnership to add real value to customers makes sense.
How to engage:
- Talk technology. Most InsurTechs are driven by technology. You need to have someone on your team that understands how tech companies are built in 2018. Microservices, APIs, AWS- if you don’t understand – you may need to add to your team.
- Simple engagement. InsurTechs have to move quickly. Six weeks to sign an NDA signals that you are not serious about partnering
- Commercials – funded startups want to show their backers momentum. They typically do not need major revenue initially but need to show that this partnership has value in the future.
- A lot of InsurTechs are hammers looking for a nail. They may have technology but have not worked out what value they add. This is a red flag
- Innovation companies – there are huge number of consultancy companies that have never launched a startup proclaiming they can manage startups on your behalf. Tread carefully. Managing a large enterprise software project and an early stage InsurTech startup is very different
- You need to trust that the startup is going to be around in years to come. I am a big fan of visiting their office and getting a feel for the culture of the company. Looking at their investors or track record of the founders is a reasonable indication. Talking directly to their investors may prove useful.
In summary, there is a great opportunity for travel insurance companies and others to build real partnerships with interesting early stage technology companies that are focused on insurance. If you can engage correctly it can be a low cost high impact route to innovation in this ever-changing Insurance landscape in 2018.