As technology continues to advance and increasingly looks to disrupt the global insurance industry, partnerships between incumbents and InsurTech startups are becoming more and more commonplace, however, cultural misalignment could be hindering innovation across the sector, according to Alex Maffeo, Chief Executive Officer (CEO) and Founder, Boost Insurance.
Speaking with Reinsurance News, Maffeo of Boost Insurance, an InsurTech development platform, explained that “cultural misalignment between startups and incumbents is by far the number one inhibitor to innovation.
“Startups need to move fast and have the ability to iterate. Incumbents in this industry are notoriously slow and resist change. Startups are doing things differently whereas incumbents are overly reliant on historical data and traditional methods. Incumbents typically try to assert too much control over startups in the form of onerous exclusivity requirements or excessive equity grants.”
He continued to stress how burdensome exclusivity demands and alike, make it impossible to develop a successful business, while startups typically get caught in “pilot purgatory where they have small test programs with individual business units, but then find it extremely difficult to get full organizational buy-in with their incumbent partners.”
Maffeo stated that ultimately, incumbents tend to favour InsurTech partnerships that optimize their existing businesses, and often resist fundamental shifts in the marketplace.
“Dismissing insurtechs that are taking new and different approaches, which may wind up potentially competitive, is a surefire way to have your business disrupted over the long term,” he concluded.
In the current challenging and highly competitive risk transfer space, global insurers and reinsurers of all shapes and sizes are increasingly looking to improve efficiency and lower costs throughout the value chain, and the rise of technology is supporting their efforts.
However, and as stressed by Maffeo, it’s important that relationships and partnerships between incumbents and InsurTechs are beneficial for both parties and the wider industry, and that cultural alignment is achieved in order to really innovate and move the marketplace forward.
The InsurTech development platform believes that the barriers to entry for innovators in the re/insurance sector are too high, and it aims to improve this via technology and improved cultural alignment.
In May of this year, Boost Insurance announced that it had secured a dedicated reinsurance facility to support its B2B InsurTech development platform, led by insurance and reinsurance investment manager Nephila Capital, with participation from Markel Digital and RenaissanceRe Holdings.