If insurers don’t embrace startups they could find themselves in trouble cautions Startupbootcamp InsurTech global managing director Sabine VanderLinden.
VanderLinden (pictured above, centre) was speaking at a networking event held last night by Startupbootcamp InsurTech, following the Cape Town leg of the organisation’s InsurTech FastTrack.
No ad to show here.
She said some insurers fear that startups might disrupt their companies and make them redundant. She pointed out an example of startup companies that were opting to work with retailers and not insurers.
“Startups with platform-based solutions may do that (make insurers redundant), some are ready to go to market. Some of these startups may decide to become insurers themselves, corporates are going to be watching them very close,” she added.
VanderLinden shared insights from PwC’s insuretech trend report released last month. The report uses data from Startupbootcamp Insurtech drawn on between July and November last year.
The report lists IT security, differences in business models, regulatory uncertainty and differences in management and culture as the top four barriers to collaboration between startups and insurance companies. The others are IT compatibility, differences in knowledge and skills, different operational processes and required financial investments.
Startupbootcamp InsurTech research reveals that 70% of startups are interested in working with corporates
She told Ventureburn that research by Startupbootcamp on about 450 startups revealed that 70% of startups want to work with corporates, but that up to three quarters are worried about working with corporates and felt that it is a long and complicated process.
“The reason why is internal processes take too long. They suck the startups energy and resources. Startups don’t have that much money and it could take them six months to get a new project,” she said.
She said Startupbootcamp InsurTech assists startups by making sure that they meet the right person and they know who exactly they have to talk to so they can move their conversation along.
‘Don’t collaborate with old guard’
VanderLinden encouraged startups looking to collaborate with corporates to be careful when choosing partners.
“First identify companies who want to do it, because if you go for the old guard, an organisation that has not yet thought about collaboration, they will not have internal processes in place to get you to work within their environment. If they ask you to sign a deal or contract they will take you through the vendor route and not the startup route,” she said.
VanderLinden said corporates keen on collaboration could be identified by how they invested in infrastructure, participation in accelerators and through how vocal they are on finding startups. Startups should rather choose to work with such companies, she said.
She said early adopters such as Munich Re, AXA, MMI Holdings and companies like Old Mutual have units that work with startups.
“Their senior management teams have said okay, we are not going to be disrupted by startups, we are going to do something to elevate our business and we are going to embrace what is going on from a digital transformation,” she added.
‘Meet in the middle’
A central concern that corporates have is around data security and its impact on their brands. As such corporates were cautious about collaboration. This she said is compounded by regulators’ focus on data security. However Vanderlinden thinks there is a way around that.
“I think there is a need to create a sandbox environment like the British financial regulator, Financial Conduct Authority (FCA), has done where startups can test and learn their solutions without impacting real customers while using real data- initiatives like this are super important,” she said.
In the end VanderLinden believes that despite their differences startups and corporates can work together.
“It’s always about finding the right balance, startups must be mindful and look at the insurance companies as their clients, you have to understand their needs and wants, you have to have empathy to understand the constraints they are dealing with,” she said.
She added that insurers also have to learn to accept how startups work. “Both have to meet in the middle, they have to trade off things if they want to work together.”
Featured image: From left to right: Erika Bothma (Startupbootcamp), Sabine VanderLinden (Startupbootcamp InsurTech global managing director), Matshidiso Hagan (Senior Investment Analyst at Old Mutual Emerging Markets)
