How to Collaborate With Insurtechs

Collaboration has become one of the buzzwords at innovation conferences. Not quite as prevalent as blockchain or AI - but not far behind. Unlike some of the other buzzwords, the benefits of effective collaboration can be seen quickly -- as little as a month in some cases and no more than two quarters at most. Incumbent insurers have realized that collaborating with startups is one of the fastest ways in which to bring in unique capabilities, digital skills and mindsets into the broader organization. Effective collaboration, however, is difficult - especially from the insurer's point of view. At the start, the benefit of the collaboration is in the future – but the costs and effort are upfront (the startup gets an immediate benefit – validation of a large customer). Generating and maintaining organizational energy for collaborations is a key element of the innovation manager’s job. I have put together a 10-point checklist (from the perspective of the corporate innovation manager) to improve the chances of success: 1. Buy in: As the innovation manager, you have to ensure that you have the buy-in of the C-suite. Buy-in means paying more than lip service to the company's innovation agenda. It means a willingness to put your reputation on the line and personally promote startup partnerships. Lack of C-level buy-in is the quickest way to a doomed collaboration! Top Tip — Struggling to get buy-in? Remind your execs that 75% of the S&P 500 will turn over in the next 15 years. Do they want to innovate or die? 2. Money: Fight for a ring-fenced collaboration budget. Normally, the business unit will not be willing to pay for the pilot from its budget. It will always have a better use for its cash than paying for an unproven benefit. Thus, having a dedicated pilot fund significantly increases the chances of effective collaboration. Being the payer also allows you to demand (gently) effort and seriousness from the business unit implementing the pilot. Top Tip — Think through the handover of the pilot to the business. At what point will the business unit take complete ownership of the project? 3. Legal: Don't wait till after you have identified a startup partner to speak to your legal team. Involve them with the process from the start. Get them to draft a standard collaboration agreement. Allow them to be comfortable with terms relating to customer data, IP protection etc. The more lead time you can provide the better. Top Tip — Agree on the amount of liability insurance your legal team wants. Better yet, budget for it so that you can purchase it on behalf of your startup partners. See also: How to Assess Bootstrapped Startups 4. Compliance: Another team that should be involved from the start. At a minimum, get to know the documents your compliance team needs and get your startup partner to give those to you early on in the process. Waiting for compliance clearance is a real buzz and momentum killer. Ideally, work with your compliance team to create a sandbox (less demanding compliance) for your partnerships. Top Tip — Read your company's compliance manual. It helps to be an expert in your internal processes! Processes like internal risk clearance should be done well before the negotiations reach the contracting stage. 5. Procurement: Beware the Request for Proposal rules. These can serve as the ultimate roadblock if not managed ahead of time (you do not want your hand forced to request for minimum three quotes or ask for a three-year financial history for what should be an 'innovative' project). By design, procurement is a risk-mitigation strategy and is not meant to handle startups or innovation. Still, you have to work within the confines of the procurement process – it’s best to be on first-name terms with the head of procurement. Top Tip — Keep your pilot budget below the minimum that triggers a mandatory RFP. 6. Problem statements: As the cliché goes - fall in love with the problem, not the solution. Always start with the problem the business needs to solve and don't fall into the trap of chasing the latest shiny technology. Crafting good problem statements is at the heart of good collaboration. In contrast, technology-first partnerships will rarely capture mind share long enough to be successful. Make sure the problem statement has been approved by the business head; this includes agreeing on the outcomes you are looking to achieve and the metrics that your business sponsor can use to track the success of the project and to link them to her KPIs. Top Tip — Think through the following points to generate actionable problem statements: (a) One-line overview (b) How do things operate currently? Highlight the pain points. (c) How much pain does it cause (in $ value where possible)? (d) Who are the people/groups of people affected by the problem? (e) What are the barriers to improving the situation? (f) What are the outcomes you would like to see? – the best problem statements stay away from technological buzzwords​​​​​​​​​​​​​​. 7. Evangelists: Successful collaboration requires support from many individuals across all levels of the organization. Research has repeatedly shown that cultural and political reasons derail partnerships far more than product-related challenges. You need to make sure that your business colleagues are invested in making the collaboration work. They must have an upside – that is, the possibility of personal and financial growth. Financial growth is easy – include a bonus for successful collaboration. However, personal growth is the real catalyst and will pay dividends beyond the initial collaboration. Top Tip — Use the entire gamut of personal growth options — from profiling your evangelists in your company newsletter to giving them visibility to both your company and the startup’s executive teams. 8. Security and IT: You've done the hard work of securing a budget, agreeing on a problem statement and recruiting your evangelists and then you find that the APIs required for your project are not ready. You lose credibility internally and externally. You need to know what your IT org can and cannot do and the architectural requirements your organization mandates. Top Tip — Make sure you have reviewed documentation on all the APIs your organization provides. See also: Digital Playbooks for Insurers (Part 2)   9. Sourcing Networks: There are a host of open innovation platforms that you can use. Most come with thousands of startups registered on them (a classic vanity metric). You need quality over quantity and should focus on startups that have raised at least one round of institutional funding. Remember, you are not in the business of incubating startups - you need companies that are able to deliver a product-market fit on Day 1. Top Tip — Use tools like Crunchbase and Tracxn to vet startups. Look for verified funding and deployments. 10. Due diligence — DD in a collaboration context is a tricky subject. You are not an investor, yet you need to answer some basic questions. Ultimately, your reputation depends on the quality of the startup, so you need to complete a stripped-down DD that includes gathering information about recent sales, ensuring you receive customer feedback from the startup's customers and seeing an in-depth demonstration. Top Tip — Speak to at least one investor or customer as part of your DD Ultimately, successful collaboration is about survival – this is the age of the network, and success lies in building a committed and responsive ecosystem. Insurers quick to leverage the relevant startup services while defining a digital vision for themselves have a better chance of thriving for another century. Best of luck!