Insurtechs may think the ongoing disruption of the insurance industry means they are exempt from the “old rules.” But to compete and gain entry into the industry with their innovations, the rules are still the same, according to Matt Leonard, Oliver Wyman Partner. “It’s amazing how many startups forget this,” he added.
According to Matt, any insurtech should be able to crisply articulate the problem they are trying to solve and identify its beneficiaries, whether they are individual customers, agents, incumbents, or reinsurers.
It’s also important to pinpoint the actual benefits the technology delivers and how a business case can be made for making a buying decision. Does it solve a persistent business problem? How does it compare to what currently exists?
Wrapped up in those considerations is another basic one: Who’s making the buying decision, and how are those decisions made?
"Before developing software or a service, it is critical to network with people in the space so that you can understand what services or technologies they are likely to buy,” Matt says. “This is what makes an opportunity like InsureTech Connect so valuable, as it gathers all the elements of the ecosystem in one place.”
And the process doesn’t stop once an insurtech secures funding. Matt advises them to continue to ask these questions and incorporate the answers into their evolving business plans. “You don’t want to get to the end of the runway in nine or eighteen months and realize you got it wrong,” he said. Which means that the company may have to pivot.
Matt uses Betterview as an example of a company that pivoted brilliantly. It initially operated drone fleets as part of its business model (lowering the cost of roof inspections by using drones rather than people), but the company soon realized that its business’s real value was in data analytics. Betterview built a risk management platform that uses algorithms, machine learning, computer vision, and geospatial data to interpret images. Now some of their customers only provide them with images to analyze.
And this nimble approach seems to be working. Investors were impressed with Betterview’s new direction. In May the company secured $4.5 million in Series A funding from carriers Manchester Story, Nationwide Ventures, EMC Insurance, MaidenRe and Compound Investors, bringing its total venture funding to $10 million.