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Signs that an insurtech isn’t worth your consideration


September 1, 2020   by Adam Malik


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A good insurtech will let its insurance partner take its product for a test drive and easily provide referrals, insurtech leaders said during a recent webinar.

If an insurance carrier or broker is dealing with an insurtech company that isn’t doing those things — or is engaged in other activities that raise red flags — its best to move on, they added.

It’s important for the insurance industry to “avoid that trough of disappointment” by gaining first-hand knowledge of the product the insurtech has to offer, said Harsh Shah, director at San Francisco-based Socotra.

“The analogy I always think about with the product is: If you were to purchase a car, you would understandably want to give it a test ride,” Shah said recently during the webinar, Innovating with Insurtechs — A How To. “I don’t walk into six car dealerships with a 400-line RFI [request for information] and say, ‘Hey, can you all fill this out?’ and ask them to present PowerPoints.”

iStock.com/onurdongel

That was the old way of doing things — or at least, it should be the old way, Shah said. But there’s a new class of insurtech companies working against the belief that pitches and proposals are the normal way of doing business. The new way to do business is to showcase a true product that’s ready to be tried and tested.


“Because buying enterprise software is this costly investment, as an insurer you deserve the opportunity to test the products you want to purchase,” Shah said. “Ask for a demo. Ask for documentation. Ask for a 30-day free trial. You should be able to test the platform out, just like you can do with SalesForce.”

Referrals are key for Ian Jeffrey, a panellist on the webinar and co-founder and CEO at Breathe Life in Montreal.

“If the insurtech cannot put you in touch with one of their existing clients [who can provide] a glowing review of the value that [the insurtech has] driven, then there’s a big problem,” he said. “That’s a big, big red flag for me. If the company is not willing to provide any of those items, whether it’s a referral or a case study, then you may want to think about moving to the next company.”

Related: A common mistake P&C organizations make when working with insurtechs

Insurtechs should be ensuring that every client can act as a referral for future clients, Jeffrey added.

Those in the P&C industry may also choose to focus on the experience of the insurtech’s leaders. Even if you are dealing with a company that’s just a year old, the company’s founders may have started other successful ventures. It’s important to look at the track record of building and scaling a team, Jeffrey recommended.

Shah also suggested checking on how much funding the insurtech has raised. “This is fairly public: How much have they raised? Does it feel like the company is backed by institutional investors with deep pockets? Is it backed by industry insiders or corporate VC [venture capital companies] that know the space well?”

Also ask them about their data security, Shah observed. Ask them how they will treat your data and how they are securing it. Ask about certifications and business continuity plans.

“If you do that earlier in the process, it will just save you more hiccups later on,” he said.

 

Feature image by iStock.com/metamorworks


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