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“Being Right” is Just the Start of the Battle

Eye of the Storm: Natural disasters, the insurtech market, and other musings from Bob Frady, CEO of HazardHub

In school, you get rewarded for being right. You study, memorize, take the test and – if you get enough correct answers – you not only get a good grade, you get recognized for that good grade. Your GPA and class position are ready to be updated. The process is automatic: get the right answers and reap the rewards.

With an insurtech, it’s not quite so easy. You study, you memorize, you work hard on your POC and you NAIL it -- then nothing happens. It’s probably the single most frustrating part of being an insurtech – you do great work in a proof of concept, yet it rarely seems to materialize into a full-blown integration.

The problem is simple. In school, the grade A GPA ranking process is automatic. With insurtechs, there is no process automation. In fact, there usually is no process at all. The innovation POCs and the actual running of the business are usually two completely separate animals.

For example, we had a prospect who sent us some claim data for hurricane claims. We showed that over 97% of their claims came from “F” grade hurricane zones. We thought we “aced the test,” but nothing happened for a long, long time. Another prospect sent us wildfire losses, and we showed them that our F zones were more than 13 times more likely to experience a wildfire claim. Again: crickets.

It turns out that being right wasn’t the end of the battle – it was the beginning. Being “right” was just table stakes to figure out how to generate an actual integration.

It’s a problem that catches most insurtechs off guard. Their academic training and excellence leads them to believe that if they “ace the test,” the rewards will follow. It might take a year to get and complete a POC. The 12 to 24 months that it can take to go from acing the POC test to actual implementation can be soul- (and wallet-) crushing. When we tell people that it’s a three-year sales cycle, this is what we’re talking about.

Part of the problem is the insurtechs themselves because they hesitate to ask the “so what” question. As in, “When we do a great job on the POC…so what?” Forcing carriers to address the implementation question is fear-inducing, as it may mean you never get the POC in the first place. But it’s better to spend your time chasing real opportunities than projects designed to show the carrier is playing nice with startups to improve their AM Best score.

We’d love to say we’ve done this consistently from Day 1 at HazardHub, but sometimes turning down a check is hard! We had one prospect that did a massive study. We showed them how we were able to give them a path to profitability and potentially save them hundreds of millions in claims in what were difficult markets. We jumped on the study and were thrilled to present the result. Then: crickets. It turns out the lead on the project had some extra cash in his budget. He “just wanted to see what happened” and spend his cash. While we were thankful for the revenue, we never knew there was no path to implementation – which was completely and totally our fault.

Sometimes, being right is just the start of the battle.










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