Tag Archives: InsPeer

10 Insurtechs for Superb Engagement

We have written about the key challenges that insurance carriers are facing. Winning insurtechs are those that tap into these challenges to accelerate digital transformation. In this post, we’ll focus on the first of seven different flavors of winners in fintech insurance: insurtechs that drive superb customer engagement.

Customer engagement leaves much to be desired

Most insurers still have low Net Promoter Scores. In spite of all the efforts and investments in the last years, customers continue to experience a lot of friction throughout the customer journey. And what is even more challenging, rising consumer expectations are more and more difficult to meet. The frame of reference is set, not by the service offered by other insurers, but by what customers experience when they reach out to other brands, for instance when using their smart phone.

See also: Core Systems and Insurtech (Part 1)  

There are a bunch of reasons why customer engagement is the first flavour we are exploring in this blog series. We believe customer engagement is the key to turning digital transformation efforts into a lasting competitive advantage:

  1. Customer engagement is the key to build trust
    This is what research told us: Trust is built by excelling in the daily provision of services. Touch point performance, the perceived quality of customer-facing employees, the ease of doing day-to-day business are the most important elements in building or reinforcing trust.
  2. Customer engagement offers new points of differentiation
    Because virtually every financial institution is simplifying its product range and individual products, it will become increasingly difficult to differentiate from competitors on a product level.  Consequently, the points of differentiation of financial services will shift to the way the company engages with customers, e.g. in service and customer experience.
  3. Service is becoming a much more important purchase driver
    In the past, you shared your thoughts and experiences with your neighbors over your backyard fence. Nowadays, people exchange their thoughts and experiences also over a virtual fence powered by smart phones and social media. Peer-to-peer information sharing is almost always about the service quality. This has a huge impact on our decision-making. We are less and less choosing solely on price any more; more and more we are — within a certain price bracket — choosing on service. Service is becoming a much more important purchase driver.
  4. Lack of customer engagement results in loss of value
    Every day, thousands of insurance and financial products are purchased that do not completely match the needs of the customer. The cancellation rate in life insurance is proof of this. Sunk costs include billions of euros in intermediation costs and, even more importantly, of course, huge loss of value for customers.
  5. Customer engagement is a primary source of profit
    Ample research shows that customers who have had real positive experiences will drive revenues and profit in a variety of ways. They are more open to other products of that company. They will be less sensitive for offers from competitors. The costs to serve will decrease. And the customers are more likely to advocate your services to friends and family.
  6. New entrants set new standards to engagement
    Not all new entrants will survive, but they will definitely set new standards. Despite the fact that they differ quite a lot in nature, they have one thing in common. Every new entrant is attacking the frictions and complex processes that customers have to deal with when working with financial institutions. Incumbents need to step up to the plate to keep up.
  7. Regulators scrutinize how the industry engages with customers
    During the first couple of years “after Lehman,” the various supervisory authorities have focused on the way money was made, and the quality of financial products. We now see that that focus has widened to just about every aspect of customer engagement: sales, advice, service, even advertising. Regulators are forcing insurers to have a 360-degree view of customer engagement to treat customers fairly.

Address the pain points

The challenge is to close the gap between the insurer and the customer. Moving from transaction to interaction, from one-way communication to a dialogue and from interaction to intimacy, taking the dialogue from exchanging information to actions.

Too often, customer engagement is mistaken for creating a Disney-like experience. We think the opportunities are much closer to home. In our work for insurers, we have learned that customers across the globe more or less experience the same pain points:

  • “They do not really know me. They do not understand my situation.”
  • “I am not convinced they act in my best interest.”
  • “They do not treat me nicely. I don’t think they would walk the extra mile.”
  • “Their information confuses me.”
  • “They don’t make it easy for me.”
  • “I am not sure what I’m covered for and what the overlap with other policies is.”
  • “It is not clear what the status of my claim is.”
  • “I am not sure what I am exactly paying for; it seems very expensive.”
  • “It takes ages to get an answer. And too often I’m not getting any.”
  • “What the call agent says is different from what the broker told me.”
  • “They don’t treat me fairly.”

Just imagine what would be accomplished in terms of customer engagement if all these pain points were solved.

Furthermore, insurance is still about averages, products, one-size-fits-all, paper, brokers and agents – which is not always in sync with changing customer preferences and what technology is able to. In fact, we notice that customer engagement technologies that are widely accepted in other industries are still hardly used in insurance.

Take the use of video. Research shows that only 7% of a conversation is about words, 38% is about tone of voice and 55% is about body language. We have seen quite a few successful WebEx implementations; e.g. bank employees who assist customers in the complex process of purchasing a mortgage, with application-to-proposal conversion rates increasing from 10% to 35%, and proposal-to-signed contract from 50% to 75%.

Another no-brainer is the use of YouTube channels to explain what customers should do when a particular event takes place. These channels are extremely effective to explain more complex consumer electronic products but are hardly used in insurance. Think of the application of social data to simplify the underwriting and onboarding process of new customers and consequently higher conversion rates, or to login to certain information to simplify the customer experience. Or take the poor state of FAQs at many insurers’ websites, while a company such as Zendesk is able to launch a tailored state-of-the-art solution in just a few weeks and at very low costs.

The Tripolis communication platform allows companies to take personalization to a next level, deploying real-time relevant dynamic content in, for instance, email campaigns. Customers receive personalized real-time information and offerings that anticipate their context, the time of day, where they are – not when the email is sent, but at the moment the email is opened. Obviously, this improves the impression of a one-to-one intimate relationship with the brand. While the use of such solutions is increasing fast in other industries; this is hardly the case in insurance.

Fortunately, more and more insurtechs are helping insurers to make a leap in customer engagement, to become much more effective in every step of the customer journey.

And, of course, we also see new entrants that are attacking specific frictions, complex processes and product and pricing imperfections that customers have to deal with when working with insurance companies. Trendwatching.com coined the term Clean Slate Brands: a whole new breed of exceptional new brands living by the rules of business 3.0 — newer, better, faster, cleaner, more open and responsive. Brands that consumers are therefore attracted to, also because they cannot have sinned yet.

See also: Insurtech: Unstoppable Momentum  

A line-up of 10 insurtechs that drive superb customer engagement in various stages of the customer journey:

PolicyGenius addresses the uncertainty of consumers with regard to gaps and overlaps in the various policies they hava purchased over time. PolicyGenius offers a highly tailored insurance check-up platform, where consumers can discover their coverage gaps and review solutions for their exact needs. PolicyGenius’ online store includes solutions from life and long-term disability to pet insurance. Quoting engines offer side-by-side comparisons of tailored policies.

Trov offers customized home insurance by allowing coverage of individual key items rather than a one-size-fits-all coverage set with average amounts. An app-based platform allows customers to discover and track the real-time value of their belonging. They simply upload the items they own to a digital locker, by scanning a product UPC code, entering an auto VIN number or a home address or looking up individual items in an in-app database. Trov (backed by leading fintech VC Anthemis) has partnered with a wide variety of proprietary data sources like Zillow (U.S. real estate), Blackbook (U.S. autos) and Symantics3 (global consumer products).

Erste Digital taps into the fast-growing use of social media and mobile to purchase products and services – quite neglected by traditional insurance companies. Erste Digital is a B2B digital broker platform selling “add on” insurance. The Scan2Insure mobile app allows customers to scan a barcode to instantly get a quote to insure the product. To sell through social media channels, Erste Digital has integrated the platform into YouTube, Instagram, and Facebook.

BIMA offers micro-insurance in 14 emerging markets in Africa, Latam and Asia, using a mobile-delivered model. Traditional insurance companies find it difficult to service those living on less than $10 per day. And that is a shame, because insurance is a powerful tool that can prevent families from falling back into poverty in case of illness and injury. BIMA gives customers access to micro-insurance that is paid for using prepaid mobile credit or postpaid billing. Policies start from $0.23 per month, and BIMA pays out within three days of receiving a claim. Today, BIMA serves more than 18 million customers.

Recently, BIMA decided to enter the health sector. In emerging markets, people need to travel far and spend many hours in waiting rooms to see a physician. BIMA’s mobile health services make it easy, quick and affordable to access medical advice from a qualified doctor via a tele-doctor service. Memberships are available in three, six or 12 month pre-paid packages and include an unlimited number of phone consultations with a qualified doctor for the whole family.

More about BIMA’s fascinating business model in one of our next posts.

Cuvva introduced a mobile app that enables the user to sign up, get a quote and buy coverage in less than 10 minutes. Quite different than what customers have to experience when they apply at the average insurance firm. Basically, a completely digital experience run from a smartphone. What is also addressing a customer need is that Cuvva gets customers covered for only as long as they need it; from a single hour to a whole day – rather than the usual single option of a year.

Another imperfection, at least in the eyes of customers, is the costs of deductibles. insPeer allows users to share insurance deductibles with their friends and family members.

Collision damage waiver and loss damage waiver on rental vehicles are also always expensive. Insuremyrentalcar provides the solution with a package that starts from $5 a day to $93.99 a year.

Embroker says it aims “to revolutionize the way businesses buy, manage and understand insurance.” The company combines the service and expertise of the best-in-class brokers with an innovative technology platform. The 100% online solution allows customers to optimize insurance spending with policy benchmarking tools and provides a real-time interface to track and manage claims, apart from many other beneficial features.

Claim Di and Snapsheet are both all about making the most important moment of truth of a car insurance, when an accident takes place and the claim process that follows, less of a hassle.

The Claim Di mobile app “shake and go” feature facilitates communication and claims between parties in an auto accident and their insurance companies. The drivers can shake the phone near the phone of another party who also uses Claim Di, allowing for an insurance claim without waiting for a surveyor from their respective insurance companies to arrive at the scene (which is common practice in Thailand). Claim Di also includes roadside assistance, a call service for insurance companies and a module to facilitate payment to claimants.

Snapsheet provides insurers the process and technology to optimize virtual claims operations. Claims adjusters get the tools they need to provide a seamless experience; a mobile solution enables customers of insurers to settle a claim completely virtually. The solution simplifies claims adjusting, reduces the cycle time and increases customer satisfaction. Consequently, Snapsheet’s solutions are transforming claims organizations into a customer-first experience and cost-efficient operation.

Bauxy’s offerings takes away hassle and frustrations in a very different way. They enable consumers to file their claims just by taking a photo of the invoice. No more queuing on the phone to talk with insurance company call agents, asking when the money will be reimbursed and getting frustrated in the process. Bauxy submits the claim on the consumer’s behalf.

What these insurtechs have in common is that they cut two ways. On the one hand they solve frictions and dramatically improve customer engagement. On the other hand, they simultaneously improve operational efficiency. In our view, this is what makes an insurtech a winner.

In our next post we will focus on the second flavor of winners in fintech insurance; insurtech solutions for dramatic cost savings. So stay tuned!

The 5 Charts on Insurance Disruption

The high-level forces (people, technology and market boundaries) are responsible for insurance’s driving influences — new expectations, innovations and new competition that individually exert tremendous transformation pressure on the industry. The forces don’t operate in isolation, however. They are connected and combine to create an even more powerful and disruptive impact on the industry. Majesco developed a model to reflect these forces:

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The combined impact is creating a powerful market shift that brings the three together, creating unprecedented innovation and disruption. It reflects what author Malcolm Gladwell calls a “tipping point.” A tipping point occurs when an idea, trend, behavior or expectation crosses a threshold and spreads like wildfire, changing the fundamentals of business. These are often sudden, as we have seen in other tipping points over the last century, reflected in the move from the industrial age to the information age and now to the digital age. Each move created leaps in innovation and transformation.

People

The makeup of the market is shifting. Insurers who ignore the shift will be challenged to retain their customers, let alone grow their businesses. This shift is being driven by demographic, cultural, economic and technological forces. They present new challenges and opportunities for the insurance industry that will require insurers to rethink their strategies, products, channels and processes to reach a fast-changing market.

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Market Boundaries

The combination of the sharing and platform economy trends is dissolving traditional boundaries and the long-held competitive advantages of incumbents. Just as start-ups can now access technology as a service, they can also access resources (sourcing and crowdsourcing), designing, manufacturing and more as a service, giving any company access to the resources needed to compete. As a result, companies must compete on more than brand, product, price or distribution. They must compete on innovative approaches.

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New Entrants

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Shifts in the Industry

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To download the full report, click here.

P2P Start-Ups From Around the World

Before the advent of underwriting in London’s coffee houses in the 1600s, civilizations used various mechanisms to provide financial protection within their communities. For example, in the Middle Ages, tradesmen learned their skills through apprenticeships in the guild system. These guilds collected fees, and the wealthier guilds used these fees as a kind of insurance safety net.

If a member of the guild was robbed, if his house burned down or if he died, the guild used money from the safety net to rebuild the house, support the family or settle any financial obligations.

The world of insurance has changed a lot since those times, but the fundamental definition of insurance as “the mutuality in the sharing of losses” hasn’t.

Which brings us to emergence of the new generation of peer-to-peer (P2P) insurance firms. These InsurTech start-ups want to address the conflict between the insured and insurer, because the insurer is betting that the insured won’t make a claim, while the insured is betting he will. The P2P InsurTechs also want to address human behavior and moral hazard.

P2P insurance protagonists around the world

Friendsurance – Germany

The pioneer of P2P insurance in 2010, Friendsurance pools its users into small groups and gives its customers a cash-back bonus at the end of each year if they remain claim-less. Friendsurance operates as an independent broker in Germany. See here for an interview with CEO and founder Tim Kunde.

Lemonade – U.S.

Claiming to be the “world’s first P2P insurance carrier,” little is known about Lemonade other than that it is coming soon. The company hit the press when it was reported it had raised a massive $13 million in seed funding (a strong indication where the puck is heading).

Inspeer – France

Here, customers form friend-and-family groups to share the deductible (aka excess) element of a claim. This enables high deductibles, thereby reducing premiums from the insurance carrier. The group shares the benefit of lower premiums and provides each other with financial cover for the higher deductible if there is a claim.

PeerCover – New Zealand

This is a friend-and-family savings scheme to provide financial cover for deductibles in the event of a claim. Like Inspeer, the higher deductibles result in lower premiums for everyone in the group. However, unlike Inspeer, in the event of a claim, members get as much as three times their initial contribution back to cover their excess.

Guevara – UK, TongJuBao – China

For Guevara and TongJuBao, I spoke with the founders to find out more about how P2P insurance works and why it is different from traditional insurance. The two companies have two very contrasting stories.

I’ll start in China—or Shanghai and Hong Kong, to be precise. Recently, I skyped with Tang Loaec, founder of the Community Risk Sharing platform, TongJuBao (aka P2Pprotect).

Tang is on his third financial business launch after a career in banking and risk management. In his spare time, he writes fiction books!

TONGJUBAO EN+CN
Like most involved with InsurTech start-ups, Tang wants to disrupt insurance.

Tang explained, “We all want protection, but nobody loves insurance. And our insurance providers have not done a good job. In China, customer satisfaction is low at around 19%. Something needs to be done.

“People think the process is unfair. Consumers pay premiums regularly and on time, but, when it comes to the claim, insurers often delay and deny the amount to be paid out. This just leads to a breakdown of trust.”

Often, an InsurTech startup builds a business model that relies on a traditional underlying insurance business model. Tang aims to build a P2P insurance model that is more than a social group sharing each other’s exposure to deductibles. TongJuBao, like Guevara and the recently announced Lemonade, plans to go further and completely redefine the end-to-end insurance model.

This is not just a distribution play built on some social novelty factor. This is the start of a new wave of insurance business!

With TongJuBao, there is no underlying insurance carrier. Its model separates the underwriting process from the claims process, thereby removing any conflict of interest. First, TongJuBao creates social communities or groups that customers join. The company then creates a deposit account for every member.

All members pay two sums of money into their deposit accounts. One is the fee for administration. The other is, effectively, a guarantee deposit to cover the risk being insured. All members pay the same amount into the deposit account to buy units of protection — in other words, if one unit provides £10,000 of cover, and I want £50,000 of cover, I buy five units.

Tang explained that his first-year focus is on launching a range of social risk products into the Chinese market:

– Marriage cover is typically not insurable because divorce is a human-based, not event-based, decision. TongJuBao’s product will launch with a flat-rate premium and a short-term, no-claims period (to guard against early payout on someone buying, marrying, divorcing and claiming in a very short period). Effectively, this is selling an insurance product as an alternative to a pre-nup.

There is a similar product in the U.S. market from Safeguard Guaranty, which claims to offer the “world’s first divorce probability calculator.”

– In China, child abduction is a massive social problem (see this report from the Guardian). Nobody knows the true scale of the issue, but it has been a problem since the 1980s and is possibly an unintended consequence of the “one child” policy.

TongJuBao’s policy will provide immediate support to the family through an agency that will offer emotional support as well as initiate search-and-rescue activity in the critical early hours after abduction.

How does TongJuBao work?

Tang explained, “The members of each community pay premiums into a large pot, and then members draw on the pot when they claim. Essentially, everyone in the community signs a contract with everyone else. The members all share the risk and reward.“

This is a mutualization model, but there is a capital limitation with this model, so all payouts are restricted to a capped amount. In many ways, you could look at the TongJuBao model as a marketplace more than as an insurance carrier. However, unlike the Uvamo model, members are not speculative investors looking to get a return on an investment.

As for regulation, TongJuBao operates under a civil law contract and not as a regulated insurance business. This is the model that has been working for P2P lending over the past eight years, and Tang expects it to work just as well for P2P insurance.

Can this business model scale?

Tang believes he can get the same rates of growth in protection as the ones China has seen in lending. He told me, “The model will scale. Just look at P2P lending in China, which has scaled to over 2,000 platforms and [where] total volume of lending is four times more than [the] rest of the world put together! And how did this happen? Because, in China, banks were not meeting customer needs. It’s the same story for insurance; they are not serving customer needs.”

In many ways, TongJuBao’s business model takes us back to the roots of insurance. Way back in 1696, Hand in Hand Fire & Life Insurance,  the predecessor to Aviva, the UK’s largest insurer, was created to provide everyone in the community with protection in the event of a fire. Members paid a subscription, and Hand in Hand owned its own fire brigade. Everyone in the community enjoyed the collective support of all the other members in the event of a fire.

Moral hazard

A common theme when talking to InsurTech firms is “the moral hazard.” The long form definition of moral hazard can be found here, on Wikipedia. In the modern context, the term is used to define the actions and choices of the protected party when it doesn’t carry the financial consequences of those actions. If an insured party knows it is protected financially should it crash a car or drop an iPhone in the street, does it act with the same level of precaution as it would without any financial cover? And why should it? That’s what the insured party has bought insurance cover for, isn’t it?

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(Source: http://www.lifetonic.co.uk/articles/moral-hazard)

Leaving personal responsibility and the moral dimension of this debate to one side, the fact is that a riskier attitude ultimately leads to higher premiums for everyone.

This is why P2P insurance offers the potential for lower-cost insurance. By having you join groups or communities you have an affinity with—whether family, friends or people with common interests—the business model relies on a socially responsible attitude to risk-taking, as well as a financial one.

If the insured knows the deductible is going to be funded by family members, is she less likely to make an exaggerated claim, especially when she is also taking the deductible from her own pocket?Guevara_Logo_black

Hanging out with Guevara 

One sign of success appears when your name is regularly dropped as a pioneer in your field, which was the case when Guevara and Friendsurance were prominently named when the story about Lemonade hit the press

So, it was my absolute pleasure to spend time with three of the four founders of Guevara at their London headquarters—Paul AndersonRich Philip and Mike Greer. (The fourth founder is Kim Miller.)

Anyone who spends time in the investor community, especially during early-stage investing, will tell you it’s all about the team. And there’s no better example than the team at Guevara, with a wide range of backgrounds, skill sets and experiences.

Everything about Guevara is incredibly professional, from the cool branding and young Turks’ positioning to the grey-haired underwriting and pricing experience in the back office.

Formed in 2013, Guevara started offering motor insurance in late 2014. As the founders explained the origins of this digital insurance business, they relayed their personal experiences in buying insurance, from paying high premiums to having no idea with whom they were insured.

The best story came from Anderson, who is from Australia. When he first came to the UK, he bought car insurance based on having an Australian driver’s license. It cost him £1,000.

Close to renewal time, his insurance provider reminded him that his Australian driver’s license was only valid for a year and that he needed to switch to a UK one. However, there was an unintended consequence of swapping. He was recategorized as a new/inexperienced driver of less than a year! His premium shot up to £4,000. Same driver, same car, same location.

Sadly, this is an all-too-real illustration of how motor insurance works today and why there is real market opportunity for a new approach.

‘Old insurance is rubbish’

Guevara offers a standard motor insurance policy that is underwritten using traditional rating factors (ABI rating, driver history, location). The premiums are competitive, although drivers are unlikely to find Guevara on the aggregator sites.

This is because Guevara is different. Here’s why.

New customers are offered a choice of groups to join. Their base price (which is what Guevara calls the premium) is split in two, with one portion going into the individual group (called the protection pool) and the rest going into a single pot that supports all of the groups (called the insurance fees).

The amount of the split is anything up to 50% and depends on the number of members in the group. For groups of fewer than 10, the pool contribution is 20%, with 80% going into insurance fees. But when groups get to be larger than 100 members, the base price is split 50-50 between the two pots.

Claims are first paid from the money collected in the protection pool associated with each group until it runs out (or doesn’t, in which case there is a surplus). In the event that the protection pool runs out, claims are covered out of the collective pot (insurance fees). And in the event that the collective pot runs out—i.e. the combined ratio exceeds 100%—Guevara is reinsured by a traditional carrier.

The key here is that any surplus is redistributed back to the members. At renewal time, all money in the protection pool stays where it is, and the renewal premium is discounted accordingly.

The model works so that members can achieve 100% discount on their protection pot contribution and only pay the insurance fees element if everyone in their group does not make a claim. For larger groups, this is 50% of the originally quoted motor premium.

To affinity and beyond!

What makes Guevara work is affinity. Having an association with the group is really important, because this model relies on keeping claims expenses down. Even if there has been an accident and a claim needs to be made, the member has direct incentives to minimize the claims expense.

Guevara screen

For example, following an incident, how frequently does the insured go and arrange a hire car instead of letting the insurer do it at a much lower expense? If the Guevara customer knows that a claim will directly affect friends or family or will hurt its affinity group, the customer is more likely to only claim what is necessary.

What you see is what you get

Guevara also wants to tackle the continued complaint of customers is that there is no transparency with motor premiums — How are they calculated? Why do they vary so much from one insurer to another? Why do they go up from one year to the next?

Guevara not only lets customers make their own choices about the group they join but always lets them see who is in the group, how much money is in the protection pot, who is making a claim and, most importantly, how much is left in the pot at renewal time.

Philip, one of Guevara’s founders, said the company’s aim is to “encourage customers to engage and understand our insurance product. … Insurance is such a large proportion of household discretionary spending. By giving our customers accountability within their groups and making that transparent for everyone, we can reduce the cost of motor insurance for everyone.”

What next for Guevara?

For now, the team is totally focused on the UK motor market, but I can sense they won’t stop there. And this is more than a distribution play. Guevara is building a full-stack insurance model, and building an insurance business is no small feat. It takes time and a lot of capital to do that. Plus, there is the whole subject of regulation, which has to be embraced and fully adopted into the business model.

Guevara’s product is ultra-sticky because the upsides come at renewal time, just when buying decisions are being made. For Guevara to succeed, it has to show, over time, that it can deliver a better trust engagement, a change in driving behavior and, ultimately, lower, fairer premiums for group members (which is the goal for all the P2P InsurTechs I’ve listed).

Insurance evolution

Evolution-Of-Travel-Insurance1Jeff Bezos is credited with saying, “What is dangerous is not to evolve.” The traditional insurance model is not in good health, and this is creating the dynamic for change. The emergence of P2P insurance is evolution in action, even if it is taking us back to the roots of the industry!

What Are Other Marketers Doing?

“Insurance Marketing & Distribution Summit Europe 2015” proved to be a great event.

There were interesting speakers, a range of topics and plenty of opportunity for interaction. Plus, it was a pleasure for me to share with this group, but more on that later.

Following events that were useful for getting close to leaders on whom insight leaders focus less (IT, digitalcustomer experience), I was back with marketing  and sales. Most likely, the primary customer for most insurance insight teams is their marketing leader. So, I hope it’s helpful to hear the thoughts and plans of a number of leaders from the insurance marketing community.

Here are key messages from these insurance marketers:

  • Marco Brandt (Agila) shared about Agila’s journey from being a broker-based pet insurer to focusing on the Internet channel. It uses digital capabilities for personalization of communication and pricing. Perhaps the biggest opportunity for the company, though, was to use its digital communication and free content to dramatically increase the number of touch-points with their customers (a recurring theme). Agila has a strong story to tell about growth of customer satisfaction and premium income (which doubled in five years). The company’s next, self-identified challenge is to embrace mobile.
  • Stephan Dequaire (Towergate) provided a review of the growth of price comparison sites in the UK car insurance industry. I was surprised at how much Compare the Market now dominates, above even MSM and Go Compare. It was also interesting to see how much this model varies across the world. By comparison with the U.S., intermediaries (including tied agents) are more the norm across Europe, where there is also a larger share for bancassurers. Some research suggests the shine is coming off them, though, with even consumer advice sites pointing to direct insurers. What was more shocking was to hear how a consumer advice site suggests consumers lie about data to get a better price (“optimizing your job title,” etc). It really brought home the erosion of consumer trust, in the UK market especially.
  • Phil Bayles (Aviva) reminded us that, across Aviva and insurance as a whole, the intermediary channel still provides the largest profit and volume. He provided a nice segue into my later talk because he stressed how more than 25% of management time was now taken up by conduct risk agenda. The challenge with succeeding with your intermediary channel, including independent financial advisers (IFAs), is that they deal with you day in and day out. You can’t persuade an intermediary channel with some catchy or emotive brand advertising. Bayles stressed the need for a focus on adviser satisfaction and ease as well as fixing problems quickly. With a strategy to be “No. 1 for Brokers,” there is nowhere for Aviva to hide if tracking does not match up. Transactional net promoter scores (TNPS) suggest that Aviva is well on its way.
  • Simon Green (The FCA) talked about how FCA’s behavioral economics expertise was influencing policy and reviews, as well as the important role of technology innovation.
  • Pollyanna Deane (Simmons & Simmons) brought legal expertise to our proceedings and talked about increasing regulatory scrutiny, including the likely impact of the Insurance Distribution Directive. She also mentioned the risk of European Insurance & Occupational Pensions Authority (EIOPA) becoming a third regulator for UK insurers!
  • I then presented on customer insight and conduct risk, where I shared a number of the lessons I’ve learned from training insurance marketing teams on using customer insight to mitigate conduct risk. This included briefly covering consumer spotlight, behavioral economics and vulnerable customers. I’m pleased to say there was considerable interest afterward as marketing leaders could see the benefits of more focus on conduct and on embedding insight in their processes.
  • Louis de Broglie (InsPeer) focused on innovation. He explained the interesting concept on which his start-up, InsPeer, is based. Returning to the insurance origin of mutuality and governance in community, his company provides consumers with a way to pool their excesses. Currently, only available in France, this unregulated solution combines the purchase of high-excess cover from an insurer with a community that contracts to cover a proportion of others’ excess in the event of a claim. This results in lower premium and zero excess for each individual, as well as social pressure on claim veracity and lower claims frequency for the insurer. The next stage is intended to be peer-to-peer insurance, akin to the evolving models from Guevara in the UK, as well as others worldwide. Given the explosive growth of Uber and AirBnb, it seems likely some model of peer-to-peer disruption will take off.
  • Monika Schulze (Zurich) returned to the theme of greater engagement through marketing. Her recurrent theme was the importance of emotion, using your brand and an emotionally engaging narrative consistently across channels to provoke positive responses and engagement from consumers. Inspired by “Transmedia Branding,” Schulze really brought this topic to life through a number of videos that made an impact and examples of clever use of social media. Perhaps the most surprising part of this event was a story about Lidl selling milk in Sweden. Through active monitoring of Facebook comments, Lidl spotted a Swede named Bosse who said he didn’t want to buy German milk. Lidl used this as a chance to humanize its brand, and the company renamed its milk “Bosse’s Milk” across Sweden, including a photo of Bosse and an explanation that the milk actually is Swedish milk. This action, in response to an individual, captured the public imagination and boosted sales. For a great example of fleet-of-foot and creative marketers using emotional advertising, check out Zurich’s #SaveThe Snowmen.
  • Gordon Rutherford (Axa) also stressed the importance of emotional communication in brand engagement. Along with warning to not be one of those needy brands that basically use social media to say “please love me,” he highlighted the impact of finding a noble cause to really make a difference and to improve brand sentiment. An example is Axa’s “glass of consciousness” exhibitions in Mexico, which engage the public with the need to change attitudes about drinking and driving. Axa has found a way to humanize its brand and engage its own employees, all the while making a social difference.
  • Edward Rice (AIG) shared AIG’S progress in digital transformation, where the company has gone beyond just using digital as a marketing channel and is using it to reengineer business and customer experience. He noted that the right comparison for customer experience isn’t the low bar currently set by the insurance industry but is, rather, the personalized, digital ease provided by retailers. He  then shared numerous examples of how, once you have the basics delivered consistently, you can surprise and delight your customers with personalization and relevance. One interesting example was marketing done by Boden and easyJet that shows customers that the brands remember past purchases and have an apparent growing understanding. Rice also touched on the power of responding to one individual on social media as a way to humanize your brand and be playful and on the importance of providing timely advice and warnings that help customers reduce risks.
  • Isabelle Conner (Generali) explained the huge cultural transformation that she is leading, changing a 184-year-old business from product-centric to customer-centric. She stressed the importance of emotional brand marketing and reminded everyone that we are in an ideal position to put this into action, with insurance being about protecting what people love and being there when the traumatic happens. But the marketing has to be grounded in changing the customer experience reality and the internal brand reality, not just be about broadcasting a message. Perhaps the part that had the most impact was when she shared videos of Generali’s CEOs from Spain, Switzerland and France calling customers who left detractor net promoter score (NPS) ratings. It is so important to include timely response and resolution in your NPS metric programs, but it has even more of an impact on a company’s culture when CEOs get engaged in the experience.
  • Stephen Ingledew (Standard Life), although not an insurer, has many of the same challenges in the world of retirement savings, investment and income solutions. Ingledew focused on the importance of customer engagement in redesigning improved experiences. He shared some details of co-creation sessions and agile development, the latter being more than just an approach to IT development but also a mindset of continual learning and iteration. Some of his examples of online tools included elements of “gamification,” which is helpful for consumers in the baffling world of pension reform choices. The brand approach of “#ReadyWhenUAre” nicely balances a range of enablers, while avoiding being paternalistic. Another critical customer need is education, but it becomes tricky to do it in a way that is neither boring nor patronizing. Selecting Steph and Dom from the British reality show Gogglebox to host a series of videos to chat in the pub about the issues was inspired choice, and one can see why it has gone viral.
  • Zach Goren (Media Alpha) brought the world of West Coast U.S. innovation to the conference. Media Alpha is helping auto insurers, among others, buy targeted “in market” customer leads in real time, rather than just relying on mass market advertising through Google (where insurance keywords cost a fortune). Media Alpha is basically an innovation on the traditional market of selling unconverted quotes, but the company does this in real time and stays on the insurer’s site. So, the insurer becomes both a seller of insurance as well as a seller of advertising space to competitors, especially where customer details show this person is unlikely to convert. Media Alpha provides real opportunities to offer consumers more choice.
  • James Baker (Vitality) leads the insight team and helps the company’s brand understand how to bring about behavioral change in its customers. The company has an interesting approach, providing health insurance but also helping motivate you to not need it, through rewards for a healthier lifestyle. This approach provides more opportunity for engagement with insurance customers and offers tangible value back on your policy (many insurers would love to achieve either). Vitality’s insight, built on a hybrid segmentation of FSS and behavioral analytics, has identified a number of actions and rewards, under the concepts of “we’ll be there for you” and “we’ll make it more rewarding to be well in the first place,” that have driven significant engagement and behavior change. Ideally placed to exploit wearables and other IoT innovation, given the importance of employers and employee benefit consultants to Vitality’s business, the company can also demonstrate benefits in reduced absenteeism.
  • David Stevens (LV=) brought to life the complex world of automated advice in the pensions/retirement income sector. The company has innovated with so called robo-advice (although the process also includes human interaction). LV=’s innovation with Wealth Wizards (which it acquired) and the fact it has broken down the steps into manageable chunks should really help. With the high cost of advice, too many in the public are not engaging with such an intangible service. A fixed price of £199 for personalized options after automated fact finding is much more accessible, and the offer is communicated in an emotionally warm way. Once again, you can see the influences of both personalization and gamification in the company’s communication. The style of communication and the ease of playing with the tools also contribute to humanizing insurance (as does clear fixed pricing).
  • Adam Kornick (Aviva) heads up the company’s global analytics capability, and he shared how it is using predictive analytics in pricing and risk modeling. Kornick gave an important reminder that price is the primary selection criteria consumers cite with insurance, so personalized pricing matters every bit as much as, if not more than, personalized communication. One of Aviva’s key innovations has been to build on the individual price for quoting (based on captured and average data) that others have done for home insurance and to give customers the price of a product that they are most likely to buy next. It was also interesting to hear of Aviva’s progress in broker analytics, another reminder as to the importance of the intermediary channel and how predictive analytics can help there, too.

Phew. Well done for making it to the end of this post! Key themes I took away are the need for: personalization, emotions, humanizing insurance, more frequent engagement through communication, innovations and continued focus on the intermediary channel.

Hope all those topics and ideas were useful. Please share the insurance marketers’ innovations you are generating from customer insight.

Meanwhile, if you’re interested, you can download a free copy of my presentation here.

New Leaders in Race for the Killer App

Last week, we looked at how insurers have missed opportunities, multiple times, to become real innovators and follow through on developing the new killer apps. We took as our inspiration, the book, The New Killer Apps: How Large Companies Can Out-Innovate Start-ups, by Chunka Mui and Paul B. Carroll.

This week, we’re looking forward. Is the insurance industry thinking big enough? Is it starting small? Is it learning fast by experimenting, testing and learning from failures?

If the industry isn’t currently innovating, new competitors entering the market are! There are dozens of examples. Consider Climate Corp. and its re-imagination of crop insurance using mobile, cloud and emergent knowledge. There is Google with its aggregator site, Google Compare, allowing drivers to search for the best car insurance deal, creating an interesting and formidable channel. Then there is Peers, a nonprofit developing products for those participating in the sharing economy. These aren’t just new ways to sell. In many cases, they are groundbreaking models of protection to respond to new models of life.

The rapid experimentation and expansion of social media or peer-to-peer-based insurance companies, introduced by Friendsurance in Germany, now includes new companies like InsPeer in France and Guevara in the UK. Guevara pools customers’ premiums online to save money, and any money left in the pool at the end of the year stays with the group and lowers everyone’s price the next year. Will automotive companies be next with the emergence of connected and autonomous cars? Where are the 21st century affinity models going to lead us?

So how do established insurers out-innovate, let alone compete? How do they become this generation’s emerging insurance leaders? They must look beyond long-held traditional views and become accustomed to major business shifts. Instead of transforming the business using age-old assumptions and traditional business models, insurers must look to reinvent the business model, not unlike how Uber reinvented the taxi model or how the new entrants are reinventing insurance.

Starting at the Core: What Is Insurance?

Todays’ insurers may be tempted to look at surface issues, just like they did in 1998. How do we sell differently? How do we empower our agents? How do we touch consumers? But to understand the real reinvention of insurance, consider how confusing the concept of insurance has become to the consumer.

The insurance industry sells a product that may be legally required, such as auto insurance. The product may not really be deemed to be a necessity, such as life insurance. To the consumer, premiums seem to simply evaporate down a hole, instead of accruing like mutual funds. And many consumers would suggest insurance isn’t even a “product” at all! If an insurer has to spend too much time educating and selling AND it lags behind in digital technology and excellent customer experience, how long do you think it will last when a new competitor comes along and offers a new model of engagement that is simple and easy to understand (and uses the latest technology)?

Insurers need to erase the white board and begin with a redefinition of insurance. How do we protect people in all of the new ways that they live while using digital technology to actually make the experience of buying, owning and using the product we sell more appealing?

There are start-ups and venture capital looking to “uberize” insurance to be that new competitor and disrupt insurance. But traditional insurers still have an edge. Start-ups and “unicorns” (those challenging industry disrupters with billion-dollar pre-IPO values) don’t have the knowledge of pricing, profitability and regulatory requirements or a base of customers. This is where insurance as an established industry can compete and out-innovate.

To do so, we must embrace the digital revolution. We must turn long-held business assumptions upside down. We must reinvent the business model. We should embrace trends and experiment. And we must effectively answer the consumer’s question, “What is insurance, and why is it important to me?”

Instead of implementing modern core insurance systems on-premise and converting your existing business, look to cloud options where you can experiment and build innovative products, new channels and reach new market segments fast and less expensively. Look to your partners to provide an ecosystem of options and capabilities that will help you meet existing customer needs and reach new customers. Look to your peers to see if you can partner or collaborate, leveraging the assets of both organizations in new ways. By doing so, you can find innovative ways to create a business model outside the traditional business, seek new market segments and new regions through insurance as a service model and reach more customers with alternative channels.

Insurance business models, assumptions and practices of the past decades and centuries are less durable in today’s game-changing marketplace. Competitive dominance is no longer achieved by operational efficiency, lower prices, massive advertising, large internal systems or channel loyalty. It is achieved by anticipating trends and pivoting quickly to create and capture the economic and competitive opportunity. To win on the final lap (the one that counts), insurers need to make moves today that will position them as emerging leaders.

In this race, there is no one path that moves you across the finish line. There is no singular destination. There is only a world of possibilities.

So think big! Start small. Act fast.

Unicorns beware. We’re coming for you in this final lap!