In the field of InsurTech, technology is used as a means of improving service in the insurance market. It is an industry that often lags behind other industries in terms of innovation and is not always accessible due to its complexity to the average person. Despite this, dozens of startups are developing innovative solutions to make the insurance process simpler and change the traditional structure of the insurance industry. In order for a startup to receive financing, an entrepreneur needs a detailed business plan tailored to the InsurTech industry.
In the business plan in the field of InsurTech, it is important to emphasize the following issues:
The market as it is, operates in a particular way, regardless of your solution. However, a developer knows that there is a problem that exists out in the market. You must be able to clearly define the problem itself and the size of the problem. For example, the price of premiums when trying to insure a home. When asking for the need for your product, it is absolutely essential to back it up with hard data to help you illustrate the problem as clearly as possible. In order to find this vital data, it is highly recommended that you conduct comprehensive market research.
Another aspect of the insurance market that you need to pay attention to is the regulatory process. For example, in some cases, instead of setting up a full insurance company, the company may choose to be incorporated as an agent (MGA) in order to handle binding coverage, pricing, underwriting and claims settlement without being a traditional insurer.
In terms of building a customer base, you need to examine the market itself. If the need for the product is more for renters rather than homeowners due to age, or a lack of purchasing power, it is advisable to use a marketing strategy that is aimed more at a younger audience since most renters tend to be younger than 40. An experienced investor will want to understand how to use their money to expand your customer base.
As part of building a business plan, it is necessary to define how the company generates revenue. You need to check out the commercial programming to get a clear picture of your economic potential. The business model should be built according to the number of potential customers the product may acquire. It is important to make sure that your product is as accessible as possible, while also providing added value to the user. Take for example “Lemonade”. Lemonade takes a different approach from most insurance companies in that their model is a low and a fixed price. The way they price the service is more reminiscent of Netflix than a traditional insurance company. Of course, all of this is possible because the video processing technology that the company uses in order to shorten the claims payment times to its customers. Lemonade maintains a commission of 25% of the premium while utilizing the remaining 75% to pay for customer claims and reinsurance. At the same time, Lemonade gives back to the customer’s local community by giving the user the option to choose a donation target that the company will donate from unused premiums
How long will it take to develop an MVP version ready for distribution to the end user? What time and steps are required for development? How much funding does it require? Is it necessary to expand your team? These questions (and many more) need to be answered in the business plan to give the potential investor a sense of security and faith in your professionalism.
We answer all of these questions as part of the business plan building process. An entrepreneur who wants to set up a startup in the field of InsurTech needs to know the answers to all of these questions before the product development stage. All the more so before turning to potential investors.
How Targo can help:
Our team has extensive experience in the field of InsurTech. By combining our experience and your knowledge, we will maximize the startups’ chances of reaching the market and occupying a dominant place. Targo’s business plan will help you pass the due diligence smoothly and quicky.