By FINTECH Books Contributor, Jennifer Overhulse
There are any number of ways in which the culture clash between traditional insurance companies and Insurtech startups may manifest itself. Most are fairly superficial and easily overcome, but the more ingrained difference is the risk averse nature of the insurance beast itself.
Insurers can be quickly convinced about the advantages of remote workers, utilizing technology to automate manual processes, and even moving toward a direct-to-consumer model instead of the age old model which relies on independent agents as the primary distribution channel.
The one thing insurers can’t let go of, however,is the inclination to avoid risk, to minimize controversy or confrontation, to “play it safe,” so to speak.Don’t get me wrong, some measure of risk aversion is prudent, but in the case of the insurance industry it can lead to analysis paralysis, and a reluctance to adopt technologies even if they can be proven to be beneficial.
For Insurtech startups, this presents a problem. Startups like to move fast. In the eight to 12 months which represent the average insurance company cycle, an Insurtech startup may pivot once, twice or even three times as the company refines product, business model and revenue projections.
Few Insurtech startups have considered, or are prepared, for a buying cycle which lasts eight to 12 months, and sometimes longer. Without a short-term revenue strategy, many Insurtech startups will fail fast while waiting for that first deal to come through. With proper planning, Insurtech startups can more naturally match up with insurers’ buying cycle preferences, and win the deal (and the day) before going belly up.