Keys to Successful Collaboration Between Insurance Carriers & InsurTech Solution Providers

The insurance industry has spent billions on innovation, with a clear ramping up of its efforts as it met the imperatives imposed by COVID lockdowns and seized on opportunities created by new solutions brought to market by insurtechs.

?And yet, while many of these efforts can be deemed successes, the path to bring them to market has not always been smooth. Indeed, for every successful and smooth implementation, there are no doubt countless others that run over budget, deliver a constrained scope, or fail to see the expected impact and returns materialize.

A group of professionals from across the industry set out to understand what makes collaborations between InsurTech solution providers and carriers more or less successful, and what actions and investments the industry could make to ensure it reaps the rewards of its efforts to modernize, innovate and evolve.

Those efforts came together as the Insurance Collaboration Index, with findings that can help insurers collaborate InsurTech solution providers to help drive the industry forward.

The Insurance Collaboration Index Initiative

A working group comprised of industry veterans was convened in 2021 by InsurTech NY co-founders, David Gritz and Tony L. , including myself, Cynthia Hardy and Krishnan Venkatachalam of Pivot Global Partners , Mark Gardella of Zephyr Innovation Advisors , Irene Yang of Finesse Innovation, Roi H. of RCI, Alan Walters (formerly of Conning Research) and Mike (Fitz) Fitzgerald CPCU, PMP (formerly of CB Insights).

The team created a survey instrument to gather first-hand, anonymous feedback from InsurTech solution providers on their experience working with different carriers to find what drives success (or failure). Respondents scored carriers on executive sponsorship, decision making, clearly defining success, having sufficient budget or funding, ability to resolve issues, alignment between the business and IT, due diligence, and the level of resourcing they provided. These areas were then correlated to their impact on the overall ease of collaborating to successfully bringing a solution to market.

?Over 120 insurtechs shared feedback on carriers of differing sizes, market segments, product offerings and geographies, and worked with those carriers to deliver a wide array of solutions from back-office technologies to customer-facing products and tools. Across all of this variety, several things rose to the top as being most impactful on the success of the initiative, and some surprising revelations were made that go against what you may expect to help a project succeed but actually don’t matter.

?Keys to Successful Collaboration

The single most important and highly correlated factor when it comes to what carriers can do to help ensure success when working with an insurtech on implementing a new solution is seemingly obvious, yet frustratingly not done consistently or sufficiently. Based on feedback we received, that thing is properly resourcing the project. This factor was strongly correlated to the success of a project, with a correlation coefficient of nearly 0.75.

?That’s a broad term that can take on many specific meanings, but the extent to which carriers assigned dedicated resources to oversee a project, engage in a pilot or proof of concept, train staff on how to use the tools, have technical staff working on API connections, etc., can make or break a project.

?For example, a carrier may assign a project manager to oversee implementation, but that person may not be committed to the project, invested in its success or have the bandwidth to really stay on top of its delivery. Or there may be an assigned resource, but the person assigned gets swapped out several times, so it’s still a dedicated resource on paper, but not in practice. We have also seen many projects that go well until the pilot phase where carriers may fail to assign pilot users to get genuinely involved, instead rotating people through or letting them skip meetings or engaging with the solution if they’re busy or disinterested.

It may also be a function not of assigning resources, but assigning the right resources. Are these strong performers? Are they bought into the idea and committed to its success? Have they been educated on why the company is doing this, why it matters, and what success looks like?

So the project may be properly resourced on paper, and bodies may be in roles, but they need to be the right people who are committed and engaged for the project to succeed.

?The second-most impactful thing a carrier can do to ensure success may seem odd as it sounds like it implies that things are failing already.

Invariably, even the best projects hit bumps in the road, whether that be delays, complications, surprise developments or worse. According to survey respondents, it’s not whether you keep problems from arising, but how you respond when they do that matters.

?Specifically, having communication and decision-making protocols and pathways clearly defined so that issues can be raised, discussed and resolved was nearly as correlated to success as having dedicated resources.

Many carriers have well-established protocols to address problems, but they may require fitting a meeting cadence or timing that draws out project timelines or risks scope and budget. Having a more flexible and responsive path to ensure time isn’t lost or the opportunity to manage the negative impact of problems isn’t missed can be a crucial differentiator between projects that flounder and those that thrive.

Putting together these top two drivers of success, carriers can setup project teams with resources that are committed and engaged in the success of the project, and have well-established pathways to resolve issues and overcome barriers as they arise so that they can be addressed quickly and completely.?

Surprising Findings on What Doesn’t Help

While these factors are correlated with successful collaboration, there are some that you may expect to be highly correlated yet have less direct impact in practice, if any. Specifically (and surprisingly), having sufficient budget is not highly correlated with success. That is, innovation and successful InsurTech deployments are more dependent on how you engage by dedicating people to the project and working to resolve issues than to how much money you are willing to spend.

This was a very interesting finding as many carriers assume that innovation is expensive, or that they may lack the budget to be innovative. On the contrary, how you use the resources you have is much more important than the scale of resources at your disposal.

A corollary to this is that you cannot make up for a lack of committed resources or a difficult or unhelpful issue resolution process with money. That is, paying the insurtech to work around your problems or spending more on systems integrators (SIs) to deal with an issue was not found to save troubled projects, while dedicated resources and internal issue resolution at the carrier was.

Of course, that does not mean internal resources are free, but there is more impact from working effectively with the resources you have than unlimited spending on additional resources.

Another interesting finding in terms of what isn’t tied to success is the complexity and time-intensity of due diligence. After hearing many insurtechs complain about arduous or onerous due diligence reviews with carriers, you might think that these can completely or at least significantly derail projects or hinder their chances of success. Instead, while insurtechs may not appreciate particularly slow or difficult due diligence processes, they noted that project work often continued on in parallel, and, eventually, they got through the review.

While there are ways to make due diligence more efficient, effective and relevant, there was no sign that it is a major source of problems in how well insurers and insurtechs work together.

?So, while you must have sufficient budget for the project and shouldn’t make due diligence harder than it truly needs to be, spending more or forgoing asking what you need to ask won’t lead to greater chances of success in working with an insurtech to innovate and evolve your business.

What May Seem Obvious Isn’t Always

While it may seem obvious that having dedicated resources and removing barriers quickly and effectively can keep a project on track, in practice, we find that judging performance here mirrors what the industry learned around customer experience – it’s not how you judge yourself, but how those you work with judge you.

?The Insurance Collaboration Index was a unique and rare opportunity for carriers to get real, unfiltered insight into how they’re performing, and where to focus efforts to be more effective and efficient with their innovation efforts.

?Beyond the insights discussed above, one of the biggest learnings from this work is the need for carriers to seek honest feedback from their partners so they can learn how to do better, just like we seek to do with our insureds and trading partners. We may not always like what we hear, but we can always learn and grow from it, and that will serve to make us more effective in future efforts to move our business forward.

Moving Forward

The insights from the research brought to light useful insights and some surprises, but there is more to understand. The work on this project is continuing with some exciting new efforts underway now.

Part of that will be the publication of the third book in The Future of Insurance series, coming in mid-2023. Like past books in the series, it will feature first-hand case studies of insurers collaborating with insurtech solution providers to bring something new to market. Through their stories, you can learn nuanced and detailed insights that can help in your specific context and across the industry.

The theme of collaboration will also be central to the InsurTech NY Spring Conference, being held March 29-30, 2023, in New York City. To learn more about the event and to register, visit InsurTech NY’s page for the event.

To learn more and stay up to date on the book and its release, visit future-of-insurance.com/collaborators.