Insurtech experts from Lloyd’s Lab and Guy Carp share strategic insights

Strategy and partnerships are vital to the success of insurtechs but many in the sector still struggle to get them right. Experts from Lloyd’s Lab, Guy Carpenter and two senior consultants in the industry came together to discuss the issues and provide insight for Intelligent Insurer’s webinar ‘Navigating the Insurtech Maze’, in association with Appian.

When investing in new technologies, the right thing to do first is to take a strategic look, said Madeline Bailey, strategic change and technology consultant and former head of strategic initiatives at global specialty re/insurer MS Amlin.

“That means looking at how and where you, as an insurance business, want to compete. It can be a bit of a struggle for many businesses and it’s one of the reasons why when we think of insurtech it does feel like a bit of a maze. Because it suddenly feels like everyone is focusing on in-year current problems and how can they use the magic wand of insurtech to help solve some of those problems.”

But she said: “You ought to be thinking ‘how do you think strategically about where you compete and where do you want to differentiate?’ We all know where the value comes from for thinking around new business models, new ways of offering product and insurance solutions to clients - using far more granular data to help them manage and risk mitigate in their business or personally.”

Asked how executives can identify strategic priorities for introducing new technology, Steven Jones, managing director at Guy Carpenter Genesis client services lead, said it was important for them to “stay current on trends and developments in technology”.

He said: "I think it’s incumbent on them to understand what is possible outside their own four walls."

While development methodologies have changed over time, for example the sector is not doing as much waterfall development as it used to, it is certainly in a more agile environment from an IT perspective, Jones explained. But he added that the fundamentals of how business leaders and executives should be thinking about technology shouldn’t have changed much.

“It starts with the goals and objectives of the company, which needs to be translated down to the business units themselves. Those units need to understand the people, process and platforms they have in place to achieve those goals.

“And from an insurtech perspective the focus on data analytics and technology and the gaps associated with that are important. Then finally, after that, we can then turn our attention toward insurtech ecosystems to find solutions to address those needs.

"Otherwise we’re just enamoured by the latest technology and chasing lots of shiny objects with undefined value to our business.”

The right partner is fundamental to insurtech success, something Ed Gaze, senior manager at Lloyd's Lab, knows well. Asked what insurers need to consider when deciding what type of partnership might work best, he said it depends on what they are trying to achieve from the relationship.

“If they’re looking at something that is really fundamental to the way they do business, then if it ends up successful then you probably want to have a decent stake in them. But if it’s something that’s going to help a certain process or quite a niche part of your business then you’ve probably got more options.”

Gaze added that before insurers get too far down that line they may just need to experiment and try things out.

“Try doing proof of concept (POC), see how they pan out, see how the relationship works, it might depend on which part of your business it is relevant to as to whether you do a joint venture or just look at licensing the tools.”

He said the decision is “really quite specific” and they have seen different outcomes from the Lloyd’s Lab.

“We’ve seen some which have gone into a kind of consortium, where they’ve developed a product together. At Lloyd’s ourselves we’ve invested in one of the startups (Layr), not to make big gain not to make loads of money out of it but it was partly an experiment for us, so we’ve got experience in not acquiring a whole but investing in a small startup.

"So [we can find out] what do they want from us? What do we expect from them? How much do we need to do? How much are you going to invest? And how do you value it?”

Of course, even the best laid plans can go awry, so what are the signs that your insurtech may not be a good strategic fit?

Silvi Wompa Sinclair, an experienced independent insurtech expert, said: “I think there are a couple of things that can tell that tale.

"Steve [Jones] was talking about ‘chasing shiny things’, so I think [that is] when you see technology as a sort of tick box exercise or to grab headlines but its actually not used. Or you invest or partner with something that isn't really aligned with your fundamental company strategy, there’s no clear logic how your partnership or investment is actually going to make your competitive advantage stronger. That is a clear sign."

Wompa Sinclair told webinar listeners this could translate into "talking the talk but not walking the walk".

"So a lot of talk around what it is you’re doing, what you’re going to be doing, but when you scratch the surface there isn’t very much happening.”

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