How InsurTech startups can get ready for 2021’s summer of hiring
Insurance has transformed itself in the past five years.
Following FinTech’s lead, InsurTech has become a real growth marketplace and that looks set to continue in the coming years. But in what sub-sectors will that growth occur? And how can startups get their hiring right for 2021 and beyond?
What follows is a summary of our own experience helping InsurTech startups scale, and a conversation with Jodi Cartwright, CEO / NED and a key figure in London’s InsurTech scene.
Very few new InsurTechs broke through last year because of a lack of significant funding.
Of course Covid hasn’t helped the situation, although at Santa Monica Talent we’ve seen the majority of InsurTech startups use the past 12 months to build their technology and back-end. Online businesses have been ok and, given their low headcounts and overheads, many have been less affected than other industries.
Jodi says: “A few years ago there was a lot of press and excitement around the new and interesting InsurTechs e.g. Buzzmove, Brolly and Digital Risks (now Superscript). Some have become Covid-casualties, some have been bought by incumbents, and others have successfully raised further funds.”
“I think mainly because of where we are economically, we're not seeing high numbers of new startups coming through.”
“VCs, rightly so, are more nervous about gambling on newer InsurTechs because their primary concern right now is protecting their current portfolio. And while there was a high level of investment in InsurTech in 2020, 80% of the funding went to the top 10.”
Looking at where InsurTech will go in the next 18-24 months, Jodi identifies three areas for growth:
Embedding insurance technology in existing services
Personalisation
SME insurance
Jodi: “I think the incumbents will lean more towards innovation in underwriting, claims, and pricing. This is where they can get both cost and experience advantages deeper in the value chain, rather than through B2C and in the distribution parts of the business.”
1. Embedding Insurance
Jodi: “Non-insurance companies will be looking at insurance and how to incorporate it. Here we’re talking about embedded insurance where companies can easily add insurance alongside their current customer offering (a bit like what Amazon is starting to do).”
“No one jumps out of bed in the morning and wants to sort their insurance renewal. I think customers would rather it just go away, so let's do that for them. Let's make it seamless by integrating and embedding it with other services, whether that be banking, a cloud accounting platform or something else. I have seen a great startup looking to embed insurance for on-line businesses in the Shopify model.”
2. Personalisation
There are two sides to the personalisation coin. The first are the startups tackling smaller sub-sectors of insurance in a more targeted manner. Laka is a good example of this. They do collective insurance for cyclists and nothing else. That’s not a criticism, rather a real bonus. It means they can offer a more tailored service to their customers.
The other side of the personalisation coin is data.
Jodi: "Companies can use data for underwriting and pricing and also create a much better experience when it comes to claims.”
“To be an insurance player you have to have underwriting expertise. You either buy that in or you partner with someone. The likes of Facebook can do either. And because they've got so much data and are so advanced in distribution and how they interact digitally with customers, they’re really well placed to transform the customer experience.
“I think the likes of Facebook, Google, and Amazon will either partner with, or scoop up, someone like Lemonade. Lemonade, in particular, would be a great target because they're full-stack.”
3. SMEs
Jodi: “SMEs do their admin at all hours of the day and night. They’re expected to be a tax expert, sales expert, marketing, networking, IT etc. I don't see many solutions out there helping simplify things for them. There is an opportunity to make life so much easier for them, not least by embedding insurance with other services.”
“For example, if you're a startup you have to go to Companies House to register your limited company. Why not, as part of that journey (and many others), offer startups a package that encompasses insurance?”
As people start to head back to offices we expect to see a number of company rebuilds. And, with no overseas travel for the next 4-6 months (meaning talent is around and available), we predict a summer of hiring.
At Santa Monica Talent we believe there are five areas to consider to make sure you get this hiring right…
1. Should InsurTech startups hire from corporates?
There is a nervousness around hiring corporate profiles into a startup. Typically the pushback is, “we’re just not sure we can give them the support they are used to.” E.g. their own office or budgets for training and travel.
Typically, there are two main age demographics that we see joining InsurTech startups:
Under 30s. They don't mind working in a riskier environment and don’t need the ‘perks' associated with corporate employment.
Over 40s (broadly speaking). They’ve had a successful corporate career. They're financially secure, are quite happy to jump into the startup world, and will typically join as an interim advisor or executive. If everything works they’ll be brought on full-time.
InsurTech startups are quite funny places because you've got a group of mid-20s and then a group of mid-40s, and not much in between. That said, the number one trait to hire for is adaptability.
Jodi: “I think the challenge for an InsurTech startup is hiring a depth of insurance expertise that can make the jump from corporate to startup. Many have already made the jump, but it’s not a huge number.”
2. Is insurance experience a must-have?
Jodi: “Insurance is a regulated market. You need to understand that and appreciate it. However, you also need generic entrepreneurial and innovation skills, the ability to think out of the box, and a track record of scaling businesses.”
“There are certainly roles you don't need to be an insurance expert for, and the key is to create a healthy tension between different disciplines. For example, on one side you may have your underwriters who have technical depth of expertise, on the other you might have your marketing team who are specialists in digital and marketing.”
“At my previous startup the underwriters would, for example, answer product related questions in a technical way, and marketing would then press them in a really healthy debate to say, “but what does that mean to the customer? How can we explain that in an easier way and take out the jargon?”
3. Who should your first senior hire be?
Jodi: “The first one would be a CTO. Then get a really strong marketeer.”
“If you're a startup with a B2C strategy then marketing has to be a core competency. No matter how good your solution is, if people can't find you they're not going to use or buy you. That’s why you have to have a strong marketeer as one of the first key hires.”
“I also think it's important to give your senior leadership team equity because then they've got skin in the game.”
What salary and share options should you offer? Find out using our free hiring calculator.
4. Get your sales and marketing hires right
Just to reiterate Jodi’s point, hiring expert sales and marketing talent is so important for InsurTech startups, especially those working in the B2C space. Customer adoption of new insurance products is difficult so you need strong and savvy digital marketing specialists.
Heads of growth, demand generation pros, performance marketeers… You’re looking for marketeers who’ve been there and done it. There are a number of freelancers operating in this space, but where else can you hire from?
5. Look at HealthTech
There is a close alignment between the InsurTech and Health Tech ecosystems, and when it comes to hiring we’ve seen an interchangeable talent pool.
Jodi: “Companies now directly correlate health activities you do today with how much you're paying for your insurance. Here you get a much higher level of customer engagement and the customer can see the benefits of the health improvements they're making at any given time.”
Because of this trend, those working in Health Tech are familiar with the insurance space and can offer startups a really well-rounded skill set.
Get ready for the summer of hiring
When it comes to company rebuilding and hiring, this summer could be like nothing we’ve ever seen before. Make sure you’re ready for it!
Get in touch with Santa Monica Talent today for a free consultation. We help start-ups scale up by building exceptional sales, marketing, product, software, and leadership teams for them.
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