5 Essential Strategies to Help Insurtechs Flourish in 2023
A clear strategy fuels insurtech growth. This is essential in order to ensure that the company enjoys sustainable growth and can best make use of funds provided by investors. Here are five strategies that will ensure that the company is able to scale success.
The expanding Insurtech sector is one that investors are watching extremely closely. They are also attracted to a market that boasts almost unlimited potential.
However, there are a large number of startups that are vying for attention and funding – so making sure that a company has a well-thought-out strategy for growth is pivotal.
Below we examine the top 5 strategies that will ensure the success and scalability of any Insurtech endeavor.
1. The importance of KYC
At this point, only approximately 2% of the worldwide insurance market is focused on Insurtech. The corollary is that around 98% of companies are failing to address the needs of an ever more demanding client base due to reliance on legacy systems and approaches.
Insurtech companies have a clear advantage in that they can deliver life insurance products as well as others, quickly and efficiently – and maintain constant contact with clients via mobile devices and various apps, one of the prerequisites for success.
However, leveraging client data to gauge which services are most in demand is essential to the success of any Insurtech company.
Although the marketplace is currently small, competition is already cutthroat. Scaling successfully is dependent on the company prioritizing the strategically sound use of KYC data.
The process should include forecasting regarding the launch of new products and services, as well as the timeline for these launches.
Cover Genius recently revealed the results of a study involving 15,000 global travellers. The results indicated that 40% of travellers intended to switch from their current travel insurance providers.
This is a clear indication that there is a disconnect between the needs of the consumer and the offerings and services provided by traditional insurance providers.
2. Insurtechs must focus on providing better products and services even more quickly.
A focus on innovation is one of the marks of a successful Insurtech company – and that innovation is focused on drive-through technologies that enable the company to offer exceptional service.
It is essential that the Insurtech company streamline its internal process through a commitment to a process of continued improvement – and committing itself to operate in a lean and agile manner – which means delivering services faster – and focusing on those emerging technologies that will help the organization to offer solutions that address the unique needs of the customer.
A recent study by global thought leaders McKinsey revealed that insurance companies could automate between 50% and 60% of back office functions.
Successful insurtech companies are doing exactly this by developing new service models in cooperation with other insurtech and leading technology companies.
3. Insurtechs need to focus on identifying suitable partners in the ecosystem
The pace at which technology and other offerings are evolving means that it is essential for Insuretech operations to identify partner organizations that can drive growth and facilitate scalability. It is this type of cooperation and collaboration that will enable an Insurtech company to reach the next level.
However, the converse is also true; selecting the wrong partner can have negative short, medium and long-term effects.
In order to ensure that the collaboration is successful, the Insurtech company needs to obtain professional legal advice on issues such as the length of the collaboration, the expectations of both parties, and security strategies and concerns that might impact the success of the business. Cybercrime, for example, is one of these concerns.
There are numerous studies that indicate that one of the key success factors in any such collaboration is whether it meets the criteria of an identified business needs and use case.
Insurtech companies must ensure that there is clear evidence of a connection between the insurance providers’ needs and the solution(s) provided by the Insurtech startup.
4. Insurtechs need to take robust KPIs into account
This may be business 101 – but setting achievable goals at the outset is one of the best methods of ensuring that discussions of strategy are focused and effective.
These KPIs can include numerous measurable goals, such as the identification of the right partner companies, examining potential new product and service launches and the impact of adopting suitable technology solutions.
Every business expert agrees that the absence of clear KPIs and goals – and understanding these will result in the company ‘forcing’ tech solutions to fit rather than identifying and partnering with tech providers that make appropriate solutions available from day one.
A study by Capgemini revealed that Insurtech companies could enjoy a 60% faster time to market if they enjoy a collaboration that aligns with their goals.
Those companies that fail to correctly identify the essential indicators for success are facing an uphill battle when it comes to measuring the failure or success of an Insurtech investment.
5. Insurtech companies need a clear scaling plan
A report by the Co-Founder and Chief Revenue Officer at Air Doctor, Efrat Sagi-Ofir emphasized that Insurtech companies need to be easily scalable.
She mentions that startups and scalability must go hand-in-hand. She also mentions that the relationship between parties often breaks down when moving from the pilot project and testing to scaling up for a large-scale rollout.
There may be various reasons for this breakdown, including technology, incompatible business models and infrastructure among these. Any conflicts or incompatibilities can mean that solutions ‘Fail at Scale.’
Pilot projects are absolutely vital to success. Those insurers looking to partner with Insurtech concerns in order to boost their digital presence or scale need to ensure that a pilot is rolled out prior to making any official decisions.
Pilot projects reveal potential problems and challenges that can be dealt with quickly and efficiently prior to full-scale implementation – and before a significant loss of investment becomes a possibility.
The pilot project also offers an opportunity to test scalability in order to assure success when the strategy is finally rolled out publicly.
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