Most insurance companies have started working with InsurTech startups. However, for incumbents on the first impression, all startups look the same. How to identify true InsurTech startups, and sort out pretenders?
Focus on True InsurTech Startups
Be smart and work only with real value providers. These ‘True InsurTech Startups’ have three characteristics in common.
Distinction number one of True InsurTech Startups is of course, insurance! They contribute to the core insurance value chain:
The value chain is a set of activities which insurers operate, to deliver services to their customers. How the value chain activities are carried out determines the costs for policyholders and affects the profits for incumbent risk carriers.
True #InsurTech #startups have three characteristics in common; only work with theses true value providers.Tweet
True InsurTech Startups focus on these value chain activities. They improve or substitute them.
Typical activities inside the insurance value chain are sales, customer service, policy administration, claims handling, product, and risk management.
The second distinction is tech! True InsurTech startups offer tech-based products and solutions. Why? Because: The core of the insurance industry consists of two things: money and data.
For InsurTechs, insurance is a simple payment promise (which includes the money) in the event of an uncertain loss (this includes data). The combination of money and data makes insurance the perfect digital product, which InsurTechs have recognized. This epiphany is the reason for their offering of tech-based services.
#Insurance the perfect digital product, which #InsurTech #startups have recognized.Tweet
The best-known examples of applying technology in insurance are the numerous price comparison sites, which already took a significant market share from established providers.
The third distinction is: True InsurTech startups are in a startup mode. They are a newly funded business venture that has an idea of a product or service. These startups are in search for product/market fit (trying to meet a real need) and are trying to develop a viable business model around it (by testing and validating their hypothesis)
Examples of successful companies that have been startups before are facebook, PayPal, uber, Airbnb, stripe, and many more.
You are now able to identify true InsurTech startups based on three characteristics: (1) contribution to the insurance value chain. (2) offering of technology-based solutions, (3) state of a startup mode.
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