A Roadmap for Strategic Collaborations with InsurTech Startups
Innovation in the insurance industry is no longer a luxury but a necessity. As a seasoned InsurTech thought leader and mentor, I, Karl Heinz Passler, have worked with numerous InsurTech startups to unlock their potential for Baloise Group. This article outlines the three essential steps to successfully innovate with InsurTech startups, based on my presentation, How to Successfully Innovate with InsurTech Startups. Held at the Connected Insurance Europe 2019 in Amsterdam. These steps are not just theoretical but are backed by real-world examples and actionable insights.
Why Insurers Need Innovation
The insurance industry is at a crossroads. Innovation initiatives often fall short of their goals, and yet the pressure to evolve has never been greater. Many insurers are turning to InsurTech startups for collaboration, recognizing their potential to bring agility and fresh ideas. However, most of these collaborations fail. Why? Because innovation is not just about adopting technology; it’s about aligning strategy, culture, and execution.
This brings us to the crux of the matter: how can traditional insurers work successfully with InsurTech startups? The answer lies in three critical success factors—Vivid Vision, Little Bets, and Innovator Roles.
Step 1: Vivid Vision
What It Means
Innovation starts with a clear and compelling vision of the future. A vivid vision acts as a compass, aligning the entire organization toward a common goal. This vision should be more than abstract ideas; it must be enriched with stories and practical examples to resonate with employees and stakeholders.
Real-World Application
Take the example of Baloise, an innovative insurer that embraced the concept of a vivid vision with their "Simply Safe" strategy. This vision aimed to make insurance convenient and understandable. It set the stage for all their innovation efforts.
Key Takeaway
Define your vision in a way that’s both aspirational and actionable. Share it across your organization to ensure everyone is moving in the same direction.
Step 2: Little Bets
What It Means
In the world of innovation, one big bet is often too risky. Instead, allocate resources across several smaller projects—calculated bets that allow for experimentation and learning. These bets should involve low investment but high frequency, increasing the chances of identifying a breakthrough.
Real-World Application
Baloise’s "Bets Initiative" is a perfect example of this principle in action. They invested in multiple small projects, such as insuring items through a simple smartphone picture. This approach not only minimized risk but also yielded valuable insights.
Key Takeaway
Spread your resources and test multiple ideas simultaneously. Failure is not just an option; it’s a stepping stone to success.
Step 3: Innovator Roles
What It Means
Innovation doesn’t happen in a vacuum; it requires a dedicated team with clearly defined roles. Innovators need assignments, responsibilities, and resources to shield them from the “immune response” of traditional organizational structures.
Real-World Application
Baloise created three distinct roles for their innovation teams:
Scout: Identifies suitable startups.
Mentor: Guides a temporary team of internal and external experts.
Sponsor: Secures the internal resources needed to execute the project.
These roles ensured that innovation initiatives were well-supported and effectively executed.
Key Takeaway
Establish clear roles within your innovation team. Protect your innovators from bureaucracy and empower them to lead and deliver results.
Bringing It All Together
The three steps outlined above are not just concepts; they’re a proven framework for successful collaboration between established insurers and InsurTech startups. When combined, they create a powerful cycle of vision, experimentation, and execution.
Consider the results achieved by Baloise in 2017. Within just three weeks, they implemented a project in partnership with startups KASKO and Snapsure. Using AI-powered technology, customers could insure items like Swiss watches - what else ;-) - by simply snapping a photo. This project exemplifies what’s possible when vivid vision, little bets, and innovator roles come together.
Final Thoughts
As insurance decision-makers and innovation managers, you hold the key to the future of the industry. The lessons from Baloise and other pioneers show that success is within reach if you follow a structured approach. Define your vision, take calculated risks, and empower your team—and you’ll be well on your way to transforming insurance as we know it.
Let’s make innovation happen, together.