“Me, Free, Easy.”
Oliver Bäte, the CEO of Allianz, gave a CeBIT speech with this headline that covers all revolutionary insurtech activities and gives us the most important hint about what the products for customers will look like in the future. And this is not just applicable for insurance but for all businesses that would like to sell their products to new generations.
As every insurance professional knows, the main principle of insurance is the law of large numbers. This theorem describes “the result of performing the same experiment a large number of times. According to the law, the average of the results obtained from a large number should be close to the expected value, and will tend to become closer as more trials are performed” (Wikipedia). At first sight, “me, free, easy” and the law of large numbers could seem to conflict, because the law of large numbers requires doing the same thing over and over while “me, free, easy” customizes almost every step of the insurance experience according to customers’ needs. But insurtech makes it possible to customize the insurance experiment for every client and produce millions of different versions of products.
See also: Insurtech Is Ignoring 2/3 of Opportunity
The biggest advantage of the insurance business is the ease of acquiring customer data. In many circumstances, customers are obliged to provide all the data their insurers ask for. The main dilemma here was how the data should be managed. I said “was” because with insurtech implementations — e.g. artificial intelligence, machine learning or big data — managing millions of details about millions of customers is as easy as shelling peas. Today, insurance companies have magical tools that find the right data for the right time frame for the right customer in a couple of seconds. So, the first feature of the new-age insurance product, “me,” is accomplished!
“Free” means a world without intermediaries. It does not matter whenever, whoever, whatever; you can reach, buy and use. The main driver of a world without intermediaries is blockchain. Like many other industries, intermediaries mean checked (relatively trustable) data and incredibly increased operational costs for insurers and customers. Intermediaries reach people, make them possible customers, gather data and represent insurers’ corporate identity in many processes. Is it not too risky leaving your company’s reputation in another’s hands? Undoubtedly, the answer is yes. Thankfully, insurers don’t need to carry this risk any more. This responsibility will be transferred to customers, and all assessments will be performed by customers in accordance with the risk appetite of insurance companies and pre-defined criteria.
“Easy” means easily understandable products that do not require sophisticated financial literacy. So, the policy owner does not need intense assistance with products (beforehand and after sales), as well. Possible dependencies are defined, and customers are informed about every detail of the products. The key to “easy” is helping customers configure products to reflect their own needs. Big data management and other disruptive technologies enable insurers to make configurations with their information technologies. And now, we have more “easy” and more “me” insurance products.
See also: How to Collaborate With Insurtechs