ITIJ 208, May 2018
Paul Prendergast, CEO of travel insurance insurtech startup Blink, explains how to leverage the new startup community to innovate core travel insurance products quickly without major capital investment and delivery risk
Travel insurance is bigger than digital music. Over $15 billion 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 while 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 and 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 a 100-per-cent focus on innovation.
Why it makes sense
Insurtechs are raising billions in funding, and 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.
Beware of innovation companies – there are a huge number of consultancy companies who 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 are very different things.
Funding. 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 the track record of the founders is a reasonable indication. Talking directly to investors may prove useful.
In summary, there is a great opportunity for travel insurance companies 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 the ever-changing insurance landscape of 2018.