Insurtechs can play a vital role in supporting, augmenting, or refining life and health insurers' value propositions, business initiatives, and goals. These forward-thinking companies offer new and innovative products and services to enhance the customer experience, improve process efficiency, reduce costs, facilitate advanced data analytics, and more.
Insurtech offerings run the gamut, from evidence-based and claim cost-reducing online mental health treatment programs, to banking services that include customer carbon footprints, to new business and distribution models that can ease and extend insurer reach into uninsured and underinsured populations.
As with any third-party vendor, the right insurtech partner can fuel an insurer's strategies, tactics, products, services, and results. The wrong partner, however, can drain resources, waste time, and yield few to no desired outcomes.
Selecting the right insurtech partner should not be approached lightly. It involves entering a complex and noisy environment. Nascent players, ill-conceived approaches and ideas, and insufficient road testing abound. Evolving nomenclature and slick marketing can also be confusing, making apples-to-apples comparisons of insurtechs challenging.
Fortunately, best practices for partner evaluation and selection are becoming more well defined. Here are five important considerations for insurers to focus on:
- Problem statement: The insurer should be clear about the business problem or pain point the insurtech partner is being asked to solve. A lack of clarity can result in challenges throughout partner selection and implementation.
- Executive sponsor: Does the insurer have an executive or business sponsor within the organization to implement an insurtech partnership? Defining the sponsor at the onset of selection can help reduce execution challenges.
- Market scan: The insurtech ecosystem is complex and requires unique expertise to navigate. Insurers often need help scanning the vast market landscape to find the best potential partners. Exploring specific markets, ecosystems, and verticals to identify differentiators between insurtech players is foundational to developing a business case for partnering with a chosen vendor.
- Internal capabilities: Insurers should clearly understand the insurtech's capabilities, how those capabilities integrate with their own, and their organization's ability to support the partnership post proof of concept and into production.
- Custom development capabilities: While most partnerships need some level of customization, a partnership should not require the insurtech to make significant redesign adjustments to its products or services. If an insurtech needs to significantly alter its approach or solution to address the use case, it is usually a sign of a bad fit.
Partnering with insurtechs can be rewarding for insurers. Finding the right partner to help insurers meet their business goals means conducting a thorough examination of the market and ensuring a good fit. Devoting the time and resources to make sure the partnership has a solid foundation can help avoid costly mistakes and lead to a lasting, mutually beneficial relationship.