Tag Archives: gig economy

Health Insurance for Self-Employed People

We’re talking a lot these days about the future of work. We’re not talking enough about the future of health insurance.

Most Americans have historically gotten health insurance through their employers. But the number of self-employed Americans including independent 1099 contractors, freelancers, gig workers and sole proprietors is skyrocketing. According to studies by the Freelancers Union, 57 million of us are fully or partially self-employed today, and more than 50% will be by 2027. What will be the #1 concern of self-employed Americans? Access to affordable healthcare.

What’s driving this change in how we work? Some people are deciding to step away from traditional employment to pursue what they love. Others are being pushed out of traditional W-2 employee roles by automation, corporate downsizing and rising labor costs.

As the U.S. workforce changes, its insurance needs are changing, too. How will self-employed people get comprehensive and affordable health insurance? How will healthcare plans evolve to better serve this growing population? And as a broker, how can you serve them?

The future of work is coming. Where is the future of insurance? Source: Freelancers Union.

Why does health insurance for the self-employed matter?

I am a licensed broker and a former freelancer, so this issue is personal for me. I spent most of 2018 working as a self-employed growth consultant. I did paid projects from a desk at a coworking space and got to know the other people there — gifted technical, creative and business professionals with the courage and skills to bet on themselves. And I learned what every self-employed person already knows: This work can be exhilarating, but it’s not easy, and the lack of affordable health insurance hurts not only individual workers but their families, and their long-term health.

See also: Empathy Transforms Health Insurance  

Self-employed people including 1099 contractors can’t get coverage in most group policies. They can buy comprehensive individual plans during open enrollment, but it gets more expensive every year, and those earning more than $50,000 per year don’t get subsidies to offset the price. Outside of open enrollment, there are no comprehensive healthcare options for the self-employed–which is a massive problem.

How does this affect you? If you sell group plans to organizations with a large base of independent 1099 contractors, you already know the answer–you’ve got a large and growing population, and nothing great to sell them. The most innovative and successful brokers in the next 10 years will be those who can figure out how to serve this massive and growing population of self-employed workers.

The future of work deserves the future of health insurance. How can healthcare plans evolve?

Brokers and self-employed people both need better options. Luckily, we’re starting to see some new options come online that are getting traction.

Self-employed people can buy short-term plans, but these plans typically cap payouts and don’t cover preexisting conditions or many essential health benefits. They can join health-sharing ministries, typically composed of religious people who aspire but do not commit to sharing in each other’s healthcare costs, but their care may not get covered, and monthly payments are not tax-deductible.

Decent, which I founded, recently launched in Austin, Texas, in partnership with the Texas Freelance Association, offering the most affordable comprehensive plans on the market for self-employed people and their families. All plans include unlimited free primary care with a personal doctor. Decent sells year ’round, including to people without a qualifying life event, and will be expanding throughout Texas and beyond soon.

So what is the future of health insurance?

Whatever products eventually win in the market, getting employers out of the health insurance equation will make the healthcare market work more like other markets, where suppliers compete to serve customers on quality, price, and convenience.

See also: 5 Health Insurance Tips for Small Business  

America’s self-employed workforce is relatively healthy, wealthy and politically active. A revitalized individual market will encourage regulators to make subsidies available for insurance purchased in the private market, not just on government exchanges.

At the end of the day, capitalism is about choice. People want more and better options. As a growing number of Americans choose the insurance they want rather than taking the insurance their employer gives them, suppliers and brokers will provide what the market needs. At Decent, we anticipate that the future of health insurance is refreshingly similar to the future of other markets that have evolved to serve the consumer: more choices, more customization and better deals for the diverse population that makes up our country, including the rising tide of the American self-employed.

Implications of Ruling on Gig Workers

What is remarkable about the debate over California Assembly Bill 5 (Gonzales) is how unremarkable the issues actually are in the debate over the Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903.

Of course, as has been well-documented, the Dynamex holding and AB 5 could disrupt the digital platform “gig” economy, and misclassification of employees as independent contractors is a vitally important issue. It has serious implications for the fundamental fairness of how businesses compete with one another and how we value and protect workers on whose endeavors our entire economy depends.

But the debate, while appearing in the digital marketplace as its latest forum, is multi-generational.

The Dynamex decision is the current law of California as it relates to classification (employee or independent contractor) disputes over wage and hour obligations of California employers. AB 5 is intended to codify this decision not only for wage and hour determinations but also for unemployment insurance obligations and workers’ compensation coverage. This legislative process has led to chaos, with a host of employers asking for dispensation from the “ABC” test borrowed from Massachusetts (and used in Illinois and New Jersey, among other states), arguing that the test should not really apply to, among others, dog groomers, hairdressers, real estate agents, truckers and insurance producers. The list goes on and on. The queue is as long as it was in Casablanca when desperate people were seeking exit visas at any cost from Rick’s Café Américain.

But Dynamex isn’t the product of the California Supreme Court sitting down together over lattes one afternoon and deciding, “Well, let’s change the law on classification disputes involving independent contractors and see what happens.” It was a final decision in which the trial court and the court of appeal used existing tests for independent contractor status to arrive at the conclusion that Dynamex workers were, in fact, employees. In other words, even though imposing the now infamous “ABC” test in California, the Supreme Court affirmed the decision of the court of appeal.
It is unfortunate, but not surprising, that Dynamex is being divorced from its facts in the current, overheated debate in Sacramento.

Perhaps the most important part of the court’s lengthy decision is found in this part of the factual record:

“Prior to 2004, Dynamex classified its California drivers as employees and compensated them pursuant to this state’s wage and hour laws. In 2004, Dynamex converted all of its drivers to independent contractors after management concluded that such a conversion would generate economic savings for the company.” Dynamex, 4 Cal.5th 917, emphasis added.

There is simply no test for classification status that would not be triggered by this action. And indeed it was, in the lower courts invoking both Martinez v. Combs (2010), 49 Cal.4th 35 and the now iconic decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399.

That leaves us with the question – how to address the misclassification of a workforce while preserving the ability and prerogative of an individual worker as a sole proprietor to offer his or her skills to businesses that need such services on an ad hoc or project basis while not displacing work that would normally be done by an employee.

See also: Keys to California’s Consumer Privacy Act  

It is a question for the court – because the legislature could not resolve it – to clarify the comment:

“As explained, in light of its history and purpose, we conclude that the wage order’s suffer or permit to work definition must be interpreted broadly to treat as ’employees,’ and thereby provide the wage order’s protection to, all workers who would ordinarily be viewed as working in the hiring business.” Dynamex, 4 Cal. 5th at 916, emphasis in original.

This is the “B” part of the test adopted in Dynamex that is causing millions of dollars to be spent lobbying in Sacramento and may result in tens of millions being spent in a costly ballot measure in 2020.
This is also the core issue left unresolved by AB 5. What AB 5 does in its present state, however, is to accelerate the path to the Supreme Court for it to address the ABC test in a broader context than the facts presented in Dynamex. It can be argued that the legislature is doing little more than asking, ultimately, for the court to refine its application consistent with the public policy objectives articulated in that decision. However, the complex rules now in AB 5 will cause both employers and workers considerable grief in coming years.

Insurtech’s Approach to the Gig Economy

Over a third of the U.S. workforce work on a self-employed or freelance basis; a stat that is forecast to continue rising. This is the gig economy and is here to stay. For a recent InsurTech Insights, I looked at the gig economy’s impact on insurance with the rise of ride-sharer platforms like Uber.

Only a decade old but already operating in over 700 cities, Uber is a global brand that has achieved the rare distinction of becoming a verb. “To uber” has replaced “to hail” when needing a ride home.

To help me understand the impact of the gig economy on insurance cover, I called up David Daiches, the COO and co-founder of specialist insurtech platform Inshur.

First up, I asked David how he got started at Inshur with co-founder Dan Bratshpis“Dan and I came at this from different directions and met in the middle. Dan had been writing trading algorithms on Wall Street until the financial crash. From there, he found himself in a taxi brokerage serving the traditional yellow cabs. Then Uber came along, and Dan saw first-hand the difference between the (old) traditional cabbie and the (new) digital natives driving for Uber. Age, attitude, technology were all defining characteristics of the younger drivers who simply don’t want to come into the brokerage and sit around sorting out insurance. They wanted to do everything online and mobile and resist coming into the office.

“Which is when Dan started to look for a technology solution and our paths crossed. I had been working on OpenUnderwriter and developing an open source policy admin solution to allow brokers to trade on the internet. When Dan saw what we had done with OpenUnderwriter, he got in touch straight away. We met in London within days and created Inshur; the rest, as they say, is history.”

It’s a familiar story when I look across the insurtech landscape; one founder is a technologist, the other understands the market.

Becoming more than just a broker in the gig economy

In the beginning, Inshur operated as an aggregator in New York. They saw the opportunity of getting the driver up and running as fast as possible. In the old world, it could take weeks before a licensed driver was insured and ready to go. In the new world, that wasn’t going to be acceptable.

See also: How to Insure the Gig Economy  

So they did what insurtechs do and built a fast and convenient sign-up app using a chatbot called Ami. Providing a totally digital experience on a mobile app, Inshur could get the driver signed up, checked out and quoted in a matter of minutes.

“We asked carriers for more flexibility, but all they offered us was a dedicated fax machine!“

This gave them a digital face, but, behind the scenes, much of what they did looked like a traditional broker operation. They were restricted in their efforts to adapt the insurance experience to meet the digital profile of the ride-share drivers. David explained, “We asked carriers if they would give us some binding facility, but all they offered us was a dedicated fax machine!

“Then we saw what Munich Re was doing with Digital Partners, and we reached out to Andy Rear. After an initial meeting with Andy in New York, we signed a partnership agreement with MRDP and launched as an MGA in New York last year. The next logical step for us was to launch in the U.K., and we strengthened the team by hiring a good taxi underwriter who understood the U.K. market. We then started working with Uber and collaborating on how we could use their driver data for underwriting purposes.”

Inshur is a service-driven, engagement model

It’s clear to me that Inshur wants to be more than just a distributor of insurance products for the gig economy. The service features they are building into the platform offer value over and above a cheap price and an easy-to-buy insurance product. It’s what I would call an engagement model.

In New York, Inshur has a partnership with a dash-cam provider called Nexar. It’s a self-financing no-brainer for the driver who pays $49 for the camera and, in return, gets a 10% discount on the premium, typically worth about $450!

The deal works for Inshur, too, which gets access to the footage of any incident/accident. The dash cam also collects telematics data that provides useful corroborating evidence in any claim.

When it comes to claims, the Inshur approach is all about getting the driver back on the road as quickly as possible. Business interruption cover can be challenging when it comes to getting a plated replacement vehicle for the driver, in which case the solution is to pay the driver while he is off the road and get the car fixed as soon as possible.

Managing different regulatory environments

Launching in New York and London has created challenges managing very different regulatory environments. David explained: “In the U.K., it’s much harder to get an FCA license, but, once you have it, you can be very flexible on pricing compared with the U.S.  It’s the other way round In the U.S. In New York, you can get an insurance license quite easily by submitting a form, but you don’t have the same freedoms on pricing. In the U.S., all prices have to be agreed with the regulator and published in advance.”

The logic to the U.S. approach is that the regulator is protecting the market against new players undercutting market rates and then failing, leaving an exposure. I know from talking to many founders that it can be difficult to get the regulator to agree with pricing no matter how compelling the proposition for digitally removing cost and inefficiency. The regulators are there to safeguard the customer, not give a free ride to the startup, after all.

Putting the insurance customer first 

When it comes to underwriting Uber drivers, Inshur uses around 50 different rating factors. These are a mix of proprietary data and publicly available data sources from simple processes, such as the scan of a driving license. This data gathering reduces the time on the application process and builds a much richer and more accurate driver risk profile.

One of the significant factors in underwriting used by Inshur is the driver’s Uber rating. Any driver with an Uber rating of 4.99 is going to be rated a much better risk than one at, say 4.5. This rating is much easier to use in the U.K. than it is in New York, but, with their U.K. experience, Inshur will be able to show the New York regulators that the Uber rating is a reliable factor when pricing premiums.

For the ride-share drivers, insurance is a high fixed cost, and Inshur has introduced flexible pricing models to fit the needs of the drivers. Currently, about 90% of their ride-share drivers buy the monthly policy. At each monthly renewal, a simple process involving one click in the app re-rates drivers based on any changes to their Uber rating.

See also: Gig Economy: Newest Tool for Insurance  

However, Inshur haven’t gone as far as moving to a pay-as-you-drive model like the one Metromile has in Los Angeles. I asked David about the need for flexibility and how he saw the market developing for ride-share insurance. “Simpler is better,” he told me.

We have found that the gig economy drivers want a simple annual/monthly policy that enables them to drive when they want, for whoever they want. We haven’t found much appetite for on-demand. When you think about it, it doesn’t make a lot of sense to keep turning the insurance on and off. It becomes too complicated when most drivers have multiple apps and are signed up to drive for everyone: Uber, Lyft, Juno, etc. They flip between the different platforms to the next ride; they don’t mind where it comes from. Any insurance product that was based on on-demand would need to be smart enough to flip seamlessly between the different ride-share platforms.”

I tend to agree with David; simpler is always better than complicated, unless it can be completely hidden inside a black box, which isn’t practically possible just yet.

This article for Linkedin is part of an op-ed first published on The Digital Insurer. The full original article can be found here.

Future of Insurance Looks Very Different

A few years ago, the satire site, Cracked, launched a series of fake commercials called “Honest Ads” satirizing various industries. One of their fake commercials was an “honest ad” for a fake insurance company selling car insurance. The commercial features a familiar-looking, aging insurance agent in a suit (and a cape, cuz insurance sales people are also superheroes) explaining in a friendly voice what you really get when you buy car insurance. According to this guy, you’ll pay a lot of money every month for a product that:

  • you probably don’t actually want, but will buy anyway, because you have to -– or else you’ll be a criminal;
  • doesn’t offer you any actual protection (even though you could use protection), just a small portion of the money that you pay into it back, but only if something bad happens;
  • you may actually never use, even though you pay a lot of money for it;
  • if you need it, you’ll have to fight your insurance company to be able to use it, even though, again, you pay a lot of money for it; and
  • if you are able to use it, you’ll be punished, by either being charged a lot more money or being kicked off of your policy

Sign me up … ?

The effect is a poignant commentary on why people hate insurance and insurance companies and why, even as insurance products may be improving, at the end of the day no one really wants to buy insurance. That’s why we think that the insurance company of the future won’t be an insurance company at all (or at least not just an insurance company). Sure, people will still need insurance, and someone is going to sell it to them, but to win in the future,you’ll need to give them more than just insurance, or something else entirely.

With this in mind, here are a few ways insurance companies and startups can move beyond insurance to start offering true value to their customers and repair a relationship that has been tarnished by too many years of arcane business practices:

1. Protect your customer.

As the Cracked commercial made clear, a lot of insurance companies message themselves as protectors of the home, the family, the car etc., but most do little to protect their customers beyond offering them money when things go wrong – property is still damaged, cars are still stolen, loved ones are still lost. But what if instead of just compensation, insurance companies gave their customers actual protection?

The smart home security company Ring, recently acquired by Amazon, was founded with a mission to make people’s homes and neighborhoods safer. In a talk at last year’s InsureTech Connect, Ring CEO Jamie Siminoff explained that “our KPI is around how much crime we reduce, not how much revenue we produce.” Imagine an insurance company that tracked its success in this way. Because Ring invested and tracked against a KPI not just around revenue, but around customer safety, it has been able to prove that homes where Ring is installed are safer homes, which also make for safer neighborhoods — a fact that has resulted in more revenue and more business opportunities for Ring. Not only was it acquired by Amazon this past spring, but long before that it was able to form partnerships with insurance companies like American Family, which provides customers a discount on a Ring doorbell and a 5% discount on their homeowners or renters insurance.

See also: Smart Home = Smart Insurer!  

Like Ring, insurance companies should be thinking more about how to protect their customer and less about how to protect themselves from their customer. People don’t generally want to crash their cars, flood their basements, have their homes broken into. Helping customers better protect themselves from the risks that require insurance delivers value to the customer and to the company, and ultimately provides a way for insurance companies to develop trust with their customers.

2. Entertain your customer.

When Amazon first made waves as an online bookstore, few would have predicted that Amazon would one day become a major movie studio and video streaming platform. Amazon’s foray into the movie business, announced in 2010, was never about making money in box office sales or online streaming (although Amazon does both). It was about getting more people to sign up for Prime subscriptions and spend more time and money shopping on the site. And Amazon understood that investing in quality entertainment that could be included in a Prime membership was a promising approach.

Not that insurance companies need to become entertainment or media companies, too, but investing in high-quality content that people want (and like) to consume can also be a means of selling insurance. The U.K. insurance comparison website, Compare the Market understood that, while people may not like insurance, they definitely like meerkats. Hopping on the meerkat meme bandwagon, the company launched the website comparethemeerkat.com (a play on market, if you didn’t catch that), where consumers can go online and compare sets of meerkats in the way they might compare auto insurance policies or a credit cards. Beyond comparing meerkats on the website, you can also watch short videos (which are also commercials) about the lives of your favorite meerkat characters, like Sergei, head of IT, who joins the circus to escape the stress of his job at comparethemeerkat.com.

Although meerkats may have nothing to do with markets, they definitely make the idea of comparing insurance policies and credit cards a lot more fun. And whether I’m in the market for insurance, I’m always in the market for another meerkat meme … and when it comes time to look for new insurance, I know where I’ll go looking.

3. Educate your customer.

Fiverr is a freelancer marketplace that provides a platform for freelancers to sell their services, connecting entrepreneurs and workers with the companies and individuals who want to hire them. Just last month, it launched Fiverr Elevate, a platform where Fiverr freelancers can go to take online courses to help them better run their businesses. As Fiverr Freelancers, they earn credits that they can put toward courses.

Educating freelancers and small business owners is not what Fiverr is all about, but education is something that benefits customers and would-be customers and allows the company to build a relationship that’s based on value-added, not necessity. Like entertainment, education is sticky and builds trust with customers outside of the core products and services sold, which in insurance is important, considering that the primary interaction a person has outside of binding or renewing a policy is filing a claim in a moment of crisis, after something bad has happened.

4. Solve problems for your customer.

While researching and observing workers in the gig economy for an insurance prototype we designed, we heard more than once from gig workers that they probably won’t buy additional insurance, even when exposed to additional risk through their work that their existing policies do not cover.. For example, one Uber driver we spoke with used to work at an insurance company and knew that if she got in an accident while driving for Uber she wouldn’t be covered. Yet because Uber didn’t make her buy additional coverage, she decided not to (a lot of people buy insurance because they have to, not because they want to). Another Uber driver we spoke with described the insurance our prototype was offering as “third tier,” meaning that it would be coverage if his personal insurance and Uber didn’t cover him. Like the other driver, he didn’t think he would buy this kind of insurance. He’d rather take the risk.

Offering more than just insurance is particularly pertinent for insurance that isn’t mandatory. Insurance needs to solve other problems for customers that aren’t being solved elsewhere. Our gig economy prototype, for example, allowed gig workers to connect all of their apps to our platform, and provided them with a dashboard that would allow them to track all their gig work in one place, analyzing hours and peak earning times, and offering insights that would allow gig workers to optimize their schedules and their earnings. While at the end of the day our prototype was selling insurance, the users we talked to ultimately wanted to buy it not because it was insurance, but because it was more than insurance – and it was solving an important problem they were experiencing as gig workers.

Jetty, the renters insurance startup, is doing something similar. Beyond selling renters insurance, it is also helping solve a critical problem for millennials living in cities. Jetty Passport helps people get into apartments more easily by paying security deposits and acting as guarantors. For a fraction of the price of the security deposit and for an additional 5-10% of the rent, customers don’t have to worry about either. For those using Jetty Passport, Jetty renters insurance, starting at $5 a month, is a no-brainer.

See also: Startups Take a Seat at the Table  

5. Follow your customer.

While it may be true that most people don’t like buying insurance, there are a lot of other things these same people do like buying. Airplane tickets, clothing and apparel, stuff for their house. Finding out what else your customers are doing and buying (and where), and selling them insurance through these channels can help insurance companies align themselves with companies their customers actually do like and trust, while also lowering the cost of customer acquisition so you can offer more competitive pricing.

In March, AIG Travel announced that it is partnering with Expedia to sell travel insurance on Expedia sites, including Expedia.com, CheapTickets, Orbitz, and Travelocity, giving Expedia customers booking flights, hotels and other travel arrangements the option to insure their bookings for a small fee. AIG also announced a partnership with United Airlines to do the same earlier in the year.

Slice insurance, the homeshare insurance startup, has done something similar, partnering with AirBnB to sell hosts on-demand insurance when renting out their homes.

These types of partnerships are a win-win for customers, insurance companies and the platform partners. Platforms get to expand their offering to their customer; insurance companies get to build a direct relationship with customers through a channel they like and trust’ and they get access to more customer data to better understand purchasing behaviors outside of insurance. Customers get easy access to insurance coverage that will benefit them without having to go out of their way to make an additional transaction.

It’s no secret that insurance companies have an image problem, one that has been created over more than a century of legacy business practices that make transforming, innovating and developing more customer-centric products easier said than done. But as insurance companies do the heavy lifting to make their businesses more agile and responsive to the market, finding ways to go beyond insurance –through education, entertainment, creative problem solving and thoughtful partnerships– will help them build more trusting relationships with customers and not only maintain current customers but expand into new markets.

You can find the article originally published here on Cake & Arrow.

The 3 Pillars of On-Demand Insurance

One of the outcomes of economic and technological changes has been the rise of on-demand insurance products, offered both by insurtech startups and incumbents alike. This includes products with continuous underwriting attributes, microinsurance products and insurance offerings for workers in the gig economy. These offerings aren’t typically grouped together, but they share an on-demand aspect that wasn’t required or technologically possible in the past.

Continuous underwriting refers to the use of regularly updated (and possibly real-time) policyholder data to rapidly determine consumer risk and adjust policy terms and prices accordingly, as opposed to traditional term-based updates and renewals. Some forms of continuous underwriting have been around for a long time (example: pay as you go Workers’ Comp, with monthly updates based on submitted payroll) but now has applications to many lines.

Microinsurance refers to coverage of smaller risks via rapid underwriting; including on-demand products like travel or event insurance, renters’ insurance broken out for specific high-value household items or pay-per-mile auto coverage.

Gig economy insurance is most familiar to those outside the insurance space: as more and more freelance and “gig” opportunities like Uber and Postmates emerge, carriers are developing products to keep these independent contractors covered in a part-personal, part-commercial hybrid coverage.

See also: On-Demand Insurance: What’s at Stake  

While these three arenas of modern insurance might seem disparate in their final forms, they are emerging today due to a new consumer-focused approach to product definition and the connected technology necessary to allow a real-time approach. This foundation for all of them is built on three pillars:

Data: On-demand insurance requires data, if not in real time then something close to it. If insurers are only getting updates as to policyholder risks and scheduled items after an end-of-term audit, then only a traditional approach will work. But as connected technologies and the Internet of Things have created a continuing pipeline of data, a new approach emerges. Insurers now have the ability to tap into discrete data points about coverages times and risks in an automated fashion, including: When is someone driving their car for Uber vs. for personal use? When is a business stocking high amounts of valuable goods? What is monthly payroll for workers’ comp?

Product: It’s not enough to have access to the data. Insurers can’t just adjust rates on the fly. Instead, they need to take a consumer-first approach to modeling their insurance product. This means the restructuring and sale of a product with a variable pricing agreement and a flexible term. Done properly, this will allow the insurer to have the most insight into the collective risk and allow the consumer to have a transparent product that covers them for exactly what they need when they need it.

Systems: Just because the data is available and the business has rethought the product structures doesn’t mean the infrastructure will be able to support it. On-demand products mean real-time web service calls and at least some component of automated underwriting decisions. Variable rates mean a rating engine that can calculate new rates on the fly based on updated risk info as well as a billing system that can adapt to variable billing amounts and dates. Without flexible and agile core systems, an insurer can’t roll out new products that behave in nontraditional ways.

Insurers may be able to make progress with an on-demand offering even if they only have one or two of these pillars. Workers’ comp insurers, for example, have offered pay-as-you-go for a long time via manual form submission. But to make new products viable for a mass audience—and to compete with the consumer-driven ethos of Silicon Valley startups—automated data needs to be simple and convenient to turn on and off. This might take the form of a mobile app with a button to turn a microinsurance product on or off or perhaps the form of an automated data feed to a third-party system like payroll.

Conversely, all three pillars are valuable to an insurer even if it hasn’t fully embraced an on-demand approach to their products.

See also: Reinsurance: Dying… or in a Golden Age?

Real-time data allows an insurer to understand its overall risk profile at any given moment and to make decisions and new sales and renewals. If, for example, you are selling a commercial liability policy and have up-to-date info about a business’ risks, it’s helpful even if individual policy pricing isn’t affected. In fact, this is how automotive telematics typically works: Auto insurers are gathering masses of data that demonstrates real-time risk and driving behavior, but they aren’t using it to do continuous underwriting/rating.

Likewise, rethinking a product structure to take a more consumer-focused approach can happen even within the constraints of traditional insurance offerings or without real-time data. And, obviously, having modern and flexible core systems allows new product rollouts, better automation and digital interactions regardless of what products are sold.

New insurance products like microinsurance and continuous underwriting aren’t just about gathering data or having a modern core system. Rather, they are based on a multi-faceted approach: understanding risk in a semi-real-time way; selling a different type of product; and having the core systems to handle it.