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A carrier’s guide to working with InsurTech start-ups

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InsurTech Rising US is in full swing, and representatives from traditional insurers will be meeting with new start-ups to forge partnerships and continue evolving. We welcome back Stephen Goldstein, Country Director (USA) at Pivot Ventures to discuss best practice steps for making these partnerships work. 

I previously wrote an article entitled, An InsurTechnstart-ups guide to navigating an insurance carrier.  It proved incredibly popular and garnered many comments which added new perspectives (view these here), and  prompted me for this piece.  I believe that while the start-ups are still trying to find ways to best work with carriers, carriers are equally learning about how to work with start-ups.

As with the last guide, this one will follow a step-by-step format, and learning from the last article, my initial disclaimer will be:

All carriers and start-ups have unique characteristics to them.  This guide is meant to serve as a high level one and will be need to catered for each organisation’s  An specific operations and line(s) of business in which they operate in.  


I’ve split the framework into two parts – 1) Before meeting with start-ups and 2) Meeting and working with start-ups.

For the first section, I have outlined steps that carriers should undergo before they meet with start-ups.  If an organisation has already gone through these, great.

Once the strategy/framework of a carrier is identified, then they need to actually meet with, review and start working with some start-ups!  The second section outlines strategies for this.

Part 1) Before meeting with any start-ups

  • Understand and prioritize your organisation’s needs
  • Figure out what sort of partnership you are looking for
  • Build a sandbox framework for start-ups
  • Get buy-in at the executive level

Part 2) Meeting and working with starts-ups

  • Isolate resources and build a project team
  • RFP and start-up selection
  • Outline scope and other project management disciplines
  • From pilot to scale
  • Cultural differences/other tips

Part 1. Understanding and prioritise your organisation's needs

This seems like a basic one, but before meeting start-ups, an organisation should know what it is that they are looking for.

I’ve seen many carriers meet with start-ups ‘just to see what is available’ in the market. This is a waste of your time and theirs.

Taking the time to understand what the current strategy is of the company and how innovation may fit into that agenda will be ideal to have before meeting with start-ups/any software vendor.

Not only should you know what you are looking for as an organisation, but also consider which items are priority over others.

Having these two things identified will help your company in picking which start-ups to meet with, as well as giving them a clear idea of what they are pitching for when they first come to meet you.

It’s also good for an organisation to know how far along they are on the ‘innovation spectrum’.  Be honest with start-ups so they can tailor their approach.  If you have never worked with one, tell them. These guys are smart, they will figure out how to best work with you.

Figure out what sort of partnership you are looking for

There is often a question for an organisation whether to build, partner or buy a software solution.  There are different pros and cons of both, which I will not go into for this article.

However, once an organisation’s strategy and priorities are defined, they will need to make a decision on which type of partnership to pursue.  A few things to note on this:

  • Build – If an organisation wants to build a solution, don’t just use the start-up’s as a platform to do your research and then end up building your own.  Start-ups spend all of their time building a solution to provide to you/your customers. Respect that.
  • Partner – This is probably the path most carriers will go down when meeting with a start-up.  If you want to partner with them, let them know upfront that this is the model you are looking for.  The start-up will then need to demonstrate to you how they can make that partnership as fruitful as possible, including ongoing servicing.
  • Buy – Like the partnering, letting a start-up know this upfront will help them to demonstrate how they can best work with you, albeit a partnership vs. an acquisition type arrangement will be very different.  Also, the start-up may not be keen to explore this route (being bought), so knowing this up front can save time for all involved.

Build a sandbox framework for start-ups

The ‘sandbox’ term is being used a lot these days.  For me, a sandbox is when the typical rules/governance framework are made a bit easier.  For example, regulatory sandboxes allow start-ups to ‘try’ their product without the need of going through all formal approvals.

If then they are going to scale, they will need to go through all approvals, however, since the regulator has already observed them in a sandbox environment, the approvals process should ideally be quicker.

When I use the term sandbox for an Insurance carrier/start-up working relationship, I mean the following: 1) agree that with any start-up that you onboard, you will start with a pilot and Proof of Concept (PoC) first before taking on fully within the organisation; 2) make the approvals process a bit less onerous, however ensure that you still have the key stakeholders involved.

Get buy-in at the executive level

Now that an organisation’s strategy and priorities are identified and a sandbox environment is set up to work with start-ups, the next important step is to get buy-in from the executive level.

Whoever in an organisation is leading digital innovation activities should be driving this. Referencing back to the start-up’s guide to working with Insurance carriers, the person/teams that should drive this process should be within the ‘advocates’.  They should develop a strategy/framework that identifies all of the items mentioned above and make sure it meets the needs of their business counterparts (i.e. the profit centers). Once this is done, then this should be presented to the executive level for understanding and agreement.

From my point of view, there is no other better time than now for all carriers to do this sort of exercise.  The word ‘InsurTech’ should be one of the top terms uttered in any carrier’s boardroom these days. As such, there may be more appetite for an organisation to undergo a bit more lenient process in an effort to drive innovation.

Part 2. Isolate resources and build a project team

Now your organisation has a strategy and framework for working with start-ups; it is now time to actually work with some!

Go back to the strategy and pick 1-2 areas the organisation would like to focus on.

Once these are identified, isolate the people that will actually be responsible for delivering this project.  Build a project team that consists of people that can have significant enough authority and knowledge for the organisation to be the main point of contact between the start-ups, the business and the executive team.

A few tips on this section:

  1. The project team will be the main contact point for the start-ups.  They should know who this is upfront so they don’t go around the organisation trying to find out who to talk to for decisions.
  2. At the time of forming the project team, the organisation should also identify a pilot group of users who will try the solution once it is ready.  The pilot should be outside of normal BAU activities as well.

Request for Proposal (RFP) and start-up selection

The core project team will run the selection process on behalf of the organisation.

This should be based on the sandbox framework built earlier, helping to make the process easier, while still ensuring the proper governance is done.

During this process, the project team should also educate the start-up on their business model, regulations and the like.  If the carrier is US based and operates in many different states, then the start-up should know the different regulatory nuances of each state.  The same goes for European and Asia based carriers that operate in multiple countries.

The education to a start-up of your organisation and regulations is extremely important to do upfront and early on.  The education to start-ups of how insurance works and how it works within your organisation will be of utmost importance to ensure that the start-up fully understands the scope of work and how their solution fits into your specific business.

Outline scope and other project management disciplines

Both sides, the insurance carrier and the start-up, should have their own project management principles that they follow.

After the start-up is selected, there are a few key items to take note of before kicking off the project formally.  These will help in ensuring the project runs more smoothly:

  • Scope should be clearly identified up front.  This will ensure both sides stay focused.
  • Requirements should be very clear and signed off before given to the start-ups.
  • Clear data sets should be given to the start-up (if needed) to help them with building the initial solution.  Give data sets that your organization is only comfortable with giving, but ensure that it is clear and useful for the start-up (they should be able to guide you on this).
  • Test plans should be signed off by both sides and take into account extreme test cases.
  • Escalation process should be identified.  If the project team of the carrier and start-up can not resolve something, who should they escalate to for making decisions?
  • Communications process should also be identified.  This includes not only communications between the project team and start-up, but also with the project team and the rest of the organization.
  • KPIs should be identified of the solution being put in place.

From pilot to scale 

As mentioned earlier, it is advised to start with a pilot and PoC when working with a start-up.  This will allow the organisation to ‘test’ the solution and enable them to scale quickly if they want to implement it to the wider organisation.

In order to this, there are two things that should be in place:

  1. If the pilot is successful, then there should be a partnership roadmap identified within the organisation.  This will include further approvals, implementation/integration, etc.
  2. Have requirements of a go/no go with start-ups.  If the organisation realises that the solution is not going to work, quickly pull the plug on the project and also let start-up know quickly too so they can move on.

Having these two in place will give the organisation the discipline to be able to make a call on the start-up as well as a clear path for scaling up quickly.  

Cultural differences/Other tips

The last section has to do with some of the cultural nuances that exist within start-ups as well as some general tips for carriers that are outside of the other framework items I list above:

  1. Communicate in regular and fast fashion with the start-up.  This means get back to them in a matter of days, not weeks.
  2. Don’t take advantage of or squeeze the start-up just because they are small.  Start ups have limited money and resources.  This is the beginning of potential long term relationship. If you treat good from the beginning, they will treat you the same.
  3. Let the start-up be creative.  As an insurance carrier, you will know your business inside and out.  You need to educate the start-up on this.  The more you can educate them, the more they can offer.  Let them be creative within the confines of your business and regulation.  You may be surprised by what you find.
  4. Relating to point number 2,  just because they are a start-up doesn’t mean they should be treated as any less.  They are a company themselves. They have started things from nothing. Do treat with a level of respect.  Who knows, you could be working with the next Uber.


As I wrote this article, I realise that there are a lot of nuances around this subject.  The nuances can relate to different business lines, business models and areas of the value chain.

As such, both this guide and the start-up guide published a few weeks ago should serve as a high level framework, which then needs to be adopted to specific business models/organisational framework.

This article was originally published on DailyFinTech.Com. Stephen Goldstein is an experienced Insurance executive and InsurTech dealmaker with a core focus on growing revenue, launching go to market initiatives and advising industry leaders.

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