This latest piece is by Joseph Higgins, who is working within the Lloyd’s Lab start-up and innovation centre. As insurtech begins to transform established insurance institutions, it’s useful to get a little view from the inside.
Start-up accelerators are, to borrow a particularly clunky piece of Silicon Valley jargon, experiencing “Hockey Stick Growth”, as their ranks swell and interest accumulates. In the past year alone, corporate titans such as Amazon, Deloitte and Fidelity have invested in a start-up accelerator that focuses on blockchain innovation, and companies such as Snap have launched their own in-house accelerator programmes. But Lloyd’s Lab, an insurance accelerator, stands apart in a rapidly expanding field. As a company that runs an insurance marketplace, Lloyd’s has a unique motivation to encourage the permeation of innovation across the industry. This impetus has led to a thriving programme that aids entrepreneurs at the forefront of insurance technology today.
There is no doubt of the innovation value that start-ups can bring to insurance. Having taken to technology at a relatively slow pace compared with their counterparts in the banking industry, insurance companies have now embraced it, with a vigorous hunger for innovative product development.
This is reflected in the level of funding insurance technology now enjoys, with $1.7bn poured into the field in 2018. Start-ups are uniquely placed to capitalise on this, as their less defined nature allows for fast and effective product development; they have a certain level of “agility”, as Chris Lovick, Enterprise Business Architect at MS Amlin and a mentor on the Lloyd’s Lab programme, puts it.
Part of this creative ability comes from a comparatively less rigid corporate structure, and a lack of pre-established procedure, which creates a fluid and dynamic working environment more conducive to organic innovation. John McClelland, founder of miBroker and programme participant, points out that there is “no template for what you’re doing”.
This is a sentiment echoed by Anastasia Dokuchaeva, who encapsulates it well: “A lot of processes are still very lightly defined or not defined at all, so it’s very much all hands-on deck”. Anastasia is Head of Partnerships at ClauseMatch, a start-up that focuses on regulation and recently graduated from the Lloyd’s Lab programme. Hard work and long hours are required to succeed, but John described “getting to build solutions from the ground up” as one of the most fulfilling parts of his job.
Emphasising the difference in culture between start-ups and more established corporations, Anastasia says that “it is an attitude of fighting” that distinguishes the former. She adds that “working in a larger, more established organisation feels safer and calmer”, compared with the “instability” of a start-up. Similarly, John notes that there is “no safety net”, which drives creativity. For these companies, it is sink or swim, meaning an ability to invent is a necessity for those looking to succeed.
Nevertheless, start-ups in general do not represent an all-encompassing answer to the issue of product development. Indeed 90% of them ultimately fail, according to Forbes. As such, it is in the interest of Lloyd’s Lab to ensure that those picked to participate have a credible chance of viability. This is where the accelerator’s rigorous selection process comes in, whittling down a list of applicants that numbers in the hundreds to around just 10 who are selected to participate in each cohort. The Lloyd’s Innovation team, alongside L Marks and market members, selects a group of 24 from the pool of applicants to pitch to a large group of people who work at Lloyd’s and in their marketplace. This event is known as Pitch Day, and it is audience votes that largely decide which companies join the programme.
The key to a successful application is a clear value proposition. It is important to keep in mind the question of “How will you make people’s days easier?”, says Nonna Polonskaya, an Associate at Lloyd’s Lab. “Make it easy for the person in the audience to visualise it, and be clear about what you want to do during the ten weeks. Set out what you want to achieve and how that can be supported”. Pulling this off requires “doing your homework”, points out
Martin Gorm Pedersen, CEO of RequirementONE, who previously participated in the programme. “Pitches must be tailored to the audience, so that the topics and slides created reflect the people present”. He uses an inventive metaphor to illustrate his point, saying that a good pitch is one where “you hold up a mirror in front of people so they recognise themselves. This makes it a lot easier for them to identify with the problems and the solutions you have.”
Nonna warns against an overtly emotive pitch that focuses too much on the start-up’s narrative, no matter how compelling. “Beautiful stories and semantics” can be useful but must be a secondary factor, subordinate to a clearly set out value proposition. A good pitch, however, does require salesmanship. Alongside your preparation, says Martin, “you need to have some passion”. Projecting the right kind of energy is important, even through relatively obvious methods such as making eye contact when talking rather than staring at your papers.
Start-ups cannot, of course, provide a convincing pitch without an impressive product. This is the ultimate determinant of application success. Andreas MacFarlane, Internal Financial Control Manager at AXA XL and mentor in the programme, states that the best start-ups “solve a problem no-one else is solving”. Not only does this reduce the issue of competition, it mobilises support on Pitch Day by showing clear potential value for market members. Chris Lovick says that what draws interest is those who are “genuinely different”.
One such example is miBroker, John McClelland displaying clear passion for its product when he describes its “compelling solution to distribution”. In line with Chris and Andreas’ advice to specialise, miBroker focuses on rapidly arranging insurance for small scale entrepreneurs through an easily used interface.
The small contingent of companies who make it into the programme reap significant benefits. What makes Lloyd’s Lab a truly special programme is the unparalleled access to top level industry expertise that it provides. While most corporate accelerators can only offer advice from within their own companies, Lloyd’s Lab harnesses the formidable combined intellect of the market, spanning more than 50 insurance companies and over 200 brokers, providing an experience of enormous value to start-ups.
“Embarking on the programme means gaining access to a vast pool of “underwriters, data, and knowledge of the market”, says Chris Lovick. Expanding on this, he observes that this gives start-ups the chance to engage in ethnographic research, resulting in a better understanding of customers and greater insight into how best to develop your product. Here lies the key to what Chris calls “penny drop moments”, realisations about your customers that help product optimisation. Anastasia Dokuchaeva concurs, stating that “working alongside the insurance ecosystem is incredibly important for a company to succeed”.
It should be noted that the amount of value a start-up absorbs from the programme is very much in their own hands. John McClelland asserts that “you get out of it what you put in”, and both Anastasia and he underlined the importance of networking, to forge and cultivate business relationships. MiBroker has completed the Lloyd’s Lab programme, with John returning to his native Canada, but he still feels that there are people he met through the accelerator who he could pick up the phone if he had an opportunity or a question.
Important to getting the most out of the programme is handling communication well; whether that is articulating what you would like from mentors or receiving feedback and making corresponding adjustments. In addition, the relatively compressed length of the programme means that it is important to maintain focus on the core components of your product and its value proposition.
As the Lab builds towards the final selection of its next cohort, with the third Pitch Day imminent at the time of writing, there is little doubt in the minds of the prospective participants, or the hundreds of others already eliminated, of how much the accelerator can
offer those who enrol. The tools for success on offer here represent a rare opportunity. Those who seize it are the best and brightest of the insurance innovation world, and Lloyd’s Lab is a chance for them to build the industry’s future.