Last year’s report argued that collaboration will be the key to unlocking value. If anything, this view has strengthened over the past year with InsurTechs continuing to see themselves as enablers rather than disruptors and the number of full stack InsurTech solutions still very low.
While insurers and InsurTechs alike agree that collaboration between start-ups and more established businesses is the key to driving value, both groups also agree that working together isn’t always easy. Their difficulties typically fall into two categories:
Many collaborations are prevented simply by the practical questions of how to ensure buy-in from all the key stakeholders. For example, insurers worry about the legal arrangements, particularly around data sharing, and struggle with procurement processes not designed for engaging with small start-ups. Despite this, some insurers are now making good progress in solving these problems.
If start-ups are speedboats (quick and agile but unstable in choppy waters) and established insurers are oil tankers (powerful and strong but slow to change directions) bringing the two together inevitably brings challenges. Both sides have to be prepared to overcome their frustrations with one another, finding compromises to move past these perceived weaknesses.
And both insurers and InsurTechs recognise these issues. A survey conducted by Startupbootcamp found that 72% of start-ups worried about how to collaborate with larger businesses, with 59% complaining they had made more than 10 calls before tracking down the right person to discuss a joint initiative; half (48%) said agreeing a deal had taken more than six months. PwC research, meanwhile, suggests only 17% of insurers believe they are good at co-creations with start-ups, against 28% of financial services firms generally. The survey found IT security was the concern most likely to represent a stumbling block.
The value that collaboration can deliver is seen in the example of NuvaLaw, a platform that brings insurers together with a number of tools, processes and services to reduce the time and cost involved in settling claims. NuvaLaw is designing a new process to handle inter-insurer motor damage and personal injury claims; its online dispute resolution service, which employs AI and platform technologies, has the potential to deliver a 40% reduction in costs and capital outlays, and resolves claims at four times the speed of court-based settlements. If insurers work together through solutions such as NuvaLaw’s there is huge value to be created.