Top 4 Screwups in Insurtech
The road to success is often long and turbulent. In my over 20 years of experience delivering technology solutions to the P&C insurance industry, I have seen many recurring mistakes that prevent the full value of a solution from being realized. In this post, I will cover the four most common ones, which can be easily avoided with a healthy dose of self-awareness and caution.
#4 – Ideas with no plans
My son used to ask me to drive him to his friend’s house to play video games. He would give me a specific time when he wanted to leave, and I would rearrange my schedule to accommodate him. Sometimes, however, he would notify me a few minutes before the scheduled time that his friend was unavailable, and my chauffeur services were no longer needed. In this case, my son’s desire to visit his friend was merely an idea and not a plan. Now, when I get similar requests from my son, I ask, “is this an idea or a plan?”
The same can be said when it comes to insurtech initiatives. There is a big difference between an idea and a plan. Ideas are crucial for the creation of something new, but without an execution path, they can never be realized and therefore lose their value. Ideas can lead to the formation of a team within an organization that will actively pursue the latest “shiny object” in their field. However, when a newer, “shinier object” comes out, resources are often re-allocated and all the previous momentum is lost.
Key Takeaway – Understand the execution path, know the steps that will be needed to make your idea a reality, and be ready to commit to them.
#3 – One dimensional thinking
There is often more than one path to achieve an objective but it is human nature to get comfortable with a known approach. Being familiar with something creates a sense of safety, but exploring new perspectives will often yield advantageous results.
For example, in optimizing commercial underwriting processes, many think of automatically answering as many underwriting questions as possible using machine learning and extensive third-party data. This is a fine approach, but there is also the dimension of asking fewer questions in the underwriting process to advance the same objective. See our recent article in Carrier Management, “Better Answers or Fewer Questions; Two Sides to the Commercial Underwriting Improvement Coin,” for more on this topic.
Key Takeaway – Foster a culture of creative thinking and use your company’s talent to brainstorm multiple ways to approach your objectives.
#2 – Solutions in search of problems
Any interesting technology is going to capture attention, but it also runs the risk of distracting from the core pillars that help advance a business. Concepts like Straight Through Processing have great potential, but without clarity on how they will move the business forward, they can add risk and distraction to an organization.
Key Takeaway – Make sure objectives are clearly defined and well-known throughout the organization. All actions should tie back to helping to achieve an objective.
#1 – Narrow vision
Many times, companies approach vendors with a specific problem to solve. There is nothing wrong with this initially, but often the problem is a narrow take on how to achieve the company’s objectives. Of course, many insurtech startups, hungry for momentum, will engage even if the project is not in their wheelhouse. Unfortunately, this can lead to less value being delivered and possibly a failed engagement.
Key Takeaway – Allow qualified vendors to help you set your vision as you engage with them; enabling you to find and maximize the pockets of value they can deliver to your organization.
Awareness leads to success
In my experience, over half of engagements that fail do so because one or more of the screwups above are made. Staying focused on avoiding these screwups can save an organization a lot of time and money and, ultimately, help ensure their success.