Digital Insurance Agenda

“If an idea isn’t bonkers or brilliant. We’re not trying hard enough.”

Written by Conny Dorrestijn, Associate at DIA and Founding Partner BankiFi on Dec 17, 2019

Insurtech Gateway has been hacking the collaborative model between founder and insurer. The London-based incubator and fund created a fast track authorized launch capability for insurtechs.
They enable insurers, technology partners and insurtechs to get to know each other, not over five minutes or five weeks but over a duration of building a business. They currently have 10 insurtechs in their portfolio and are on a mission to become the destination for the world’s best talent to disrupt Insurtech.

We spoke with Stephen Brittain, Director and Co-Founder of Insurtech Gateway, Karl Stanley, VP at Renaissance Re, Peter Bousquet, CEO/Founder Humn.ai and David Janczewski, Co-Founder and CEO Digital Asset Services, about their frontline experiences and insights.

‘Bonkers or Brilliant’, that’s the name of your campaign to find positive disruptive teams and ideas. Looking back at your career, Stephen, you’re always doing something with creativity, design, innovation, but also very much with scaling. Where does the ‘bonkers or brilliant’ analogy come in?
Stephen: “Some of the best ideas in the world sounded bonkers at first. If the industry hopes to innovate, they must find a way to suspend disbelief and trust in new people with disruptive ideas. Bonkers or brilliant tells not to behave like a corporate when you see a great start-up. And to just accept the fact that maybe you don’t understand it and they don’t understand you.

When I first entered the insurance space three years ago, I was met with sad faces of great creative people that couldn’t make anything happen. I worked tirelessly with my partners to change the language, to create new fora where we can talk about ideas and their potential first and where we can have meetings in which we try to make amazing things happen. We want to be an independent in this new game called Insurtech. I guess that’s where the analogy comes in.”

 

 

We completely relate to that, it’s basically one of the reasons DIA was created. We wondered why so many things were happening for the payment space and for the banking space, yet nothing happened for insurance. That’s essentially how DIA came to be. We need to be insatiably curious. In a world inundated with incubator start-up bootcamps and so on, where is Insurtech Gateway different? How do you work?
Stephen: “Primarily, we didn’t start at scale. We started by helping one or two start-ups to get going and working out what they needed. We’ve designed it from the bottom up. We followed the start-up journey and built the platform accordingly. Right now, we are the only incubator with authorization and a fund. We’re building more and more bits to help start-up founders succeed on their path.”

It’s interesting that you don’t just look at the what and the how, but you really start at the very core with the vision. Understanding the purpose of these start-ups, what they want to achieve and subsequently how they present themselves. For instance, FloodFlash, one of your portfolio companies, present themselves by sitting by the water, because there is the issue they address. What methods do you use to really get to the bottom of their purpose?
Stephen: “The start-ups we work with come to us. I think it’s really in the way that we put our flag up and we attract a certain type. From that point on we get them out with our customer. We get them in the water, we get them to talk and we really encourage customer first product development and innovation. I think that’s fundamental to our story.
The example you mention, FloodFlash; the parents of one of the founders were living in a flood zone. They sat with creased faces and passion towards a frustration that their family couldn’t get a coverage and had a brilliant, or maybe bonkers, solution to solve it.”


After these first three years, what are some of the lessons you learned?
Stephen: “I think the biggest lesson was to take our time and be excellent at what we do. And I think we did that by nature of continuously bringing together small numbers of people and slowly working out how to de-risk start-ups. The first year, we were learning how to break into the market with the FCA on our side to get our authorization. As this was a tough journey, it helped us understand the pain on the start-up’s faces when they came to see us. We’d been there too. Then it became about market fit; understanding and finding start-ups which you gently guide to get that click with a customer.”

In other words, remove the barriers that get in the way so that brilliant people can get to their customer.
Peter, you’re one of the founders of Humn.ai. Can you share a little about Humn.ai and how the experience with Insurtech Gateway has been for you?

Peter: “Humn.ai is a data platform that provides real-time risk pricing and transparency to insurers in the commercial fleet space. With the help of Insurtech Gateway we’ve gone to market in six months rather than two years.”

You were an investment banker who then went fishing and became an insurtech. Working in a large insurance firm you could have taken advantage of the opportunity to develop something, but you chose to take the hard way. Why did you opt to become an independent and what is it like?
Peter: “We started with this idea of gathering and building a data asset. Going at this via an insurer, at best you’d become a high-priced consultant. You can build the data asset and build the long term value, both for yourself and the shareholders that come in, and invest, but only by starting from outside. Not only did I found this more attractive, but it’s not possible to really build that kind of data value for a founder group while staying within the walls of an insurer.”

David, you left The Royal Mint, a very stable business, to found Digital Asset Services, providing insurance against theft and loss for crypto currencies. You are now working with blockchain, cryptocurrencies and so on. Does that make you bonkers or brilliant? 
David: “It was quite a journey to convince The Royal Mint to get into blockchain and issue a UK-based gold-backed digital currency. It took five years if not longer. So, for me, it was about how to do this in a much faster and more efficient way. In the early days, I’d sat down with insurers and discuss what we were planning to which they’d start laughing. When they stopped, they’d ask again what I was trying to do. I’d repeat what I told before and they’d start laughing again. Turns out, I didn’t have a bad idea, but it had to do with the way it was presented. How do you convert what you want to say into something that is understandable and digestible by the audience that you’re targeting? I guess we wouldn’t be here today if it weren’t for the patience and commitment of Insurtech Gateway.”

Karl, you used to be a programmer and are now VP Technology Ventures with Renaissance RE, another extreme. You are an investor to Insurtech Gateway. Why did you decide to look at outside independents who, by their very nature, are more troublesome to deal with than internally grown ventures?
Karl: “I found it very interesting when Peter mentioned that working inside an insurer it can be difficult to innovate and grow value internally. I work for the ninth biggest insurer in the world, a large machine that we need to keep on the rails. It doesn’t give us the time nor the space and willingness to fail. And you need that in order to innovate. By partnering with Insurtech Gateway it allows us to vicariously do that. They come up with ‘bonkers and brilliant’ ideas and we can speak to them and hopefully teach some things whilst learning at the same time.”

First and foremost, being a start-up, you need courage since the first part of the journey you often need to fund yourself. How did you deal with that discomfort or are you that courageous?
Peter: “I think it’s still uncomfortable. A couple of months ago we closed our seed round and that was the first time that we could catch a breath and realized we took another step forward and were revenue generating. Mark, the other co-founder, and I have been on this journey for about 3 years, winnowing it down to something you could recognize a value in and feel that you could strike out on that path. We realized we were taking the Lonely Planet guide to insurance and we would still be on that guidebook and never get to where we needed to be if we didn’t partner with Insurtech Gateway.
They’ve really coached us when it comes to this very busy time world and allowed us to take larger steps towards actually seeing a product live in the market that otherwise would have taken who knows how long. This helped everyone to relax and actually build product for climbing.”

Because it’s tough, isn’t it? Obviously, the founders are very important for you, Stephen. They are normally the people who bring the business to you. How do you deal with any possible exclusivity behaviour? For instance, with banking, you often come across exclusive investments. How do you deal with that?
Stephen: “I think we were quite surprised how easy the conversations were. We made it clear that the ownership of the business would be with the start-up founder, the business owner. To our surprise, they were very happy about that at Renaissance Re. They even expressed they were not interested in owning it and it first and foremost was a huge learning exercise. Those were their words, not ours. We were also granted some underwriting access. We’re quite used to being part of panels and binders where we could double up, triple up with other insurers. So, we thought we were going to have a tough time but instead we pushed on an open door. Probably this also says a lot about the way your work, Karl.”

Karl: “I think one of the things that makes companies like Renaissance Re successful is that we have a pretty good handle on what we are good at and what we are what we are not good at. We attempt to concentrate all our efforts on the things that differentiate us and the things that we are good at. So, we’re really good at underwriting or really good at-risk selection and we put a lot of effort into making sure we have access to risk so we can build a long-term franchise value for our shareholders and so on. We feel the engagement with Insurtech Gateway. It’s not just about how we’re going to get a certain return on a particular investment. We’re thinking about it almost in terms of an access to risk play, because we need to learn about new and emerging forms of risk, new ways of interacting with the public, selling them insurance and things like that. This way we can get ahead of these things and see where the trends are. Only then, maybe, when they start to scale in a huge way, we’re ready to move.”


Almost every insurtech has a level of pivot at some point. You start out with a great idea, start touching the market, talking to prospective customers and you figure that you might have changed the story a bit. What is your advice to starting insurtechs when it comes to staying with your core innovation and at the same time listening to the markets?
Peter: “We are there to innovate and collaborate with capital. At the same time, the whole idea of insurtech is that you’re trying to find a new path to the customer and provide value to that customer. We found that working with partners who provide that direct feedback allows you to hone an idea before you go in and trial it in front of a difficult room. Trying and doing it in those kind environments has been instrumental in making the most of those small bites that you get when you go and present to capital and to underwriters. I think that’s been instrumental in our early success.”

David: “If I think back to our journey that started just over a year ago, the core proposition in terms of being an insurance for cryptocurrency hasn’t materially changed. How we have developed the proposition and worked on it has changed probably a dozen times. It changes every single month depending on the feedback we receive. When you’re a founder, you get backed because of your original concept but you have to strike the balance between that and being flexible enough to listen to either what your customers, your supporters or your partners are saying about what you’re doing.
It’s a hard balance, similar to a pendulum swing; sometimes you listen to people a bit too much and if you’re not careful, you can drift away from a core concept. It’s not an easy journey but you are not at it alone, that is for sure.”


Karl, as an investor looking for at start-ups, how would you prioritize having the right future fit; technology, having the best business idea or having a smart and agile team. I know you all want five-legged sheep!
Karl: “You already mentioned my technology background, I was a software engineer for many years, and it pains me to say that nobody cares that much for technology. It’s important, but it’s used to enable a business idea. Investing is ultimately about people. I’d first look at team, then business idea and finally technology.”

Stephen, what would you say to those people looking to join Insurtech Gateway?
Stephen: “If you’re a fascinating tech entrepreneur with an idea, looking for a place to start and you can get a bespoke team around you then feel free to approach us. We currently have 10 businesses. We are also looking for passionate insurers with the energy to innovate. We offer them a place to connect and instantly access these kinds of businesses with other insurers who are willing to play and share. It’s very easy to blame the insurance industry for being slow but that’s very unfair. It’s an industry that exists and they have a lot of regulation and compliance. It’s not a lack of willingness, it’s finding the house.”


This participative model can really help them work. What do you think will be the disruptive force that threatens insurers? What will be the WeChat or Tencent of the insurance market?
David: “I think we’re starting to see the early stage of mutual type-based insurance. It’s not there yet, but we’re starting to see examples where people will bond together and be able to insure themselves or insure a group. It’s an independent way where they don’t need anybody else to manage that for them. It’s self-managing and self-fulfilling in that sense. Whether that actually comes to pass in a big way, time will tell, but we start to see that happening now.”

Peter: “I think it’s about transparency. Data-driven transparency is fundamental to unpicking this kind of contrarian and also opposing position that often happens between the policyholder and the underwriter. That is going to be unpicking a lot of the value chain for you.”

Stephen: “Insurtech was an exercise of self-reflection and now we’re looking at good collaborations. I think a lot of things will start to happen now. Tech people will come into the market and shake it up. I agree with David and Peter and the rest we simply can’t predict.”

A final question to you, Stephen. What’s next for the Insurtech Gateway?
Stephen: “We opened Insurtech Gateway Australia to compliment the Gateway in London. Since our portfolio and our founders come from everywhere, we’re actively looking for partners to open new Gateways. Our mission is to become the destination for the world’s best talent to disrupt Insurtech, helping companies scale up and expand internationally.”

https://insurtechgateway.com

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