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From Vision to Product (Part 2)

The first part of this series is available here.

I started working for Getsafe in October as a newcomer to the insurance industry. Needless to say, I had a lot to learn about insurance as a domain as well as about Getsafe. I spent the first month or two on the job trying to gain as much context as possible to formulate some opinions of my own. Here’s a summary of my learnings from these explorations:

The customer lifecycle is super, super long.

The timing of insurance purchases generally correlates with the occurrence of major life events, which means that on average people will only need to buy an insurance product every few years. This presents some pretty interesting challenges for customer engagement as the long timeline between purchases means that we will need to be very creative about how to stay relevant and top-of-mind. We also need to make sure that our products and services can evolve with the lives of our customers.

Insurance was meant to be personalized.

A very interesting aspect of today’s insurance is that it is possible to lose money by selling more product. This is because insurance as a business relies on making sure that the amount of money collected from customers exceeds the amount of money paid out in claims in aggregate over time. The word “aggregate” is key here, because at the moment the industry does not have the means to make sure this equation always holds at an individual level, meaning that companies simply make money on the “low risk” customers and lose money on the “high risk” customers.

Insurance can be a part of every lifestyle.

Many companies supplement revenues from their core business with commission from selling insurances. For example, retail shops often sell insurance for the goods that people buy at the store. Banks often cross-sell homeowners insurance policies when customers apply for a home loan. From the perspective of an insurance company, this means that there is likely an opportunity to vertically integrate and position insurance products as a part of a lifestyle instead of purely as standalone purchases.

See also: Global Trend Map No. 15: Products  

How people buy insurance can become more natural.

At Getsafe, every new employee spends a part of the first week mapping out the customer acquisition journey from initial discovery to completing the first purchase. When I went through this exercise, the customer acquisition journey looked something like this:

  1. Customer realize he needs insurance.
  2. Customer explores options via various tools.
  3. Customer gets quotes from some of these options.
  4. Customer selects one option.
  5. Customer purchases insurance.

What stood out to me here was that the first step of the journey required customers to somehow realize they need insurance. This feels unnatural, because insurances do not occur to me as something that people generally wake up each morning and just decide they need. Insurances do not directly address any fundamental human needs in the way that food fulfills hunger or friends create a feeling of belonging. To me, it feels like the customer acquisition journey ought to have a “step #0” that starts somewhere before the needs of insurances are fully realized by the average consumer.

Insurance has a noble origin.

As I learned more about Getsafe and the insurance industry, I started asking myself a very fundamental question: Why does insurance deserve to exist?

So I started researching the origins of insurance. To my pleasant surprise, insurances have a relatively noble beginning, serving as the instrument by which any given community can empower its members to recover from disasters. Unfortunately, this narrative has gotten lost, because today we generally view insurance companies as sleazy, sales-driven businesses that profit from the fear in individuals. The sense of communal benefit and protection is nowhere to be found in the average person’s perception of why insurance exists. This represents a very large gap between that starting place and where things are today, and I think our mission to reinvent insurance should also include helping people understand how it fits into their lives and why it is good for them and their community.

Turning inspiration into concrete statements

To add up these learnings, here are three statements that start to concretely articulate how the inspiration from above could inform our product vision. Imagine a world where…

  • …Getsafe provides products and services that directly address human needs. There should be a reason for people to wake up in the morning and want to use one of our products or services.
  • …Getsafe engages with people before they realize they need insurance. We want to be a part of the journey to help them understand how insurances may fit into their daily lives.
  • …Insurance feels more like a companion rather than a pile of paperwork. Getsafe should bring insurance back to its roots and re-create a sense of community around it.

With these concrete statements, we can start to tell a story about the world that we would like to create. Here is a high-level pitch for what we are trying to achieve at Getsafe.

Bridging insurance with human needs

“Peace of mind” is a basic human need, and here are some ways that the average person might articulate this fundamental desire:
I need to…

  • …plan for the future.
  • …have a backup plan.
  • …stop worrying.
  • …feel safe.
  • …be ready for the “what-ifs.”
  • …know my family will be OK.

As an insurance company, providing the appropriate coverage to our customers is one way that we can try to address “peace of mind” for them. Unfortunately, insurance is really complicated, and most customers need help understanding what they need, when and why. Traditionally, insurance agents have tried to bridge this gap by setting up long appointments to interview customers about their needs. For us as an insurtech, how can we use technology to do this better? How can we seamlessly bridge “peace of mind” with insurance products such that it feels completely natural to our customers?

See also: How to Speed Up Product Development  

The insurance of tomorrow

Technology has become ubiquitously embedded within the daily lives of people. In today’s on-demand economy, consumers gravitate toward real-time access and instant gratification. This trend provides the optimal environment for next-generation insurance products to incubate because it affords us ample opportunity to inject ourselves into the everyday lives of people. With a mobile-first approach, our app lives inside the pockets of our customers and travels with them wherever they go. As long as we are providing tangible benefits to our customers, we have the opportunity to position insurance as a life companion, rather than a necessary evil. We foresee the evolution of the “insurance experience” in two phases:

1. Insurance as an app

Over the last two decades, technology has dramatically changed how people interact with many products and services. This same movement toward digital and on-demand is now finally gaining traction within the insurance industry. For Getsafe and our insurtech peers, this means that we have the opportunity to define what the “insurance experience” ought to feel like in this new world. As an example, customers can now purchase and cancel insurance policies in real time, without scheduling an appointment or filling out a long contract. We will build technology to transform interactions that have traditionally been complex into one that is frictionless, fast and fair (i.e., claims).

2. Insurance as a lifestyle

Because insurances are complicated and usually irrelevant to daily life, we believe that insurtechs will aim to achieve far more than the digitization of insurance products. We believe that for the industry to truly progress, insurance products must become more ubiquitous in the everyday lives of consumers. It should be clear to our customers how we enable them to live the lives they’ve always wanted to live. They should not perceive insurance products as something that they need to buy but hope never to use.
Getsafe will reinvent insurance by creating an insurance experience that caters to the digital, on-demand needs of customers. We will scale our operations by developing internal tools. Ultimately, we will also create products and services that bridge human needs to insurance products.

Conclusion

If you’ve gotten this far, thank you for reading! I sincerely hope that you’ve found both of these articles useful and that you’ve been able to find some tips to apply to your daily work. Feel free to drop any questions or comments and contact me!

10 Insurtech Trends at the Crossroads

The emergence of insurtech has reshaped the strategic insurance agenda. Here are the top 10 insurtech trends as we enter 2018.

Insurtech Trend #1 – Automation will replace human effort across the entire insurance value chain

This is a trend that is not unique to insurance. But it is a trend that will significantly affect the insurance sector. This is because much of the insurance industry still operates in pre-internet ways. It is also because many personal lines are being atomized. Small parcels of insurance protection cannot be packaged and sold with human input and remain cost-effective. It is also because customers demand it. They want a purely digital experience that does not require human contact when a machine will do nicely, thank you.

One to watch: ZhongAn

Insurtech trends article: Is the Rise of the Digital Advisor the new InsurTech Game Changer?

Insurtech Trend #2 – Insurance premiums will become highly personalized based on greater tech-enabled insight on customers and their individual risk

When you add together the massive growth in new sources of data together with tech-enabled data science, it is inevitable that premiums will become highly personalized. This will be enabled by tech such as wearables, telematics, IoT and smartphone apps. Not to mention the ability to build insights through relationships that exists across data sets. Gone will be the days when people of the same age and gender, with identical cars or homes living on the same street, will pay the same premium. In the future, other factors will apply to reflect greater granularity in their individual risk profiles. Data science will become a key set for underwriters and actuaries.

One to watch: Sherpa

Insurtech trends article: Insurance distribution is about to get personal

Insurtech Trend #3 – The blockchain era has begun, and there will be a rapid shift from pilot to production of distributed ledger technology

It is hard to find a major insurer that is not involved one way or another with a blockchain initiative. This will only continue as this disruptive tech continues to prove its ability to provide a viable solution. Of course, there are still some big questions to answer in terms of scale, performance and security, but those answers will come. The big breakthrough in insurance for blockchain will be in the back office for the complex and global world of wholesale, commercial and reinsurance (which is desperately in need of moving into the internet age).

One to watch: ChainThat

Insurtech trends article: R3’s partnership with ChainThat is one giant leap for insurance

See also: Insurtech: The Year in Review  

Insurtech Trend #4 – The lines between the old and new will blur as insurtech becomes mainstream by 2020

The defining characteristic of the Fourth Industrial Revolution is speed of change. This certainly applies to insurtech and its impact on the world of insurance. The rate at which insurtech startups are popping up all over the world is not surprising. Everyone wants a piece of this $7 trillion cake. The incumbents have responded, too. By investing in, partnering with and acquiring insurtechs, the incumbent insurers have wholly embraced the movement. This will lead to the creation of whole new digital brands, designed to cannibalize traditional business. And because it is simply too expensive and takes too long to transform legacy operations, the incumbents will ring fence and run them down.

One to watch: Munich Re

Insurtech trends article: Digital transformation is the strategic imperative no insurer can ignore

Insurtech Trend #5 – Digital engagement through lifestyle apps will change the relationship dynamic between insurer and insured

Lifestyle apps are the norm. It is hard to find anywhere in the world where this is not the case, so lifestyle apps are the perfect vehicle to provide the peace of mind that customers want when they buy insurance. Instead of the annual chore of hunting for the lowest-priced insurance then having nothing more to do with it unless you suffer a loss, lifestyle apps offer value on a daily basis. This makes them sticky, which, for insurers, means less churn. They also give insurers greater insight into their customers’ behavior, which means better-informed risk assessments and personalized premiums. And they build brand loyalty, which, if you believe in behavioral economics, will result in lower levels of claim embellishment and fraud.

One to watch: Metromile

Insurtech trends article: Metromile, the pioneers of digital engagement

Insurtech Trend #6 – The all-in-one insurance policy is here to stay

It has taken longer than I predicted back in 2015, but the all-in-one insurance policy is here. From a customer’s perspective, the all-in-one policy makes perfect sense. Especially for the millennials and Gen Y’s. Why can’t they simply have one relationship with one insurer and have everything covered in one go? And it’s not just for younger generations. Imagine giving the insurer the details about your car, home, health, travel, pets and possessions. The insurer gives you one overarching policy, a fair price and the ability to flexibly adjust the cover as needed. Operating on a membership model, the platform can provide safeguards and advise the customer on good and bad decisions. This is AI territory and relatively straightforward to automate. IMHO, this is a winner; watch this space!

One to watch: Getsafe

Insurtech trends article: Getsafe take the Lemonade model one step further

Insurtech Trend #7 – New models will challenge the traditional insurance value chain 

In the digital economy, where insurance is embedded into lifestyle products or distributed through ecosystems, the traditional insurance model doesn’t work. The inherent inefficiency in a highly intermediated value chain, too dependent on human effort, makes insurance products expensive. When as much as 80% of premium is lost on distribution, leaving barely a fifth for the risk pool, you know something has to change. In the words of Jeff Bezos, “your fat margin is my opportunity.” These new models will see the carriers squeezed as the reinsurers provide risk capital directly to digital brands. Regulatory frameworks will be reworked to reflect these shorter value chains that don’t require the many layers they have today.

One to watch: Amazon

Insurtech trends article: Redefining the insurance value chain

Insurtech Trend #8 – Lemonade has set the pace in Insurtech 2.0; copycats will follow

The first phase of insurtech was all about distribution and data. Then came Lemonade. In September 2016, they launched in New York, and a year later they cover around 50% of the U.S. population with their renters and home insurance products. For me, Lemonade have defined Insurtech 2.0. Many insurtech startups claim to redefine or reinvent insurance, but they simply don’t, whereas Lemonade has. It is inevitable that the copycats will appear. Some will be insurtech startups, although they will need to be as well-marshaled, experienced and funded as the Lemonade team to have any chance of success. And some will be the incumbents, which will have a go at creating a Lemonade model from within. These will almost certainly fail!

One to watch: Lemonade

Insurtech trends article: Lemonade really do have a big heart, killer prices and instant everything

See also: Top 10 Insurtech Trends for 2018  

Insurtech Trend #9 – Claims settlement will become an automated, self-service and quick-to-pay experience for customers

Insurers spend too much of a customer’s premium on handling the claims process. This is because the process is manual. And because the carrier wants to double-check the claim. And because customers don’t always tell the truth. And because there is too much time in the whole process. And and and and and. The insurtech solution is to put the claims process in the hands of the customer. This sounds counter-intuitive, but it isn’t. Taking a self-service approach, the customer provides video and images at FNOL and is in control of the claims process. Automated reviews of claims handle the vast majority of cases and award instant payouts. The money can be with the customer in a matter of hours. No long processing cycles, no time to embellish the claim and high levels of customer satisfaction. Those that fail the automated review are the exceptions handled by the carrier, which is what they’re looking for anyway! This will become the norm for claims management, once the fears and resistance of the lifelong claims directors can be overcome.

One to watch: Rightindem

Insurtech trends article: Democratizing insurance claims restores trust for customers

Insurtech Trend #10 – Tech-enabled loss prevention will become a key feature in the insurance product

Advances in everyday technology are increasing the ability to predict the likelihood of an event or outcome occurring. In home and motor, tech is being used to model behavior and identify exceptions. Sensors and phones and devices are all collecting data that define our individual norm (as opposed to a collective norm). As a result, any deviation can be instantly assessed, and action can be taken. To handle scale, this is 100%-automated, driven by AI and machine learning. Which means the opportunity for insurance is immense, because, instead of being a passive risk taker (which carriers are today), insurers will become active risk managers.

One to watch: Surely

Insurtech trends article: Digital implementation is the strategy insurers have been looking for

Insurtech prediction lists from previous years 

Looking forward with insurtech Insights – 10 predictions for 2017

Daily Fintech’s 2016 predictions for InsurTech

Sign up for more insurtech Insights here

Asia Will Be Focus of Insurtech in 2017

Asia will be the key pillar in the coming revolution of insurance and in all likelihood will become the hottest market for insurance technology (insurtech) globally. It’s no longer just a pipe dream, as this time all the stars are aligning. Take the sheer population size and rapidly emerging tech-savvy middle class, together with low effectiveness of traditional insurance distribution. Combine that with a destabilizing wave of political populism, making its rounds across much of the developed world, and you’ve got most of the ingredients for a region that will take on a leading global role for insurtech.

So what, if anything, is missing to really ignite insurtech in Asia? It turns out that while the region is ripe for insurtech, the actual quantity and quality of startups in Asia is nowhere near that of other regions… at least not yet.

Share of investments in insurance startups can be used as a good proxy to the overall level of insurtech activity around the world. According to the figures, the U.S. takes 63%, with Germany (6%), U.K. (5%) and France (3%). China is at 4% – which doesn’t account for Zhong An’s massive investment in 2015 — and India at 5% (Source: CB Insights).

See also: The Future of Insurance Is Insurtech  

So the logical question is, why aren’t there more startups in Asia, considering the substantial opportunity and funding that exists in the region? Is it due to a shortage of experienced entrepreneurs, difficulty of starting a business, lack of access to investment or something else? The answer is that it’s likely a combination of a few factors, including a weaker early-stage entrepreneurial ecosystem, which doesn’t yet effectively support startups, and a cultural aspect of lesser tolerance for failure. Both of these are changing fast, though, and entrepreneurs across Asia are starting to identify and test innovative insurtech solutions.

The following are just a few recent notable insurtech startup examples across Asia that have already reached beyond Series A funding: Zhong An (an $8 billion Chinese insurtech startup), Connexions Asia (Singaporean flexible employee benefits platform with a U.S.$100 million valuation), and two large insurance aggregators out of India– Policybazaar and Cover Fox.

So why am I convinced that Asia insurtech startups will not end up dominating their regional home turf ?

Probability and “Survival of the Fittest”

The lack of critical mass of startups in the region means that they will not enjoy the same quality filters and network effects of the larger entrepreneurial ecosystems of the U.S., Europe and to a somewhat lesser degree China.

“Surviving” U.S. and European startups have to fight their way across a lot more competition to reach scale in their home markets. Hence, where a weaker startup in Asia could get repeated life support simply because there aren’t that many others to invest in, natural selection weeds out the weaker models in EU/U.S. much quicker in favor of more robust ones. Stronger startups then get to attract the best talent from the entrepreneurial ecosystem, including talented entrepreneurs whose models didn’t work as well, further reinforcing successful EU/U.S. startups.

Home Market Advantage

Success in a large home market like the U.K., Germany or a few U.S. states gives a substantial boost to any startup. It provides both credibility and cash flow to allow a much more aggressive expansion into other regions. This also gives a startup flexibility to develop the necessary adjustments to the business model to adapt it for Asia.

The U.S. and EU have a deep domain level of insurance expertise, which gives EU/U.S. startups from those regions a further edge to tap advisory expertise locally, because most of the largest global insurers are based in these two regions.

Lastly, considering that most startups adopt a collaborative approach with insurance companies, having a relationship that originates close to the top decision maker at headquarters gives an added advantage to EU/U.S. startups when they are looking at expanding to new regions. I’ve personally experienced examples of relationships developed in Europe that later carried over in creating a pre-warmed partnership with the insurer’s operations in Asia.

Regulatory Complexity

Asia is made up of a large number of countries, where each has its own insurance regulator, who possess views on how things should be run. This means an additional potential growth hurdle for Asian startups.

For example, a startup out of Singapore will need to figure out how to navigate the neighboring Asian country regulatory regimes pretty early in its growth cycle. Thailand, Malaysia, Indonesia and Vietnam markets all have diverse regulatory requirements. This lands the Singaporean startup at a disadvantage vs. a more mature startup out of EU/U.S. – which not only has experience dealing with regulators in its home market but also possesses a proven track record and a larger resource pool that it can use to overcome any regulatory issues.

Meet Future Leaders of Asia InsurTech

Here are  35 insurance startups from across the U.S., Europe and China that have a real shot at collaboratively shaping the future of Asia’s insurance . Granted that not all of these startups will successfully adapt their models for Asia, a few would and will go on to successfully dominate Asia’s insurtech landscape in the foreseeable future.

Credit: George Kesselman

Credit: George Kesselman

The future of insurance in Asia is coming fast, and it’s looking pretty exciting!

See also: Insurtech Has Found Right Question to Ask  

Below are links/brief description of each of these 35 ventures.

U.K.

  • Guevara – People-to-people car insurance
  • Bought by Many – Insurance made social
  • Cuvva – Hourly car insurance on-demand
  • SPIXII– AI insurance agent
  • Gaggel – A better alternative to mobile phone insurance.
  • ClientDesk – Digitizing the insurance industry
  • Insly – Insurance broker software

Germany

  • SimpleSurance – World’s leading e-commerce provider for product insurances
  • Friendsurance – The future of insurance (P2P)
  • Getsafe – One-stop digital solution for all your insurance matters
  • Finanz-chef24 – Germany’s largest digital insurance for entrepreneurs and self-employed
  • Money-Meets – Save money and improve finances
  • Clark – Insurance as easy as never before
  • MassUP – White-labeled platform for online insurance sales
  • FinanceFox – Your insurance hero

USA

  • Metromile – Pay-per-mile insurance (usage-based auto insurance)
  • Oscar – Smart, simple health insurance.
  • Zenefits – Online HR Software | Payroll | Benefits – All-In-One (EB distribution)
  • Policy Genius – Insurance advice, quoting and shopping made easy
  • Embroker – Business insurance in the digital age
  • Slice – On-demand insurance for the on-demand economy.
  • Trov – On-Demand insurance for your things
  • Cover Hound – Compare car insurance quotes from top carriers
  • Insureon – Small-business insurance
  • Bunker – The marketplace for contract-related insurance
  • Lemonade – Peer-to-peer renters and homeowners insurance
  • Cyence – Comprehensive platform for the economic modeling of cyber risk

China