Carriers are increasingly looking for InsurTechs that would serve as good partners or investments, but how do they pick the right ones? That’s a vital question for carriers to address so they can make good choices and avoid misfires.

Nationwide has honed an approach to InsurTech partners and investments for some time now, most recently joining a $4.5 million investment round in May for Betterview, whose risk management platform uses machine learning, computer vision and geospatial data to deliver data, analysis and insights for commercial and residential properties in the United States.

We submitted a number of questions to Erik Ross, vice president of Nationwide’s venture capital team, about Nationwide’s view on InsurTech partnerships and investments and the ideal strategy for carriers seeking to pursue either or both. Ross leads Nationwide’s venture capital and open innovation efforts, and according to Nationwide, he oversees the more than $100 million that the insurer has committed to invest in early stage companies to develop “strategic insights and accelerate current and future capabilities.”

His responses are listed below.

Q: How does Nationwide determine InsurTechs of interest? What kinds of things does it look for?

Ross: We’re looking for companies where we can provide value to both the InsurTech and Nationwide. We’re looking for companies that align with our strategy and our desire to develop solutions that make life easier for our members and protect their evolving needs.

Can the partner help make the claims process more efficient and provide a better member experience? Can they help our business partners accelerate our current business while helping the InsurTech scale? What insights can we glean from the engagement to help us develop our strategy while providing domain expertise to the startup? Are they innovating part of the value chain, and are they doing it in the way consumers demand—simple, fast and digital. How can we be a good partner for the company?

Q: What should the goal be of carriers looking to do the same?

Ross: We believe you need a solid strategy in place to guide your decision-making process, for both the broader business and venture/innovation efforts. Understanding the problem areas provides focus on what matters most to the business and our members. It’s easy to get distracted with every new technology or the latest buzzwords. There are a lot of opportunities to partner, so we look for companies that help us accelerate our current and future business models, solve for the evolving needs of our members, and solutions that align to our strategy.

Q: What is a good InsurTech investment or potential partner?

Ross: We evaluate InsurTech investments on both a financial and strategic basis. We have to believe the company can scale and achieve their financial goals as well as have a strong strategic alignment to Nationwide to make an investment.

From the partnership POV, it has to be a win-win, mutually beneficial engagement to be successful. The company needs to accelerate what our business partners are trying to accomplish, and we need to provide reciprocal value in the form of capital, connections, commercial relationships, mentorship, etc. That is different on a case-by-case basis. We’re interested in partnering and investing in ways that move the needle for our members and partners.

Q: What is a bad InsurTech investment or potential partner?

Ross: When the strategic objectives aren’t aligned and the relationship doesn’t have the potential to add value to both organizations, you are likely looking at a bad fit.

Q: What kinds of InsurTechs do you see a lot of right now?

Ross: There are multiple InsurTech solutions out there for every part of the value chain, but not every solution is viable. We are very thoughtful and selective with the companies in which we invest and with whom we partner at Nationwide. We say “no thanks” many more times than we say “yes.”

Q: What kinds of InsurTechs do you expect to see in the future?

Ross: We’ll see more and more solutions coming forward leveraging new data sources and machine learning, new products and services that better meet changing risks, and solutions embedded at the point-of-sale. We’re just on the cusp of this right now.

We also expect evolving mobility solutions as car ownership and autonomy continues to develop, as well as solutions focused on the longevity economy. As life expectancy continues to extend, there is a huge opportunity for companies to reimagine products and solutions for aging adults. Developing these tech-driven solutions will be challenging but fruitful for those that help older adults live comfortably in retirement.