The insurance industry has faced an onslaught of challenges over the past couple of years, from the global COVID-19 pandemic to economic and social inflation, a talent shortage, a changing climate, growing ransomware attacks, and the Russia-Ukraine war.
These topics were all discussed at the Insuretech Connect conference in September at Mandalay Bay Hotel and Casino in Las Vegas. During one session on how insurers can navigate turbulent times in the industry, Everest Re CEO Juan Andrade said “there’s never been a more important time in the industry to be able to deal with various kinds of risks.”
“If you look at the velocity of things that are happening around the world,” he said, “the risks of today are dramatically evolving.”
He was speaking to reinsurers, but for InsurTech startups, the challenges could be just as great. Carrier Management previously reported that InsurTech is facing a “leveling out period” as experts say many InsurTech valuations have come down this year.
“We’re in this leveling out period,” said Chris Cheatham, product evangelist at Bold Penguin. “I don’t know what to call this period yet, because I think we’re still seeing the market shake out. This period right now is different. This is not pandemic. I don’t even know what to call it because I don’t want to try to name this particular economic moment, but you’re seeing valuations come down.”
Cheatham was speaking during a session on mergers and acquisitions in InsurTech for Carrier Management’s 2022 InsurTech Summit.
“I think there are a lot of people, honestly, probably trying to figure out their exit strategies right at this moment, right in the next few weeks, because things are looking interesting, I guess, is a nice way to put it,” he said on the panel, which took place in May.
But as Cheatham predicted that many InsurTechs might be trying to figure out their exit strategies this year, what does this mean for new startups wanting to enter the space?
Carrier Management and Insurance Journal attended the Insuretech Connect conference in Las Vegas this September and asked experts experienced in the startup world for their best advice to launch a startup in such a challenging environment. Here’s what they had to say (quotes have been slightly edited for clarity):
“Hire good people that you trust”
“I think my best advice — I’ve worked in a handful of startups now — is legitimately to hire good people that you trust. Hire people that not only know what they’re doing, but people that you don’t have to micromanage, and people that are going to make themselves and the company first in terms of their approach.” — Alex Marr
“Things move so fast”
“Understand that things move so fast sometimes, and we can make decisions on a daily basis if we need to. There are a lot of challenges. Sometimes you just don’t have the right resources, so you need to figure out how you actually find those resources on your own. A lot of times, people don’t have a playbook even set up just yet. This is my first startup. If you worked for a big company, it’s really hard for you to actually come and understand how you’re going to work in this startup world. It’s a whole different mentality.” — Bobby Khamis
“Continue to have curiosity”
“My best advice for a startup would be to have a strategy. Make sure you know what you’re going to focus on and execute on that strategy. Continue to have curiosity, because curiosity is absolutely critical with so much change that’s happening in the marketplace. Be flexible in what it is that you’re doing and then have courage because this stuff is tough.” — Denise Garth
“Don’t get discouraged by others”
“It’s really fun. I actually work with a lot of startups, and the energy that they bring is the best. I absolutely love partnering on that energy level. The biggest thing is don’t get discouraged by others. [Despite] the classic slowness that you see within the industry, continue to push forward, continue to be fast-paced, be dynamic. This industry has had a lot of energy taken out of it, and there are a lot of professionals that have been told no by their IT teams for decades. Don’t worry about that. [Think to yourself], ‘We’re in a position where we can say yes now, and so let’s just push forward together.'” — Drew Lawyer
“There’s always money to fund good ideas”
“My advice for a startup — and we work with a lot of them, a lot of MGAs — is it’s a tough time right now, as everybody knows, but there’s always money to fund good ideas. I guess one of the things that people say a lot is if you wait until your MVP (minimum viable product) has no problems, no bugs, no things that you want to make better, then you’ve waited too long. So, I think the best advice I could give is launch early and iterate and improve from there. That’s the most important thing.” — George Ravich
“It’s about staying the course”
“Probably the most important thing is resilience. There are always challenges. Survival and growth requires an extreme amount of resilience. That’s step 1. Anybody can create a product, anybody can come up with a great idea, but what you need is an awesome team to take it to fruition. You also need believers. That’s where investment comes in. But the first thing is to prove your product is a market fit, that what you have to sell is really there, that there’s really a market for it… That’s where we get started, and then it’s about staying the course, believing in your own ability and your team’s ability to deliver, and then just laser focus on delivering what customers can value. That’s what we’ve seen. You know, we’ve all seen big companies become big because that’s what their ethos is…” — Kashif Mahbub
“Focus, focus, focus on delivery of value”
“One of the things, even as a fairly advanced-stage startup — we’re at series D now and been going for nearly a decade — is that even now in our evolution, we have to keep a really sharp focus on not trying to do everything with the technology we have, but picking some clear use cases that are of real value to the insurance industry. I would say that the keyword for me has to be focus. Make the best of the investment that you can bring into the business and focus, focus, focus on delivery of value.” — Stephen Lathrope
“Don’t try to be all things to all people”
“Everyone knows that startups right now — there are a lot of them and a lot of them are burning cash. So, when you think about it from the perspective of the customer of the startup, I would say to make sure that you know exactly what your product is. Don’t try to be all things to all people. Be very, very narrow in your scope and solve a problem that they have. With respect to the capital raise, which I think is an important element for startups to think about, make sure that you can demonstrate how you can monetize what you’re doing quickly, because everyone’s worried about the cash burn. They want to make sure that if they’re going to invest in you, they’re not going to be doing that forever, and they’re not going to end up with an investment that they’re not going be able to get a return.” — Todd Greenbaum
“Know the insurance business”
“One thing that I’m so passionate about being in the business for as long as I have is if you’re going to launch an insurance startup, know the insurance business. It’s a unique business. There are a lot of nuances, there are a lot of problems to solve, and companies are really looking for digital transformation right now. If you’re going to do anything in this business, you have to know the business. You have to understand the problems, or you don’t have a shot at trying to help bring solutions to the industry.” — Julie Schieni
“Be ready to be flexible”
“No. 1, build an amazing team internally with people that are smarter than you. No. 2, really listen to your customers and be open to that feedback. Almost every beautiful company that emerges has those few zigs and zags as they find product-market fit. That would probably be my most important advice is to be ready to be flexible.” — Tara Kelly