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Michael Baptista, Founding Partner, Assembly Capital PartnersAs a venture capital firm specialising in B2B Fintech, Assembly Capital Partners (ACP) sees a lot of insurtech startups and is able to follow quite closely their challenges in working with incumbents. Assembly is also an investor (as am I personally) in Instanda, an insurtech firm that no longer needs an introduction. At the time of writing ACP remains the only VC on Instanda’s cap table.
That there is a need for better technology solutions in the industry is not debated.
Why progress is so slow is more debatable. From what I have seen, I would make four points about the interactions between startups and insurance firms (meaning by the latter, MGAs, brokers and carriers; re-insurance is a little more specialised).
Firstly, many startups (not, all, obviously) focus on their analysis of the problem to be solved exclusively on the consumer experience rather than taking into account the whole value chain. Claims is a good example where discussion of the (often justified) complaints that consumers have not matched by analyses of, and solutions for, the series of events triggered by an FNOL from the point of view of the insurer.
Secondly, startups generally underestimate both the length of the sales cycle and the complexity of fitting their tech into an ecosystem which is usually an uneasy—if barely functioning—compromise between legacy systems, in-house solutions and newer third-party tech.
Thirdly, insurers seem—in general—to be poor at communicating with startups clearly about what they want and the realistic hurdles and the timetable for commercial implementation.
Finally, perhaps most strangely and most easily fixable by the readers of this journal is the fact that today a startup can sell technology that works well and delivers great metrics without the larger firm being at all proactive about applying these proven gains more widely. This is inefficient at the level both of the firm and the sector.
This is an exciting time to be focused on technology in insurance. There is a clear need for structural improvement.
Some basic changes, as in, but not confined to, the points above, would certainly help.
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