By Bryan Falchuk, Managing Partner at Insurance Evolution Partners
The insurance industry has spent billions on innovation, with a clear ramping up of its efforts as it met the imperatives imposed by COVID lockdowns and seized on opportunities created by new solutions brought to market by insurtechs.
And yet, while many of these efforts can be deemed successes, the path to bring them to market has not always been smooth. Indeed, for every successful and smooth implementation, there are no doubt countless others that run over budget, deliver a constrained scope, or fail to see the expected impact and returns materialize.
Last year, I was lucky enough to be part of a group of experts from around the industry to research what leads to more (or less) successful collaborations between insurers and insurtech solution providers, and what we can do about it. Those efforts came together as the Insurance Collaboration Index, with findings that can help lead to better collaborative efforts to drive the industry forward.
It also lead to what would become the next book in my Future of Insurance series, and a series of insights and lessons from the first-hand stories of collaboration in the book that I will share at PiMA’s Summer Insights Conference.
What Leads to Success
From the Insurance Collaboration Index, which surveyed hundreds of insurtechs about their work with a wide range of insurers, we learned several lessons.
The single most important and highly correlated factor when it comes to what carriers can do to help ensure success when working with an insurtech on implementing a new solution is seemingly obvious, yet frustratingly not done consistently or sufficiently –properly resourcing the project. This factor was strongly correlated to the success of a project (r2 of 0.74).
This means the extent to which carriers assigned dedicated resources to oversee a project, engage in a pilot or proof of concept, train staff on how to use the tools, have technical staff working on API connections, etc., can make or break a project.
For example, a carrier may assign a project manager to oversee implementation, but that person may not be committed to the project, invested in its success or have the bandwidth to really stay on top of its delivery. Or there may be an assigned resource, but the person assigned gets swapped out several times, so it’s still a dedicated resource on paper, but not in practice.
It may also be a function not of assigning resources, but assigning the right resources. Are these strong performers? Are they bought into the idea and committed to its success? Have they been educated on why the company is doing this, why it matters, and what success looks like? As one carrier CIO told me, “If it doesn’t hurt to take the person out of the business to work on the project, you probably have the wrong person.”
The second-most impactful thing a carrier can do to ensure success may seem odd as it implies that things are actually failing.
Invariably, even the best projects hit bumps in the road, whether that be delays, complications, surprise developments or worse. According to survey respondents, it’s not whether you keep problems from arising, but how you respond when they do that matters.
Specifically, having communication and decision-making protocols and pathways clearly defined so that issues can be raised, discussed and resolved was nearly as correlated to success as having dedicated resources (r2 of 0.73).
Many carriers have well-established protocols to address problems, but they may require fitting a meeting cadence or timing that draws out project timelines or risks scope and budget. Having a more flexible and responsive path to ensure time isn’t lost or the opportunity to manage the negative impact of problems isn’t missed can be a crucial differentiator between projects that flounder and those that thrive.
Putting together these top two drivers of success, carriers can setup project teams with resources that are committed and engaged in the success of the project and have well-established pathways to resolve issues and overcome barriers as they arise so that they can be addressed quickly and completely.
What Doesn’t Help
While these factors are correlated with successful collaboration, there are some that you may expect to be highly correlated yet have less direct impact in practice, if any. Specifically (and surprisingly), having sufficient budget is not highly correlated with success. That is, innovation and successful insurtech deployments are more dependent on how you engage by dedicating people to the project and working to resolve issues than to how much money you are willing to spend.
This was a very interesting finding as many carriers assume that innovation is expensive, or that they may lack the budget to be innovative. On the contrary, how you use the resources you have is much more important than the scale of resources at your disposal.
A corollary to this is that you cannot make up for a lack of committed resources or a difficult or unhelpful issue resolution process with money. That is, paying the insurtech to work around your problems or spending more on systems integrators (SIs) to deal with an issue was not found to save troubled projects, while having dedicated resources and internal issue resolution at the carrier was.
Of course, that does not mean internal resources are free, but there is more impact from working effectively with the resources you have than unlimited spending on additional resources.
What May Seem Obvious Isn’t Always
While it may seem obvious that having dedicated resources and removing barriers quickly and effectively can keep a project on track, in practice, we find that judging performance here mirrors what the industry learned around customer experience – it’s not how you judge yourself, but how those you work with judge you.
Beyond the insights discussed above, one of the biggest learnings from this work is the need for carriers to seek honest feedback from their partners so they can learn how to do better, just like we seek to do with our insureds and trading partners. We may not always like what we hear, but we can always learn and grow from it, and that will serve to make us more effective in future efforts to move our business forward.
Published in the Spring 2023 issue of Insights Magazine.
PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the affinity market.