This article will be a 15-minute read. If you work for an insurtech startup that wants to get a deal done with an insurance carrier, it will be a very valuable 15 minutes. If you know somebody like that, please forward it to them.
Imagine this: You are the founder of an insurtech startup. You’ve got a great solution that could deliver meaningful results for any insurance carrier that brings you on. You’ve been through an accelerator (or two), have received initial funding and have your advisory board in place. You may even have a couple of pilots under your belt. Now, it’s time to really start cranking up your sales/partnerships.
As you roll out sales strategies for the year, I thought it would be useful to provide a guide for startups to consider when preparing to meet with their next prospective carrier. Collaboration between startups and carriers is a topic near and dear to my heart. While the focus is primarily for B2B startups, many of the same principles outlined below apply to D2C startups, which are looking to partner with an insurance carrier for distribution purposes.
The framework for this guide is as follows:
- Know your value
- Know your customer
- Find out who holds profit and loss (P&L)
- Help them understand how you’ll bring value to them
- Sign a letter of intent (LOI) and agree on a pilot
- Focus on both the art and science of the sale
Know your value
Startups, if you are reading this, please keep the following question in mind when you are reading the rest of the article. Is your solution going to help a carrier save costs or increase revenue? Have a clear value proposition and give tangible examples of what you do (i.e., use cases where it is already working). For example:
- Saving costs – DO YOU remove the need for manual/high cost processes? Identify opportunities to improve lapse rates, persistency ratios, loss ratios? Provide the carrier with new data sets for better and more accurate modeling? Etc.
- Driving revenue – DO YOU increase a carrier's number of prospects? Increase conversion rate? Increase sales volume because of a new niche product capturing a new market? Etc.
If you can not answer this question, you may want to focus on this first before reading the rest of this article. At the very least, have that question answered before you follow the advice provided in this article.
Know your customer
You know what value you provide to carriers. Now, it’s time to go meet with them. Wrong. Before you meet with a carrier, do your homework and be specific about which carriers you want to target.
See also: Insurtech vs. Legacy Insurance Carriers
Information you should know about the carriers you are targeting:
- What is their organizational direction?
- Who is their main competition, and what has their competition been doing when it comes to innovation?
- Who are the key players within the organization? (See next section)
- Has the carrier done anything really meaningful in the market recently?
The more you know about a company when you walk in, the better. Don’t you feel good when someone knows a bit about your solution when you first meet the person?
There are plenty of ways to get this information. Read about the company and research whatever is publicly available online. Use LinkedIn and your network to find out more if you can’t find it online. Once you’ve done your homework and know who you are going to target, work on getting in the door. LinkedIn and your network will be powerful here, too.
However, before you meet with a carrier, it’s important to know who in the organization you will and need to meet with. The below is a basic, high-level organizational chart of an insurance carrier (this will vary depending on the organization): 
A few notes on this chart:
CIO = Chief IT officer
CDO = Chief distribution officer
Chief actuary can either report to CFO or directly to the CEO (I have seen both)
Innovation can sometimes be labeled as transformation or digital strategy (I have seen either or all three)
Experience and service – relates to customer (i.e. customer experience and customer service)
I have not included HR in this diagram (they are a very integral part to any company, but usually not involved in insurtech initiatives)
Now, it’s time to meet with the carrier. So, who do you target?
Find out who holds the profit and loss (P&L)
Ultimately, any initiative that an insurance carrier undergoes must have some sort of return on it. As such, as part of the approvals process for an insurance carrier, the people who have the most say as to whether or not to bring a solution on board will be the ones who hold a P&L. Why are those who hold a P&L important? Because they will be the ones who are ultimately measured on the success of an initiative and the people you will have to convince to buy your solution.
Others are important, too, so you need to know who all the players are and what motivates them, as all will have different and important roles throughout the whole sales cycle.
Who are the players? While you read directly below, keep in mind what your solution is offering and who the person is who you are ultimately going to need to get the most buy-in from.
The top CEO – This one should self-explanatory
The control functions – these are people who may not be a user of your insurtech solution but will want to analyze it to the nth degree to make sure it’s good for the organization as a whole.
CFO – The CFO monitors/controls the P&L, so, yeah, he or she is important. The CFO may even be one of the most important, as, in some cases, the CEO will only sign off on a project once the CFO has endorsed it. That question I asked before (save cost or increase revenue) is of utmost importance to this person. Expect the answer to that question to get scrutinized, too.
Chief actuary/appointed actuary – As mentioned before, I’ve seen this position report directly to a CEO and to a CFO. Regardless, the person in the position will ask questions of a financial nature. If you have a solution that claims to improve lapse rates, increase persistency or anything else that touches pricing, be ready for some detailed questions from this department.
CRO – I’ve seen variations of this, but, for the most part, risk will encompass compliance, risk and legal. These are three very important departments of the business:
- Compliance – compliance will look at things from a regulatory perspective.
- Risk – enterprise risk management is an interesting concept for insurance and could encompass a lot. Here is a useful article on it. Effectively, risk functions will look at a variety of risks – from market/macro risks to conduct risks to credit risks.
- Legal – this one should be self-explanatory.
The profit centers – these are the ones who will likely use your insurtech solution and the ones who will ultimately get measured on the effectiveness of your solution (i.e. P&L).
Chief distribution officer – This position will vary depending on the organization; its primary goals are to grow revenue (i.e. sales, business development, commercial). If your solution has anything to do with any part of the sales value chain, then buy-in from the chief distribution officer will be key.
COO – Operations departments have a variety of functions under them – from underwriting to customer service to claims. If your solution has anything to do with back-office operations or the customer, then this is another key stakeholder for you.
Both of these definitions are wide for a purpose. These two departments have the most interaction with a customer/policyholder and will be very particular about anything that is going to affect that relationship. They will need to be convinced that the solution being implemented does not disrupt that relationship.
Many insurtech solutions are targeted at improving the customer experience. However, these two departments have the experience in actually doing it for their existing customers and will feel very particular about saying what can be done to improve that relationship. Be mindful of this when you start engaging with people from these departments.
Lastly, the aim of many carriers is to make more prominent the role of the chief customer officer or a customer experience department. For the moment, I put that position into the advocate category below, unless the person specifically holds a P&L.
The advocates – these are typically the ones you will meet with first and the ones who will be very important in convincing the the profit center category that your solution should be taken on board.
CMO – I debated as to whether to put this person in the profit center category, but I feel they belong more so in the advocates column. The reason is that a lot of the solutions brought on by the marketing team are then provided to the distribution team to help with their sales. In some cases, where the carrier has a D2C solution, it may fall directly under the CMO/product team. If the CMO holds a P&L, you may want to consider this person/department a key stakeholder rather than an advocate.
CIO – This is where you will see the titles of innovation, transformation or digital strategy. The IT department is obviously an important one for you, as you will have to work with when it comes to implementation of your solution. IT departments are seen as an enabler to the rest of the business. This means that, while you need to convince this team that your solution is technically sound, IT will not make a call on your solution from a business needs standpoint.
Note: I put corporate strategy under the CFO office in the org chart above, as sometimes there are two or more different strategy departments in an organization. Sometimes this is a completely separate department that reports directly to the CEO. Regardless of which department it is in, I would label any strategy department as advocates.
My labels above are the traditional ones, but some organizations may have people who are more powerful than others. Try to find this out through the power of your network.
Help them understand how you’ll bring value to them
The first meeting will likely be with one/some of the advocates. These may be of the manager/senior manager level, who are knowledgeable enough to do the first round of vetting for their more senior managers/key stakeholders in the organization. This session is an opportunity for the carrier to get a high-level understanding of what is being proposed to see if it should bring this solution forward. You will need to at least demonstrate the answer to that key question during this session.
After a few of these sessions, assuming the carrier is interested, more senior management/other key stakeholders will join in to get their view. If you start seeing more senior personnel in your meetings or people who fall into the profit center bucket, then you are on the right track. If you keep only meeting with advocates, it may be time to start questioning whether you are making progress.
See also: Rise of the Machines in Insurance
It’s also fair to ask the carrier who will be held accountable for the success or failure of the solution being implemented. It will help to get those people involved and excited early on. Getting people excited and on board is half the battle. It feels like the deal is done. Then, the red tape comes in.
Queue the approvals process.
Approvals to undergo a new initiative for an insurance carrier can be cumbersome. The person who is leading the project will need to do a write-up of the solution for the rest of the organization to evaluate (this will include some combination of people from the control function, profit center and advocates). This write-up will include:
- Why the carrier should do this project (qualitative and quantitative analysis that will include costs/benefits/KPIs)
- The technical architecture of the solution
- Risks associated with the solution, with mitigating controls (technical and non technical)
- Regulatory/legal implications
- And more
This may be seem like a lot, but multibillion-dollar corporations need to ensure they have a paper trail for initiatives. (Side note – you should always have an audit trail yourselves!) For a startup, the more you can help with this report and prepare yourselves for these questions, the better. Think of ones that are specific to your solution. You will save time if you address these early on.
The carrier will also want to assess your solution against three or four others in the market. Hence, it is important to know your competition and how you stack up. Again, if you have this upfront, you will save time later. You will want to constantly communicate with your key contact(s) at the carrier throughout the approvals process, helping them and being with them to answer any questions that may come up. Once approval comes in, they will want to start work, so you had better be ready.
Sign an LOI and agree on a pilot
Once all the approvals are done, get your LOI signed and agree on a pilot. An insurance carrier typically will not do this until it has done all of the internal approvals.
Focus on both the art and science of the sale
Sales is an art and a science. The science is a lot of what I mentioned above; know your prospect, have a sales pitch down and close. The art is things that you learn through more practice, such as non-verbal queues and cultural nuances. If you are doing cross-border collaboration (i.e., an American startup going to Asia or vice versa), there are a ton of nonverbal queues and cultural nuances to be mindful of. Some practices that are OK in some markets may not be in others. I own a book called Kiss, Bow, or Shake Hands. I bought this when I first moved overseas, and it has been most helpful to me in this respect.
Lastly, I’ll repeat some advice that I mentioned in my ITC review from Benoît Claveranne, group chief transformation officer of AXA:
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When a startup approaches an incumbent, they should make clear what they are looking for – to be invested in, bought out or partnered with. A lot of time is wasted on this during early engagement, and it will help move the conversation along if it is clear early on.
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For startups – make a call after one to two meetings to see if the incumbent is serious about doing business. Do they have a budget and a team to develop it? If not, it may be time to move on to the next client.
Summary
During my financial advising days, I read Dale Carnegie’s "How to Win Friends and Influence People." The one principle from that book that has always stuck with me is "make the other person feel important." By making people feel important, you let them know that you genuinely understand and care about their needs first and that you are not just trying to sell them something, but instead, providing them with a solution that meets that specific need.
The above is is a high-level guide for you, the insurtech founder, to help make an insurance carrier and the people you are pitching feel important by, ultimately, understanding their needs and how you can help them.
Creating partnerships between insurtech startups and insurance carriers is something I am passionate about and spend time doing every day. I am inspired when I hear stories from the field and new ideas on how to better this process.
I would love to hear your thoughts and feedback on this topic.
This article first appeared at Daily Fintech.
