Perry Abbott, CEO and managing director of Friendsurance Australia, talks about expanding a pioneering peer-to-peer insurance company from Germany to Australia and offers four tips on going global successfully.
Having spent the last few years preparing for the expansion of Friendsurance Australia from Friendsurance in Germany, I’d encourage people to consider the following tips when introducing a business to a new country:
1. Identify the essence of the company’s success
The key factor for me in determining if Friendsurance would work in Australia was I had to understand where in the original business model the success came from. Like with Coca-Cola and its mysterious “7X” ingredient, it’s critical to identify the essential component that makes this particular product or business successful.
In other words, what is the essence of the business’ success? If you’re thinking about expanding a business, especially across international lines, it’s important to know the answer to that question.
With Friendsurance, the unique (and successful) element was our peer-to-peer business model that allows customers to form groups with friends to meet the cost of smaller claims, providing cashback if they remain claims free.
We were the first company worldwide to launch peer-to-peer insurance in 2010, making us leaders in the insurtech industry. The peer-to-peer approach influences customers’ behaviour because people are less likely to make false claims if it puts their cashback at risk.
2. Adapt and relate
If you’re a founding CEO in a new market, you have to understand how you are going to take an existing model and adapt it for the new market. This means completely understanding the model from the home market and working out how to implement it locally.
I had a number of years to think about this with Friendsurance. I asked a lot of questions, both in Australia and back in Germany, and I spoke to hundreds of people within the insurance industry and outside of it.
I also gained valuable experience on international expansion when I worked in a global role at CSC, where we rolled out an Australian-developed model into countries in South America, Europe and the US. Of course there are always guidelines, but I learned you had to be willing to adapt because people don’t behave the same from market to market.
Insurance is a low engagement product. To some extent it’s like going to the dentist, where people think “get me in and get me out,” so the challenge with insurance is getting people engaged.
We understand that when it comes to buying insurance, Germans are more concerned with online security while Australians have real concerns about claims being paid because we have a higher risk of natural perils, like bush fires and floods. Australians also tend to buy insurance directly (not from brokers).
3. Make time for face time
It’s been critical for me to spend a lot of face-to-face time with people, especially since there is a language barrier (Frau Glocke would be surprised at how little my German skills have progressed since high school!).
Ironically, not speaking German turned out to be okay because it forced people to explain things to me in English, and I made sure I understood exactly what they meant, so I think it reduced the potential for errors that could have occurred if I were trying to conduct business in less-than-fluent German.
You have to do the hard yards and travel because the home company has its own business to run, and the best way to maintain a really positive relationship and secure their focus on your endeavor is by being there in person. You need your key people there as well, and they need to send theirs out to your home base.
Meeting in person grows the relationship, and a good relationship is fundamental to success and will help you work through rough patches of a start-up (and there are always rough patches).
I travel to Germany about every eight weeks, and we have video conferences weekly to discuss progress and maintain the relationship.
I’ve invested heavily in getting people to spend time in Germany, and we currently have Friendsurance Germany’s online marketing lead, Bernadette Brähler, working with the team in Melbourne.
4. Have a plan but be agile
Lastly, I’d recommend that you have a really solid plan as to how you will roll out the business following the launch. In saying that, I’ve learnt that that you can have an air-tight plan in place but you also need to be responsive to changes, so your ability to be quite agile is pretty important.
Perseverance, like so many things, is easier when it's shared. Finding people who share the passion for an idea allows you to find a way through even in the most difficult of times. It’s not you, but those around you, who will ensure you succeed.
Perry Abbott is the CEO and managing director of Friendsurance Australia.