Pietro Carnevale has been leading the Generali-owned House of InsurTech Switzerland (HITS) since its inception in December 2019.
HITS stands out as Insurtech Corp-Up Studio (Corp-Up is when a Corporate co-creates a solution with a start-Up) that brings value to Generali Business Units by focusing on pinpointing specific needs within the insurance industry and addressing them by connecting with emerging startups working on new solutions.
By merging industry expertise with technical innovation, HITS promotes collaborative partnerships that drive progress and meaningful change within the insurance sector.
Prior to joining HITS, Carnevale, who holds a background in engineering, spent several years exploring his career path before dedicating a decade to consulting in financial services. There, he honed his skills in strategy, transformation, and change management.
Carnevale’s passion for continuous improvement and innovation is clear in his approach, whether he’s making incremental changes or achieving significant advancements. His work in establishing innovation capability in Switzerland laid the foundation for HITS.
Although Carnevale plays a central role in HITS’s success, he views himself as a “corporate entrepreneur” due to HITS’s ties to the larger corporate environment rather than a traditional startup.
Insurtech Insights caught up with him to find out more.
How would you describe HITS? Is it an innovation lab, or an accelerator – or something different?
House of InsurTech Switzerland (HITS) is a subsidiary of Generali Switzerland. From a governance perspective, HITS operates as an independent legal entity owned by shareholders, primarily Generali.
Essentially, we develop solutions that bring commercial value to a business unit or a company, such as Generali, by partnering with startups.
Our focus is primarily on working with startups, particularly insurtech companies, as we are in the insurance industry. Together, we tackle the challenges, needs, and opportunities that an insurance unit may have.
How do you find the startups that you work with?
We start with the insurance needs to craft a unique approach tailored to the specific challenges of the insurance unit. By closely aligning with the insurance unit’s strategy, we gain a deep understanding of their needs. We have built an extensive ecosystem that includes incubators, accelerators, and various startup sourcing mechanisms to identify startups that can address these needs.
Our process is similar to a matchmaking platform in that we understand the needs and find startups that might be able to meet them. We typically shortlist three to five startups that we believe are best suited to solve the problem. However, our involvement goes beyond matchmaking. We act more like wedding planners, organizing meetings between the insurance unit and the startup solution and facilitating the process to initiate collaboration.
Once the partnership begins, we shift into project delivery mode, employing innovative methods instead of traditional project development approaches. Our approach is structured yet flexible, allowing for a collaborative innovation process.
One crucial aspect is helping startups align their product offerings with the needs of the corporate entity. While startups often understand their products well, they may not always present them in a way that resonates with the corporate needs. We work to bridge this gap and tailor the startup’s offerings to the corporate requirements.
What are the best and most challenging things about working so closely with startups?
Working with startups is both rewarding and challenging, so we begin by defining a proof of concept (POC) to determine whether the startup’s proposed solutions are feasible in practice and whether there is a cultural fit between the startup and the corporate entity. This initial POC allows us to test ideas in a tangible way rather than spending months strategising on paper.
If the POC is successful, we proceed to the minimum viable product (MVP) phase, where the product is introduced to either internal or external consumers. After that, we move into the scale-up phase, which can occur within the same country where the solution was developed or expand geographically, depending on the needs of our global company.
When you can get returns of 5, 7, or 8% with no risk, it makes you think twice about investing in startups. Funding has shifted, and while Europe often reacts a little later than the US, it still saw a higher number of deals compared to Asia last year. Startups already on a growth path were the most impacted.
Pietro Carnevale
One key measure of uniqueness in corporate innovation is longevity. Many initiatives start strong but then fade away. Our continued presence proves the value we bring. The composition of our team is crucial, balancing individuals from both startup and insurance backgrounds. This ensures we can blend the two worlds effectively, striking a balance between innovation and practical insurance know-how.
In contrast to other attempts in the market, which may be overly focused on either the insurance side or the innovation side, we strive for a middle ground. Being too heavy on the insurance side can stifle innovation, while leaning too much towards innovation can result in a disconnect from the business. We aim for a balanced approach.
Lastly, our workspace plays an important symbolic role. Our in-house garage provides a collaborative environment where startups can work alongside us. Not only does this support our projects and allow access to technology experts, but it also sends a message to the rest of the organisation that innovation and startups are integral to our operations and not distant concepts.
What strategies have you found to be most successful, when facilitating partnerships with insurtechs?
The value of cooperation is straightforward: every company needs to innovate to progress, and the majority of innovation comes from new companies like startups. This is not because large incumbents are boring, but because they tend to be more risk-averse and choose not to operate in areas where startups excel. By bringing these two worlds together, you can create progress.
The benefits for both parties are clear. Startups help corporations improve their time to market and allow them to test various solutions. This is especially important in industries like ours, where technical skills and expertise are becoming harder to attract. By collaborating with startups, we can leverage their technological investments and innovations in a flexible and variable manner.
For startups, working with corporations can be beneficial, particularly for B2B startups whose business model involves corporate partnerships. Collaborating with corporations gives startups access to markets and customers, which might otherwise be costly to obtain on their own. Corporations can also invest directly in startups they partner with, supporting their growth.
While the concept is easy to understand, successfully implementing it can be challenging. As mentioned earlier, having the right formula is key. The idea itself may represent 1% of the effort, while industrialising the methods for building partnerships accounts for another 9%. The remaining 90% is all about hard work and dedication. You need a structured approach to partnership building and a lot of perseverance to see it through.
Can you describe what the current startup climate is like in Europe at the moment? How would you describe it after having just come out of 2023?
The year 2023 was worse for startups than 2022, which was already about half as good as 2021. The main reason seems to be tied to interest rates. When you can get returns of 5, 7, or 8% with no risk, it makes you think twice about investing in startups. Funding has shifted, and while Europe often reacts a little later than the US, it still saw a higher number of deals compared to Asia last year. Startups already on a growth path were the most impacted.
Despite this, the environment remains favourable for early-stage startups. Investing when the market is down can be a smart move. In the InsurTech industry, startups often take longer to become valuable companies, so playing anti-cyclically might be beneficial.
In terms of where the funding is going, there hasn’t been a major shift in Europe yet. Property and casualty insurance (P&C) still offsets and outperforms life and health insurance. Corporate interest in startups seems to focus on startups that can help improve core insurance processes, such as underwriting and claims.
The first key aspect to focus on is creating a defendable unique selling proposition (USP). This means building a product that is truly special and indispensable to its users.
Pietro Carnevale
Another area of interest is improving customer engagement in an industry that isn’t known for frequent customer interactions. Startups that can help improve relevant interactions with customers are gaining traction.
Embedded insurance has been a major trend in recent years, and there is now a shift from general players in embedded insurance to more specialized vertical ones that cater to specific customer needs.
The third significant trend is around startups that assist in managing risks that are not yet fully understood. This includes risks related to cyber threats, climate change, and natural catastrophes. The insurance sector needs to find solutions in these areas, and startups can play a crucial role in helping us address these challenges.
What essential strategies would you advise startups to adopt if they are looking to scale and partner with incumbents?
The first key aspect to focus on is creating a defendable unique selling proposition (USP). This means building a product that is truly special and indispensable to its users. The goal is to ensure that if the product were to disappear, someone would feel its absence. This is crucial because the risk of commoditisation or being quickly outpaced is high, so concentrating on the product is essential.
In addition to working on a defendable USP, there are two types of patience needed for success. First, if you are venturing into a highly regulated industry like insurance with a B2B business model, a lot of groundwork is required at the early stages. This includes everything from seed to Series A funding rounds, as you need to prepare yourself to partner with a regulated, large corporation like an insurer. This involves meeting certain levels of IT security, certifications, and other standards. It is important not to underestimate the effort involved in this preparation.
The second type of patience is about focusing on a single market once you’ve secured your first partner. It’s essential to establish a strong presence in that market and avoid expanding too quickly geographically. Each country has its own set of regulations, even within Europe, so startups should be cautious about underestimating the complexities of expanding from one country to another. This becomes even more challenging when expanding beyond Europe.
Are we going to see better growth for insurtechs by 2025? What are your predictions?
Yes, I believe we’re on the verge of a rebound. While I don’t have a crystal ball, I think we’ve likely hit the bottom and can expect a recovery, perhaps not to the record levels of 2021, but somewhere between the years 2019 and 2020.
Looking at the industry compared to banking, which has seen significant investment in FinTech over the past 20 years, InsurTech is still in its early stages. There’s still plenty of room for further investment, and I see more waves of growth on the horizon.
Interest rates may likely decrease in the next 18 months, which could encourage investment to return to InsurTech. In my view, now is an excellent time for individuals with innovative ideas to start new ventures. There’s a lot to be done in the industry, and I don’t believe the story ends after the first wave of investment.
What’s your view of Gen AI in the startup space right now?
I believe in the transformative potential of generative AI technology. It has the power to shape society and industries for the next 10 to 20 years, and I think we’re just beginning to see its impact. It’s difficult to make long-term predictions in this fast-paced field, as advancements occur rapidly, every three months or so.
When it comes to generative AI, there are two main categories: creators of the technology and users of the technology. While opportunities will remain for creators, the landscape may become dominated by large players providing generative AI infrastructure, both in hardware and language models. Users of generative AI, however, will see flourishing opportunities for some time.
The focus on developing a unique selling proposition (USP) is important for both creators and users of generative AI. For users, relying on commodity use cases may bring short-term gains, but these will eventually be offered by major tech companies as part of standard software packages. On the other hand, those who develop distinctive, defensible solutions that leverage generative AI to deliver value to customers or businesses are likely to experience sustained growth.
Ethical and regulatory considerations are also crucial when discussing generative AI, as this technology can be used for both positive and negative purposes. For instance, technology has already been developed that can read minds by using generative AI to interpret brain scans and reproduce the images a person is observing with remarkable accuracy. This has potential applications, such as helping individuals in a coma communicate, but it also raises concerns about privacy and the potential for misuse.
Overall, while generative AI holds great promise, it’s essential to navigate the ethical and regulatory landscape carefully to ensure the technology is used for the benefit of society.
Bottom line, I think most startups, it’s a fair thing to say that in the next two to three years to have a bit of generative ai, it’s a good thing.
What’s new on the horizon for HITS over the next 12 to 18 months?
Our goal is to find the ideal recipe for collaboration between corporations and startups. This synergy can bring positive changes to the industry, which is a crucial sector that impacts society as a whole. Our focus is on continuously improving year after year.
We aim to achieve scale, which is vital for our success. Each year, we strive to multiply the number of collaborations and enhance the existing partnerships to grow and reach new levels. This scaling process allows us to expand our impact and bring more value to the industry.
Interview by Joanna England
