Tag Archives: ring

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.

How Tech Is Eating the Insurance World

Amazons and Apples and Googles. Oh my…

What do these companies have in common? Devout brand loyalty from the modern consumer coupled with world-leading technology. This poses a massive threat to insurance companies that value ownership of the customer above all else and are seriously lagging on tech. In a post-financial crisis world where financial brands are reflexively distrusted by modern consumers that have incredibly high digital UX standards, technology brands and emerging insurtech startups have a considerable advantage in winning future insurance business.

Amazon, Apple, Google and other tech giants don’t do anything small. It would be foolish for insurers to think that these disruptors will enter the industry to play nice and simply serve as their brokers or lead generators. They have capital in spades, massive captive audiences, piles of valuable data and are perfectly comfortable navigating complicated regulatory landscapes. Insurers like to hide behind this regulatory complexity as a reason to dismiss new market entrants, but this is simply a speed bump for those who want to make insurance a point of focus – not an insurmountable barrier to entry.

The Google Experience

Google dipped its toe in the industry in 2015 with Google Compare and then quickly withdrew in 2016. Insurers like to point to this as the shining example of how technology companies “don’t understand insurance” or how they “underestimate the complexity of the industry.” What they forget (or simply don’t mention) is Google’s core business model – advertising. What is the sixth most expensive word on Google AdWords? Insurance ($48.41 per CLICK!). Who buys that word and drives significant revenue to Google? Insurers. Google’s exit was not the result of execution failure or naivete; it was a consequence of rocking the boat with some of their highest-value advertising customers. The rest of the companies listed above, among countless other tech giants and well-funded startups, do not have that same conflict. Insurers are not immune to disruption from them.

Shifting Consumer Behavior

The modern consumer is a digital native and does not want to speak to people on the phone or fill out piles of paperwork. Consumers want to be offered insurance when it’s top of mind – how they want it, when they want it, from brands they trust, instantly.

One of the biggest problems we see with tech-insurance partnerships is insurers’ insistence on controlling the underwriting and sales process, which creates massive friction with technology companies that offer far superior digital experiences. Consumers don’t want to leave Amazon to start a separate purchasing process on an insurer’s website, and Amazon doesn’t want them to leave its site, either. This is something that is easily solved through API-driven technology systems and programmatic underwriting – words that often give insurers heart palpitations.

See also: What if Amazon Entered Insurance?  

Consumers don’t want to shop around for insurance on quote comparison sites. They don’t want to engage with insurance companies more than necessary or share troves of personal data through an insurance app. They want to purchase insurance when they need it, pay for what they use and never think about it again. Insurance incumbents have responded by building their own apps, offering discounts for more shared data and doubling down on advertisement spending.

Insurance in the Background

Insurance is an important feature, but not always the star product. It’s sold well to the modern consumer either purely digitally or as part of a broader offering – typically at the point of purchase for a non-insurance product or service. That’s an unpleasant thought for insurers that take a tremendous amount of pride in their history, processes and brands. However, letting pride and status quo dictate your business strategy is a good way to get your business killed.

Why not offer homeowners insurance in 15 seconds (not minutes) through fully digital workflow like Kin does? Why not combine cyber protection software and cyber insurance like Paladin Cyber does, so risk is reduced even further in the event of a cyber incident? Why not offer white-labeled SMB insurance to the millions of third-party retailers currently selling on Amazon? Or episodic renter’s coverage directly through Airbnb at the point of booking?

Here are a few reasons why insurers aren’t being more innovative:

  • insurers’ technology simply can’t support seamless distribution through digital platforms
  • insurers/agents/brokers insist on owning the customer
  • insurers don’t want to alienate their traditional distribution network of brokers and agents
  • insurers want full underwriting control through traditional, and often analog, methods
  • insurers don’t want to share data with tech companies but expect tech companies to open their proprietary analytics models to insurers.

This simply will not work.

The Everything Store

Apple already disrupted the warranty space by owning the whole AppleCare stack for themselves. Google has the conflicts discussed earlier. Facebook has the same. As a result, I believe Amazon is the most likely tech giant to make a big splash in the insurance industry as they continue to build their “Everything Store.”

We already see what they’re doing in healthcare, their investment in Acko in India, and rumors about an imminent play in banking. They recently acquired Ring, which has obvious insurance applications, for a reported $1 billion. The writing is on the wall. While I’m not entirely convinced that consumers will search Amazon.com for auto or home insurance, having millions of third-party seller merchants, adding 300,000 in the U.S. in 2017 alone, is a good starting point as far as addressable commercial insurance markets are concerned.

See also: 11 Ways Amazon Could Transform Care  

I am a huge admirer of what Jeff Bezos has built at Amazon, and I’m modeling Boost after what they did in the data storage and hosting space with AWS. It would be foolish for anyone to underestimate the impact a company like Amazon can have on any industry – no matter how old, established or huge the insurance incumbents’ businesses may be. Just ask Barnes & Noble, Walmart, media companies or any grocery store right now.

Insurtech: An Adventure or a Quest?

Insurtech making your head spin? Perhaps it’s because of the confusion whether insurtech is a “there and back again” project or more of a paradigm shift?

No one can deny the great impact that J.R.R. Tolkien’s books and movies have had on our culture. He’s been called the father of modern high fantasy literature. Not that money has the final say on one’s success and impact, but in 2009 he was ranked by Forbes as the fifth top-earning dead celebrity.

From my perspective, Tolkien’s books are fabulous and intensely engaging. I was listening to a literature professor talk about Tolkien, and he made a most interesting observation on how very different his books were. He described “The Hobbit” as an adventure, while “The Lord of the Rings” was a quest.

He went on to say that “The Hobbit” is a “there and back again” adventure story, where you go out, experience thrilling events and then come home again. But “The Lord of the Rings” was a quest; you leave home and are fundamentally changed by the events you experience. In a quest, you may physically return home, but you are so altered that in a real sense you never return home.

I had never thought of the books in this way before. As a matter of fact, “The Hobbit’s” official title is “The Hobbit, or There and Back Again.” At the end of “The Lord of the Rings – The Return of the King,” Frodo Baggins returns to the Shire but never quite feels at home and eventually leaves Middle Earth with the elves and Gandalf.

See also: Core Systems and Insurtech (Part 3) 

Insurtech can be looked at in a similar way. Do we view insurtech as a journey, or is it a quest? Is insurtech a “there and back again” project that has a start, middle and end, or a more fundamental paradigm shift in our thinking?

Is insurtech to be bandied about as yet another consult-speak hype-phrase added to web pages, slide decks, articles, polls and white papers so we can be 100% buzzword-compliant? Is it hurriedly tacked on as yet another topic on an already bloated agenda of items to be covered? Or is it something substantially more?

There are more insurtech lists, companies, conferences, accelerators and analysts than you can shake a stick at. There are more than 1.2 million results when you Google “insurtech.” You could make it your life’s work just tracking insurtech.

Using the “there and back again” definition, the vast preponderance of what is labeled today as insurtech is a journey, and there is nothing wrong with that. Within the insurance industry, we definitely need incremental new products, ideas and solutions that gradually move the needle when it comes to process streamlining, reducing costs and greater customer engagement. We applaud their efforts and wish them all success.

But the number of insurtechs that can earn the quest moniker is much smaller. While many web sites and brochures purport to be a game-changing quest, most are actually a journey in quest’s clothing.

So, how do we make sense of it all?

First, figure out if the insurtechs you are working with are on a journey or a quest. Here are six marks of an insurtech that is on a quest. You don’t have to exhibit all six to be on a quest, but four is a minimum:

  • Big Audacious Dream – Sometimes referred to as the BAD idea, this visionary and emotionally compelling future state is dramatically different than anything yet proposed.
  • Multiple Directors – There are not only numerous users that employ the solution, but it directs multiple stakeholders both inside and outside multiple organizations.
  • Revenue Diversity – Income comes from numerous different users, stakeholders and sources; the quest is not tied to traditional license/use fee revenue streams.
  • Elongated Delivery – Because the quest is by nature long and complicated, quick deployment is not possible; delivery will take time and significant investments.
  • Lots of Data – While functionality is important, large amounts of data from various sources are brought together in new and compelling ways that transform traditional tasks into new opportunities for customer satisfaction, additional sales and revenue opportunities.
  • Numerous Detractors – Few will understand or initially identify with an insurtech quest, thinking it outlandish and outrageous; most will immediately dismiss it or continually poke fun at it.

Second, it’s more than OK to be engaged with multiple insurtechs that are on an adventure. As a matter of fact, it’s wise not to put all your insurtech eggs in a single basket. Some will make it, others will not, so hedging your bets is a good thing.

Third, an insurtech on a quest is not for everyone. You can probably only deal with one at a time. They will take longer to develop and deploy than an adventure insurtech.

Fourth, you should periodically reevaluate the insurtechs you’re involved with, eliminating some, adding others.

P.S – if you are an insurtech that is on a quest, welcome to the club!

See also: Why #Insurtech Doesn’t Matter  

It’s easy to become discouraged and think you will never succeed. Take heart. Here are five encouraging Tolkien quotes from “The Lord of the Rings”:

  • “The quest stands upon the edge of a knife. Stray but a little, and it will fail, to the ruin of all. Yet hope remains while the company is true.” Galadriel, “The Lord of the Rings: The Fellowship of the Ring”
    • There will be days when you are convinced that your quest is teetering on the edge of failure. It’s at times like this that you need to seek encouragement from your team and supporters.
  • “The Ring-Bearer is setting out on the quest of Mount Doom.” Elrond, “The Lord of the Rings: The Fellowship of the Ring”
    • There will be days when your quest seems destined for financial failure and industry embarrassment. Listening to your detractors is a recipe for certain defeat. If necessary, recalibrate your goals and move forward with your team and supporters.
  • “This quest may be attempted by the weak with as much hope as the strong. Yet such is oft the course of deeds that move the wheels of the world: Small hands do them because they must, while the eyes of the great are elsewhere.” Elrond, “The Lord of the Rings: The Fellowship of the Ring”
    • Leadership is vital on a quest, but more is accomplished not by the great or brilliant, but by average people. Do not overlook their value or contributions.
  • “What is to be my quest? Bilbo went to find a treasure, there and back again; but I go to lose one, and not return, as far as I can see.” Frodo, “The Lord of the Rings: The Fellowship of the Ring”
    • To succeed in your quest, you need to have an attitude of abandonment, willing to lose to win. You will need to hold loosely those traditional things that have given you stability and success.
  • “But do you remember Gandalf’s words: Even Gollum may have something yet to do? But for him, Sam, I could not have destroyed the Ring. The quest would have been in vain, even at the bitter end. So let us forgive him! For the quest is achieved and now all is over. I am glad you are here with me. Here at the end of all things, Sam.” Frodo, “The Lord of the Rings: The Return of the King”
    • When you have succeeded, you will look back and remember people whom you thought were your supporters and friends but turned out to be your enemies. Don’t harbor anger and bitterness.

Work hard and enjoy the quest.

Talking Insurtech With Regulators

Key Points 

  • Recent shifts in insurance regulation are driven by consumer demand.
  • Traps for the unwary mean that insurtech startups should engage with regulators early and often.
  • Brokers need to know how to navigate the complex framework of anti-rebate and anti-inducement laws.

It is no secret: Investors are pouring money into insurtech startups with the goal of transforming the insurance industry. This increased investment is fueling not only growth in the industry, but also growth in the number of conferences, expos and seminars that allow companies to promote their products, build connections and stay abreast of the latest trends. Last month, more than 3,500 startups, insurers, investors, and service providers converged on Las Vegas for the largest and most global of such conferences: InsureTech Connect.

Attendees at this year’s event were treated to a host of presentations, from insightful fireside chats with entrepreneurs, such as Metromile’s Dan Preston and Ring’s Jamie Siminoff, to thought-provoking panels on satellite imagery, telematics, wearables and innovative strategies for insurance companies of the future.

See also: InsureTech Connect 2017: What’s New  

But, as excitement and buzz steadily mount, at least one panel reminded attendees that insurance—while highly ripe for innovation—is also a highly regulated industry. The panel (“Balancing Innovation and Regulation”) featured Michael Consedine (CEO of the National Association of Insurance Commissioners), Ted Nickel (Insurance Commissioner of Wisconsin) and Chris Cheatham (CEO of Risk Genius).

Here are our key takeaways of that panel discussion.

Recent policy shifts are driven by consumer demand.

Over the past 200 years, the insurance industry has gone through periodic changes. But, as Consedine explained, this is the first time that significant changes are being driven by consumer demand. Specifically, consumers are demanding simpler and more intuitive policies; a streamlined and digital application process; faster claims payments; mobile access; and new products, such as peer-to-peer or pay-as-you-go. Insurance regulators nationwide realize that innovation will lead to consumers being better served, and, as a result, they are taking an active role in being a part of the conversation and enabling innovation.

Traps for the unwary mean that insurtech startups should engage with regulators early and often.

Once a company begins to analyze risk or price products, it runs the risk of being considered an insurance company and, more importantly, being subject to a host of often complex regulations that vary from state to state. For instance, while the amount and quality of available data are exploding—opening up the possibility of using new or unconventional data to price risk—state laws prohibit not only unfair discrimination generally, but also specific factors from being considered when pricing risk. In other words, as Mr. Nickel explained, a data set may show that there are more pool deaths in years when a Nicholas Cage movie is released, but whether that correlation is actuarially sound, let alone a fair basis on which to make pricing or rate decisions, is something that companies should discuss with regulators before launching. The same is true with respect to other issues, such as privacy or cybersecurity regulations—companies should understand the regulatory regime in which they operate and ensure that they are in compliance. To that end, Mr. Nickel encouraged companies to engage regulators from the outset to explain how a new algorithm or business model works to ensure that they are not running afoul of state regulations.

If you are a broker, be aware of anti-rebate and anti-inducement laws.

Nearly every state (with the notable exception of California) has some form of anti-rebate or anti-inducement laws on the books. Generally, these laws prevent a broker from providing something of value to a customer to “induce” an insurance purchase. While promotional items, such as golf balls and pens, are often exempt from such laws, a company must be especially careful when it begins to offer—at no charge—more valuable goods or services to its customers. According to Nickel, these laws might be particularly problematic for new entrants into the industry. For example, if a broker provides a wearable device to its customers, might such a gift implicate anti-rebate laws? What about specialized software provided at no charge? New companies in the broker space should ask themselves these sorts of questions sooner rather than later, seeking out counsel when necessary to avoid regulatory issues down the road.