Hila Sarig-Shavit is the AVP Core Lines Strategy at Verisk, a leading strategic data analytics and technology partner to the global insurance industry helping businesses, people and societies become stronger, more resilient and sustainable. Hila was interviewed by Andrew Daniels, Co-Founder and President of CrashBay and Founder and Managing Director at InsurTech Ohio.
Hila, what are some of the vital perspectives that founders need to have when determining whether to build or buy a technology?
“That's a great question because companies often end up with a combination, and it's not always clear to them how to make that decision. The first thing to consider is what your resources are and how you want to prioritize them. An insurtech should take the time to reflect and think through the building blocks necessary to come up with their product and start prioritizing resources accordingly. When speaking with founders, I recommend reflecting on what it is that they do best and where it is that they're trying to disrupt or change an existing offering. Those ideally should be aligned. It's by definition that you would want to build something there because you're trying to create something that never existed before. That would be the place to prioritize internal resources.
The next step is to identify what remaining actions you need to accomplish to support that key activity. Since insurance is specialized, it requires a lot of experience and expertise. Companies can free up important resources to focus on that core area if they rely on experts through buying or partnering without hiring expensive subject matter experts in-house. That prioritization is typically impacted by the background of the founding team, who tend to have more success when they build something that they know well. It's a great idea to buy and partner with others to supplement those areas. If there's an area of weakness within your founding team, there can be distractions from your core focus. Try to rely on existing resources to close those gaps.
Finally, speed to market is vital. It's important for insurtech companies– even more so in this economic environment because there's limited investment capital. That's reducing the time companies have to develop their MVP and get to market as quickly as they can, which is the top priority. If you are able to find that high-quality component, you can expedite the process of going to market and give your company an advantage over the competition.”
How should larger technology and analytics providers in insurance be pushing to make their capabilities more broadly known to industry newcomers?
“It's important to meet customers where and how they want to consume your products. At Verisk, we aspire to have an ecosystem that connects services and businesses and meets them where and how they want to work with us. To achieve that, we're building versions of our programs that integrate into external systems because it makes it easier for customers to consume the data. This approach not only improves customer satisfaction, but to your point, it helps us increase familiarity with our solutions to companies that might be working with other partners but weren't originally aware of certain capabilities.
Additionally, we've been collaborating with other players in the tech ecosystem to better meet the unique needs of this segment and improve familiarity with our products. We've been partnering with accelerators, VCs, capacity providers and others to help them and their portfolio companies. It's by working with them on their business model as well as helping with their portfolio companies that we've been able to generate a lot of awareness and new opportunities for everyone. The result often is us reaching an even broader audience earlier in their founding process.
Over the last few years, we've been supporting more startups, and it can be at a stage as early as two founders brainstorming out of their living room. At that point in time, those customers are probably not buying large amounts of products or data from us. We're meeting them where they are in their process, we're adding value along the way and helping them solve their challenges in real time, and being that sounding board and insurance expert for them. We’re also there when they grow to be large and successful carriers. It's that support throughout the process that we found helpful.”
Can you share an example that highlights just how practical partnering with a larger technology and analytics provider can be even for these early-stage companies?
“A common example, and this is something that we've seen quite often at Verisk, is founding teams having unique technological backgrounds but little to no insurance experience. These teams tend to see themselves as technology companies that happen to be working in the insurance industry. If you're an Insurtech carrier founder or an MGA founder with a technology background, you’re focused on disrupting the tech side of things. That's your number one priority, and that's wonderful.
Then you have an opportunity to enhance your product and efficiency by buying other solutions or partnering with insurance experts. That can go a long way in making sure that your products are adequate for the insurance industry and that you're addressing unique aspects in the industry. At Verisk, we've had a lot of success working with founders with non-insurance backgrounds, and they often rely on us to be their insurance experts to inform their product development.
Specifically, a lot of insurtech carriers and MGAs choose to build their insurance program using Verisk or ISO’s coverage forms, pricing and analytics tools and insurance technology. It allows them to leverage existing, highly predictive loss costs information from an industry-wide database to quickly develop a good rating plan which significantly shortens their time to market and improves their insurance program because they're not starting from scratch. We give them a foundation to build upon, so they no longer have to start with a blank canvas. That's a completely different story and situation to be handling as a young startup.”
What are some of the key qualities insurtechs should look for when choosing a vendor or partner?
“First, quality is very important for the end result. You want to work with someone who has experience in the area in which you're seeking service. Vendor selection is always vital, but even more so in the insurance industry because it’s so nuanced and requires deep familiarity with unique considerations. For example, if you're a startup that’s working in the admitted space, it's important to understand all regulatory considerations of your value proposition. You might be a tech company, but you need to understand the requirements and work with a vendor that can help you improve your program in compliance with the industry requirements.
Second, everyone is fixed on cost. I encourage founders to think about costs holistically. Take into account the opportunity cost of building and maintaining the solution in-house and the potential cost of being less successful in completing it than an experienced expert. The most common example I see has to do with regulatory compliance. It's time-consuming to keep up with regulatory requirements, especially if you're a company that’s writing multiple lines of business in multiple states. It's even more difficult to do that if you're a young startup with mostly tech talent on the team. This is an area where I hear great feedback from startups where they appreciate the ability to use Verisk’s Legislative Monitoring tool, offering an at-a-glance view of legislative, regulatory and case law events. In 2022, Verisk analyzed over 8,000 legislative bills and 7,000 regulatory actions, a much higher number than any startup can tackle on their own. Choosing a vendor with this type of service can dramatically cut compliance costs and reduce the size of compliance teams at startups.
Lastly, it’s important for insurers to pay attention to the accuracy of the data and the interpretation of a database into your tech system. We all know that insurance is a data-driven industry. Insurtech companies have unique technological solutions they bring to the insurance industry, and they rely on that data to perform whatever it is that their software is doing. So, it's important to fully understand how insurance data is being interpreted by the vendor and how that impacts the quality of the data that you ultimately implement into your product. As an example, carriers utilize lost costs in their rating plans. An insurtech carrier should be mindful of the quality of the interpretation of the loss costs into their rater when choosing vendors. At Verisk, we offer Electronic Rating Content that connects our loss costs, including interpretation, via API to raters, greatly improving accuracy of interpretation of our data compared to working with separate data and tech providers.”