This piece is by Manjit Rana, EVP of insurance, Clearspeed
The collaboration between insurers and insurtech companies might seem straightforward, but it’s far more nuanced than insurtechs expect.
Insurtechs are often surprisingly unprepared once they gain interest from an insurer – especially when you consider the intricate and vast amount of work that needs to be completed before the relationship can bring real value for both sides.
The collaborative process between an insurer and an insurtech can be challenging. Therefore, it’s vital that every insurtech knows what it truly takes to be ‘enterprise ready’.
Here are five steps that can help:
1. Insurers buy “outcomes” not technology
Know what problem you are solving and for whom in the insurance company. I regularly use the analogy of pain to determine who you should be selling to i.e. identify who is suffering the greatest pain from the challenge or problem that your solution is able to address. If the person you are targeting within the insurer really isn’t hurting daily from the issue, you are not going to be a priority for them, and they certainly won’t find the budget required to implement your solution. Also make sure that by solving one person or department’s issue you are not creating a problem somewhere else in the insurers value chain; this is where your blockers will kick in.
2. Focus, focus, focus
I often hear insurtechs claiming they can solve numerous challenges, to me that’s a little like an athlete claiming because they can run they can successfully compete in every running event, pitch a solution to a single challenge rather than have multiple discussions in parallel with the insurer whilst they try and work out where best to apply your solution. This is important even if you have a generic solution such as an ‘AI based automation platform.’ If you are not sure where your solution is likely to add most value, go do the research before you decide where and to whom you pitch your solution.
3. Know that sales cycles in the industry are long!
They are often 12 to 18 months to get a production deal. This can be extremely trying and expensive for insurtechs. A good way to start exploring a potential partnership is to conduct a ‘pilot’ but there are important things to bear in mind when running pilots:
– Understand the difference between a PoC (proof of concept) where the pilot is designed to prove that your solution / the technology conceptually does what you are claiming it does, and a PoV (proof of value) where the
technology is already proven in other industries or use cases and you are using the pilot to prove the benefits you are claiming can be realised by the insurer. The process for running the two types of pilots are quite different.
– Before you start the pilot, clearly define the metrics and the desired outcomes–including length of the pilot, how you will measure and share the results, who will be involved from both parties, what success will look like, and what the next action will be once you’ve achieved or exceeded the success metrics. Not getting clarity on these factors up front can be incredibly frustrating for insurtechs. Using my athlete analogy, the pilot can often start off as a 100m race and end up as an 8,000m marathon. Every few metres, the insurtech is burning cash, so make sure you have enough in the bank to complete the pilot.
– Getting through the due diligence process before you start a pilot can often take weeks and months whilst the insurers various teams go through regulatory, security and data compliance checks. You WILL get asked about ISO 27001 / SOC2 readiness (or equivalent security posture), data encryption, pen test results, GDPR/CCPA compliance, data retention and deletion processes… and very likely how your solution adheres to the European AI act or the insurers own AI committee requirements. Best to be prepared in advance.
4. Don’t be afraid to say no
Being enterprise-ready means designing your product and delivery model to outperform expectations and match the scale of transactions that the insurer needs to process. If you’re not able to do that, then you’ll likely see an initial “yes” turn into a “no” six months to a year down the line, which can prove to be both costly and a huge waste of time for both parties.
If you are not sure whether you can scale your solution to that level at this time, start with smaller insurers or MGA’s, where their expectations are likely to be easier to meet.
The biggest wins do not come from onboarding new clients. It’s when long-term customers openly tell you that you’ve overdelivered for them.
That kind of feedback is earned gradually, through smaller wins that propel the partnership towards bigger milestones. Focus on delivering value, step by step, and the larger successes will follow.
5. Understand the market you are selling to
Finally, I would say ensure that you clearly understand the basics of insurance and feel comfortable describing how your solution benefits the insurers’ key performance metrics such as:
– Loss ratios
– Combined ratios
– Leakage reduction
– Underwriting profit
– Claims cycle time
This is often where an experienced coach or board advisors can be invaluable in helping to navigate the journey. They can also be very useful in helping to guide you on what your initial use case should be.
Bonus point: make the market look your way.
Rarely do insurers want to ‘take the plunge.’ It doesn’t matter how much they might love your solution on paper. Most want to see proof that it worked in practice for their competitors, rather than taking the initial risk themselves.
You always need someone to trust you first, and that’s quite challenging. So, network, build visibility, get people talking. That doesn’t come naturally. It requires a strategy, one that’s specifically designed to get senior industry leaders curious about your company, what you’re doing, and who you’re talking to.
Ultimately, it’s important to remember that most insurers genuinely want to partner with insurtechs as it usually helps them innovate their processes and products more quickly than they can do themselves. But they are very large, highly complex organisations, so engaging with them is never going to be quick or easy.
The path to partnership can be measured and deliberate, and that’s a good thing. With patience and persistence, the long-term value that emerges – financial, operational, and strategic – far outweighs the time spent getting there.
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