Top 4 Things to Keep in Mind When Adding a New Insurance Line
So, you’re an insurtech business that’s looking to grow. Adding a new line of business is the obvious next step, but what’s the best way to go about it?
You could build your own new program in-house, but since that’s a very long, expensive road, you’re probably going to leverage a partnership instead. That still leaves you with a long list of possible options that you’ll need to narrow down!
In this blog, we’ll talk about the most important things to keep in mind while you’re planning your expansion, and how they can help you determine your best path forward.
1) Product Fit
This goes without saying in any business expansion: what do your customers need, and what can you offer to meet those needs?
It’s not always as simple as deciding to offer pet insurance, or cyber insurance, or whatever kind of insurance your customers will want to buy. There can be a lot of differences between products of the same type as far as what they cover (or don’t), and what value they provide for their cost.
It’s clear that products without sufficient coverages aren’t great for the end user, but products with too much coverage can be almost as bad. Every additional protection included in a product increases the cost, whether the buyer will ever use it or not. So if a product includes many more coverages than the customer actually needs (or wants), then the customer isn’t getting great value for their money.
The ideal scenario is to offer a product with everything your target customers need, and nothing that they don’t. While some insurance-as-a-service products allow you to customize the coverages you want to offer your customers, many traditional products offer a set package of coverages that you must resell as-is. It’s important to carefully review what’s included in a potential partner’s offering and what your options are, to ensure you’re choosing the best fit for your audience.
2) Customer Experience
What experience do you want to offer your customers, and how will you make it happen?
Modern buyers expect purchasing insurance to be as easy as purchasing anything else, with just a few clicks online. Traditionally, however, the insurance industry has lagged behind the technical infrastructure required to make it happen. While this creates opportunities for insurtechs who can deliver a better experience, it also adds another complication to choosing a partner.
Technical capabilities can vary a lot between individual insurance providers, which can then impact both your go-to-market timeframe (how difficult will it be for your developers to integrate with your existing systems?), and the experience you’re able to offer (how much of the transaction can be completed online, and how much friction exists in the purchase flow?).
In addition to the actual insurance product a potential partner can offer you, it’s increasingly critical to also review what they can offer you technologically. Get specific on what you want to do in your website or app, so you can get answers on how (or if) their product can support your vision.
With any new product introduction, the hope is obviously that sales of the product will be wildly successful. But as you’re doubtlessly aware, insurance products can also be victims of their own success.
The need for additional capacity presents a unique scalability challenge for insurance programs: the more policies you sell, the more capacity you need to continue selling policies. If you can’t secure that capacity quickly enough, your program risks losing growth momentum while you sort it out.
For this reason, it’s a good idea to start thinking about how your new LOB will scale up, before you even launch it into the market. If your partner handles the capacity side, how much do they have available, and how will they get more?
4) Getting to Market
If time is money, then there’s a double cost for time spent deploying a partner’s insurance product - the actual cost of implementing the product, and the opportunity cost for each extra week that you aren’t in-market.
When evaluating potential insurance line partners, their GTM process and requirements are an important thing to consider. What needs to be done in order for the product to go live? How much technical development work is required? Are there any other dependencies to be aware of?
The faster and smoother the implementation, the sooner you’re able to start selling your new product. Doing your research ahead of signing a partnership can help prevent unexpected snags that can slow down a rollout (and throw off a revenue projection).
There’s a lot to think about when expanding your business with a new insurance line, especially when choosing a partner. With the right planning, you can choose the right product and partner to help your insurtech business reach your growth targets.