Is Insurance Broken? (Part 1)

No, insurance isn’t broken, but it has been painfully slow to evolve and is now in desperate need of some modernization.

Long on fear, short on facts, so-called disrupters are using “insurance is broken” as a marketing tool to win customers. In Jetty’s view, insurance isn’t broken, but it has been painfully slow to evolve and is now in desperate need of some modernization. Insurtech is heating up, with more being written about this corner of the insurance industry than ever before. At Jetty, we’ve been busy combining a novel combination of products to help streamline the home rental process and, along the way, participating in a lot of conversations all across the spectrum about how the insurance industry is evolving. As we headed to InsureTech Connect, we saw this as a good time to kick off “Signal to Noise,” a recurring series of thought pieces about the various aspects of insurtech — the things that matter to all of us to some extent or another (or ought to), whether it’s the technical workings of insurance, the individual products, distribution challenges and opportunities, or the increasing awareness and focus on the customer experience. Starting now and continuing through the end of 2017, my colleagues and I will go into far more detail in each of those distinct areas of Insurtech. To kick off this series, let’s take a high level look at how the signal-to-noise ratio is obfuscating our sense of the industry’s real challenges, by unpacking Insurtech’s most clickbait-worthy claim: insurance is broken. An introduction The single biggest element missing from personal lines insurance is a real understanding of one rather important, but often forgotten figure in the equation — the customer. Specifically, how the customer’s needs should inform product development, distribution strategies, and the customer experience. Here in Part 1, we’ll explore the "insurance is broken" narrative, where it is misleading and, conversely, where it highlights genuine shortcomings. And in future articles we’ll go deep into each area. The fundamental, technical aspects of insurance Broken-o-meter-score: Low At its core, insurance is sharing or “mutualization” of risk — a concept that has been practiced for thousands of years in different formats, but with the same fundamental principle: the distribution of the risk of loss, and ensuring mutual aid. For as much noise as is out there, the reality is that this “risk transfer” element is one of the strongest and healthiest aspects of the industry. And as much as some Insurtech’s claim to be reinventing the model, the reality is that this principle continues to serve as the basis of our industry. Another oft-criticized technical aspect is the policy “form”. The technical and court-tested contract language, while neither pretty nor readily-comprehensible to laymen, functions as it should. Let’s not forget that an insurance policy is a legal contract, and the legal system demands specificity. The problem lies not in the existence of the jargon itself, but rather in the failure to translate that jargon into plain English, on customers’ terms. At Jetty, we’re working to not just translate the technobabble into more easily digestible information but to make it relevant, maybe even enjoyable, and definitely more approachable. Easy when the bar is low! See also: Innovation: ‘Where Do We Start?’   The insurance product Broken-o-meter-score: Medium Clever wording and great design aside, on the product front, being approachable just isn’t enough. The coverage offering — the scope and context of the protection which the insurance product should provide — is outdated. Consumer behaviors and expectations have changed. What are consumers most concerned about? Not a Zenith Console Hi-Fi —an iPhone. Not a mink coat —a Prada handbag. Not your father’s Oldsmobile — actually, not even a car at all. Not how do I protect the stuff in my rental home — how do I even get into a rental home. That last one — getting into a rental home — is one of the biggest pain points for the modern urban consumer, and is why we created Jetty’s Passport Deposit and Passport Lease products as part of an all-encompassing solution to update and streamline the entire home rental process. The products aren’t broken, but the industry is only now spending energy considering how they can be updated to address the emerging and changing needs of modern consumers. At Jetty, our products are a lot of things: updated, enhanced, combined, all in the pursuit of an all-encompassing solution to address the entirety of the home rental problem set. But they weren’t created anew. Because the underlying insurance products aren’t broken. The distribution model Broken-o-meter-score: High In many ways, the U.S. is one of the world’s most innovative and technologically-advanced markets, where customer service and convenience are the hallmarks of our retail model. In contrast with almost every other consumer vertical, insurance is one American industry which lags far behind (ironically, this is not the case in some other parts of the world). At this point, many Insurtechs and pundits will throw agents under the bus in their interest to suggest the model is “broken.” It’s certainly not the most efficient and convenient model, but agents do provide a valuable and important service for the segments of the market that need real advice for complex situations. And just because those pundits think the advisory process is cumbersome, it doesn’t mean that they should (or will) be able to get away with shirking their duty to advise. The modern American consumer has grown up with different expectations — she is digitally-native and prone to prefer self-service. This widening gap creates both a great opportunity and one of the more interesting challenges — namely, how to provide intelligent, relevant advice through a more efficient technology-driven platform, accessible to the consumer wherever she may be. The customer experience Broken-o-meter-score: Very High Insurance is a consumer good, but somehow, our industry never participated in the transformation experienced by the rest of the financial services market. This myopic perspective has only been amplified over the years as the changing expectations around ease of use and self-service have increased across the board. While everyone is racing to throw chat bots, AI, and IoT at the problem, the consumer’s fundamental expectation is this: a simple and straightforward process that leaves him or her feeling happy and relieved at the end. Most consumers view insurance as a necessary evil — how refreshing would it be if they can instead experience insurance as a problem-solver and an enabler. Providing a great consumer experience is more than tools and process (and far more than buzzwords) — it’s the entire look-and-feel, the voice, the lingo — everything that is tied up in the “brand.” See also: Top 10 Changes Driven by Insurtech   At Jetty, we probably invested just as much time and sweat equity into our FAQ as we did in creating a clear and compelling consumer experience. And it is paying off handsomely, as informed customers consistently make solid decisions about how to use the Jetty products to help get into and protect their things in the place they rent. Tying it all together Insurance isn’t broken, but it certainly needs a refresh, free from false promises and criticisms that simply increase confusion. At Jetty, we’re combining an ability to speak to our customers in a way that resonates, with novel and thoughtful analytics that allow us to tailor coverage specifically to their lives. We’re adding real innovation by offering new and novel coverages that address emergent pain points like Bed Bugs and Lease Guaranty, alongside traditional products. We engage with our customers in ways that are simple and natural with how they obtain and process information, and navigate life’s obstacles. That’s our focus — presenting an entire solution specific to the modern consumer, with an innovative process and product combination that is easy, relevant, and instills confidence for renters and landlords alike. The challenge for our industry is to finally approach insurance as a consumer good, bring a “big-M” approach to marketing and deliver on a truly refreshing and stress-relieving experience. And this is a great week to keep this thought top of mind: What are you doing to deliver novel solutions to improve customer experience and address customer needs?

Braden Davis

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Braden Davis

Braden Davis is CEO at Currently, Jetty focuses on solving the problem of renting a home through a novel offering of financial services and insurance products that solve major headaches for consumers and landlords. Offered in combination or à la carte and accessible over any digital device, Jetty products are widely available across the United States, and aiming to be nationwide by the end of 2017.

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