The challenge of delivering operating profits for investors while anticipated revenues tumble from COVID-19 lockdowns is as real for InsurTechs as it is for mature companies, the chief executive of Slice Labs said last week.

“There’s no difference between us and a large airline right now. You just have to deal with the business that’s ahead of you. And the key is survival, not only for yourself. So, you first have to make sure your company can operate,” said Tim Attia during Carrier Management’s InsurTech Summit last Wednesday (currently available on demand).

Attia was responding to a question from Carrier Management Editor Mark Hollmer during a late-afternoon panel discussion about how moves by InsurTechs that have included staff cuts in recent weeks will position them for 2021 and beyond. Acknowledging that the economics of the pandemic forced layoffs at Slice, Attia distinguished between the struggles of startup InsurTechs and older ones like Slice.

“We still say startup, but we don’t see ourselves that way. I don’t see myself as the founder or co-founder. I see myself as an operator and the CEO. And when you’re an operator and you look at a company that’s supposed to double in size and your staff to double in size, or you have a line of business like a homeshare that overnight all you’re doing is processing refunds, you have to do something about it,” he said, referring to the fact that a large amount of Slice’s business is Airbnb insurance.

“You just have to deal with the business that’s ahead of you. And the key is survival, not only for yourself,” he said.

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In an earlier session of the InsurTech Summit, and in an interview with Carrier Management before COVID shutdowns, Attia described the evolution of Slice, starting in October 2015, when he and co-founders Ernie Hursh and Stuart Baserman dreamed up the idea around a dining room table, going on to write Slice’s first homeshare insurance policy for an Airbnb in Iowa in 2016 and ultimately deciding to partner with carriers to scale globally two years later.

In 2018, a big step in that process came with the launch of Slice’s Insurance Cloud Services (ICS), a cloud-hosted, end-to-end, digital-first platform that allows traditional carriers to become digital insurers quickly. Insurance companies like The Co-operators, Legal & General, AXA XL and Sompo International started using ICS to deliver a wide array of products in the U.S., Canada and even Southeast Asia, supporting a bigger mission for Slice. Instead of selling insurance to companies participating in the on-demand economy facilitating homeshares and rideshares, Slice’s expanded goals of delivering insurance to customers on demand—and digitally—have linked ICS to travel insurance sales for Sompo and cyber insurance sales for AXA XL, among others.

Even post-lockdown, Slice announced a new on-demand insurance solution, revealing its latest partnership with AXA XL in late April, offering opt-in cyber protection to Lenovo small business customers through the Security Advisor suite of the Lenovo Vantage platform.

During the Summit last week, Attia told Hollmer what else has happened in the last two months as COVID-19 started shutting down global economies. “You first have to make sure your company can operate,” he said, noting that having everyone in the company work from home early on was a relatively easy move for Slice. “It’s easier for us than maybe somebody who doesn’t have enough Citrix logins because we’re, by definition, virtual and in the cloud.

“But then we have to support our customers. We have large customers and then we have to make tough decisions,” he said, alluding to the need to cut one-third of Slice’s staff. “I think that’s just a sign that you’re a four-year-old company,” he said.

“I don’t like to use coronavirus as an excuse. It’s just a reality of business. You have to look at your business and you have to make money on your business lines. So, it’s no different the way we were looking at it or the way a large carrier or a large airline or a large hotel chain or Airbnb has to look at it. We feel the same way. We’re operators now. We have to make sure we’re operating a profitable company,” he continued.

Distinguishing between an operating InsurTech and one that’s just getting off the ground, Attia suggested that the true startups have an even more difficult road ahead. “If you’re not an operator, [but where] we were two or three years ago…, it would have been a lot more difficult because that wasn’t our mindset. Our mindset was, we’re still going through MVP [minimum viable product] and product market scale as quickly as possible,” he said.

Hollmer also asked panelists Erik Ross, head of Venture Capital and Open Innovation for Nationwide Insurance, and Matteo Carbone, founder and director of the IoT Insurance Observatory, to share views on how decisions that InsurTechs make today will position them for 2021 and forecasts about trends in the number of new startups and possibilities for mergers and acquisitions for existing InsurTechs.

Ross, responding to the question about whether startups will decline, spoke about investors supporting their portfolio companies through the tough times, and Carbone suggested that virus-related issues might stimulate more founders and co-founders to bootstrap their own problem-solving initiatives.

Attia agreed with Ross that investors will likely focus on trying to get their portfolio companies through pandemic-related problems. “Everybody is going to struggle through this. It’s a significant upheaval and change,” he said. “I like to work toward an optimistic goal but plan for a more worst case.”

We’re operators now. We have to make sure we’re operating a profitable company.”

Tim Attia, Slice Labs

Alluding to a prediction from Carbone that consumers, like insurance executives recently polled by one of Carbone’s LinkedIn connections, will start traveling and going to conferences and restaurants as soon as restrictions are lifted, Attia said he hoped Carbone’s forecast for an economic rebound was right. But recalling his own difficulties in launching an earlier startup right before the dot-com bubble in the late 1990s, Slice’s CEO expects something similar this time. “We want to work for the best and hope for the best. But if you were going to look at planning for the worst, then you could be talking more like a year,” he said.

Ross said he and well-known investors like Sequoia Capital and Andreessen Horowitz are also guiding portfolio companies “to try to get to a runway of 18 to 24 months.”

“Expect the worst from a revenue perspective, like going back to half of ’19 or less maybe,” he said, agreeing with Attia’s advice to plan for the long haul. “It’s really tough decisions that have to be made, but they ultimate test your survival…You want to make it through, come out the other side, and be positioned well to grow and scale once the economy bounces back,” Ross said.

“I think it is groundhog year,” said Attia. “You’re assuming less revenues—that your revenues are now the revenues that you expected last year,” he said, going on to respond to a question about M&A by advising other InsurTechs that they should always be weighing options of partnering, selling or remaining independent. “It is a long-term strategy. It’s something you should not [do] just because of COVID, that you’d all of a sudden decide to think about it or wait until somebody knocks on the door.”

“You should always be thinking: How expensive is it going to be for you to scale? And is there some partner that you can scale better with?” he said, also advising InsurTechs to ponder basic questions about whether they fundamentally think of themselves as technology companies or insurers as a precursor to making decisions about M&A and partnership options.

(Carrier Management profiled Attia for the cover story of the May-June 2020 edition of the print magazine. The full edition is available digitally now.

The complete panel discussion of the Carrier Management InsurTech Virtual Summit and other sessions are currently available on demand. )