Why Culture is the Secret Superpower of Neo Insurers

Neo Insurers are on a roll, as the recent wave of IPOs and high-profile financings shows. Capital markets have clearly woken up to the growth opportunities in the space — and to the inability of incumbents to match the dynamism and digital prowess of this new generation of insurers.

However, there is a story behind the story, and it rarely gets told. That’s where the picture above comes into play. Meet Anne, Asha, Julia, and Sanna. They are the Chief People Officers (“CPOs”) of four highly successful Neo Insurers in the CommerzVentures portfolio (Getsafe, By Miles, Bought By Many, and Hedvig).

As an investor, I mostly interact with the CEOs and CFOs of our investee companies. But recently I had the opportunity to meet the CPOs of the Neo Insurers and talk to them about their roles, their objectives and what keeps them up at night.

It was a mind-blowing experience, as it truly opened my eyes to just how central people & culture are to successful Neo Insurers.

In the startup ecosystem, most of us would agree that a strong culture and explicit values are key ingredients to successfully scaling an organization.

Internally, they guide teams towards the behaviors needed for the company to succeed. They define how information flows between teams and their members and how decisions are made — from determining overall strategy down to the hundreds of small operational decisions that individual team members make every day.

Externally, they help attract strong talent and build the company brand.

And yet, too many organizations still don’t give people & culture development the attention they deserve.

Successful Neo Insurers attract and integrate team members from very different talent backgrounds. These include core insurance functions such as underwriting and claims, as well as teams recruited from fast-moving tech companies and from the creative industries.

In order to work effectively together towards meeting company goals, people need to understand and respect each other, appreciating each other’s strengths and blind spots.

This is how Neo Insurers are nurturing strong and inclusive cultures. In the words of Hedvig’s CPO Sanna Westerberg:

“I think people are getting tired of being seen as resources (as in “Human Resources”). People don’t want to be seen as mere enablers to drive profit, they don’t want to be seen as assets or numbers in a spreadsheet. They want to be seen as people, for all that they are: people with dreams, hopes, fears, strengths, weaknesses and quirks. If you want to create an innovative workplace that drives development at a high pace, you have to start with building a culture based on trust: making people feel both safe, seen and heard. If people don’t feel safe to bring their whole selves to work, to take risks, to speak their truth, to ask the “stupid questions”, to challenge leaders and to make mistakes, how are they then gonna be able to innovate?

To me, it’s obvious that people and culture is any company’s single most important competitive advantage, since it is what people look for when they search for new jobs, it’s what makes them either like or dislike their work and ultimately what makes people work well together and perform.”

Successful Neo Insurers put their money where their mouth is. Not only do they make significant investments in their people and cultures, they meticulously track progress and effectiveness through:

• the yield rate of job offers, ie. the share of prospective employees who have accepted offers
• the number and quality of applications received
• the employee engagement benchmarking (eg. through platforms such as Peakon or Culture Amp)
• the rate of employee turnover
• the employer ratings on sites such as Glassdoor or Kununu

By elevating People & Culture to a C-level function, they ensure these KPIs are part of the strategic discussion, and action is taken to continuously improve.

I have come to believe that this is a major ingredient in the ‘secret sauce’ of Neo Insurers, and a key differentiator in the long run. Their collaborative cultures facilitate rapid organizational learning, attract people who are willing and able to learn fast, and thrive on the diverse experiences and backgrounds of all team members.