To many startups, partnerships with big companies are an important goal, possibly even part of an exit strategy.
In insurtech, partnerships are essential. Not just to us; to the big companies themselves.
In a journal article on the industry impact of insurtech earlier this year, PwC noted that "CEOs have become well aware of how insurtechs can impact their business. And we observe a change: Fear is turning into bullishness and skepticism into collaboration. The new norm is to embrace digital natives and open up for collaboration."
That may be "the new norm" for big companies, and they may be ready and raring to collaborate… but how does a small, early stage startup still in stealth mode get picked as their Player 2?
Elephant in the room alert: having someone on board who already knows The Right People can really, really help your startup, especially in its most vulnerable early days. This isn’t to say you’re doomed without them (more on that later), but even in the world of tech startups there’s some truth to "It’s not what you know, it’s who you know."
At Wrisk, co-founder Niall’s little black book of insurance contacts led directly to the meetings which kicked off our eventual partnerships with Munich Re, QIC and Hiscox. However, many startup founders have black books like that (well, the digital equivalents). More important than just having those connections is to work out on which ones you should focus your efforts.
What do you really want from a partnership? Distribution channels? Data? Strategic introductions? Once you understand that, you need to identify the connections most likely to be able to help you get what you want. Then you just need to approach them in a way - and at a time - that makes sense.
Real world example: we didn’t approach Munich Re about partnership because they’re the world’s largest insurer (although that is a nice line to casually break out every now and again). We approached them because Niall considered them one of the savviest insurers working in the insurtech space and knew they were at that time actively pursuing digital opportunities.
We knew what we wanted from an insurer partner and we knew Munich Re would be interested in providing it. We already had Niall's contacts as a way in, but the more crucial work was simply to identify and research the opportunity.
When developing a B2C product, you already know what customer problems your product addresses. You may have spent less time on learning what market problems it can solve at the same time, let alone building that solution into your product and business model from the start.
In some instances, you may only become aware of a market problem after you begin speaking to companies in that space. Mike Dennett, CEO of BMW Group Financial Services UK, told us that “the insurance market is in desperate need of digital solutions that we can offer to our customers.” We weren’t aware of this particular gap in the motor insurance market before entering BMW’s accelerator, but soon we’ll be giving their customers access to insurance.
We have, however, known from day one that we were addressing a broad problem in the insurance industry: the customer experience of using insurance is generally poor, which means fewer people are taking out insurance at all. For example, 61% of UK tenants don’t have contents insurance.
That’s a huge market, clearly under-served right now. We have good reason to believe that just improving the customer experience will encourage a number of these tenants to take out contents insurance policies - possibly for the first time ever.
Bronek Masojada, CEO of Hiscox, recognised this focus and has said they were “attracted by Wrisk’s innovative approach to understanding and improving the insurance customer’s experience.” Showing large companies that our product will solve both a customer problem and a market problem at the same time makes it easier for them to build a business case for partnership with us.
So you know who you want to work with and you understand what you can offer them. From here, the hierarchy of communication channels for approaching potential partners is:
Darius was quoted in The Times this week on our involvement in BMW’s corporate accelerator: “I wasn’t enthusiastic we’d get much out of it. As a startup, you’re focused on the goal directly in front of you. I was concerned this would be a distraction. I’m happy to say I was proved massively wrong.”
The full article details the pitfalls large companies can fall into when they run accelerators. Essentially though, a bad accelerator can waste 10 precious weeks of your financial runway on what turns out to be a vanity project or a tick-boxing exercise for them. In the worst case scenario, you leave with less time, focus and equity.
This was, thankfully, not our experience in the first cohort of BMW’s Innovation Lab. BMW offers access to their executives, distribution channels and customers rather than a cash prize, and they did not ask for equity. Thanks to their mentoring and support, we’ve been able to build a product they can use with their customers as soon as we launch.
However, you don’t even need to get accepted onto the accelerator, which may be highly competitive, for applying to be of value. Just completing the application process should teach you more about the company’s priorities, while the company will get an idea of the collaborative opportunities you present. An application to an accelerator is the start of a conversation, and a much more appropriate - and effective - channel for it than cold calls or emails.
In our case, the BMW accelerator was run by corporate innovation specialists L Marks, who went on to run the Blue Table accelerator for health insurer Bupa. In light of our successful experience with BMW, we applied for the Blue Table programme - and were told that a different kind of conversation would be more suitable for us.
Bupa’s Customer Lab, which partners with startups and small businesses to explore innovative ideas to improve healthcare experiences, did some early exploratory work after their Blue Table programme in the summer. In 2018, they will expand this work to further test the feasibility of Wrisk in the health sector. We don’t know yet where this particular conversation might go, but that accelerator application gave us a way to build contacts and gain insights we had no access to before.
Bronek also said of Wrisk “Their commitment to innovation and customer focus are very much in line with the Hiscox values and we are proud to partner with them.” That’s the final piece of the puzzle: don’t just follow the money.
Consider following the rule of 10-10-10 and asking yourself:
What are the consequences of my decision in 10 minutes?
In 10 months?
And in 10 years?
In this light, sharing values with your partners is not just desirable but essential. We put our values front and centre in all Wrisk communications, in part to make it easier for like-minded potential partners to approach us - something we expect to happen more often as we grow.
At the time of writing, we're in talks with a number of large price comparison sites, which approached us to discuss collaboration possibilities. You might expect us to view comparison sites as competitors... but you also might expect us to think that of Hiscox, an insurer partner that works with us in exactly the kind of collegiate, reciprocal relationship we prefer.
Ultimately, we’re tackling huge, complex problems, and we can’t solve any of them alone; we need to consider the potential opportunities a range of organisations can offer, not just react to our current positions in the current landscape. And this is exactly the thought process large companies are currently going through, especially in financial services like insurance.
The PwC journal article referenced above concluded that "staying alert on latest developments and collaborating with Insurtechs to create a better value proposition for their clients will be the key to success." Partnerships are long term relationships, which must be strategically useful, financially beneficial and enjoyable to maintain on both sides. Insurtech founders who view them in this way will have no trouble finding collaborators in large companies.