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The Path Forward for Insurance Industry

The insurance industry is hundreds of years old and full of ingrained perceptions and antiquated processes, which continue to cause frustration among customers. Insurers know they need to innovate, but the question is – how? How can global insurers, which have been operating in and underwriting insurance the same way for hundreds of years, know which types of technology they need to meet consumer demand and remain competitive in a rapidly changing market?

Insurance technology is the missing link. The insurtech market is growing rapidly, and players have to be prepared to adapt. There is little time to sit idle, because, if you can’t keep up with consumer demands today, there is a small chance you’ll keep up with them tomorrow. Whether it’s the need for small business cyber insurance or the necessity for pay-per-use homeshare insurance, insurance is moving away from the traditional model.

The on-demand culture and sharing economy continue to disrupt industries across music, entertainment, transportation and payments. The wave of acceptance by consumers flags a fundamental shift in consumer behavior, where consumers can get what they want now, without delayed gratification. The insurance industry is the next in line, ripe for disruption. With the continued explosion of rideshare and homeshare applications, the traditional models for car and home insurance are not substantial enough to protect individuals using their personal property as a commercial asset.

See also: Insuring a ‘Slice’ of the On-Demand Economy  

While the battle of insurers vs. insurtechs continues, we firmly believe that both parties have equally valuable offerings to bring to the table. To truly drive the industry forward, an open-source cloud platform that allows insurers to quickly build, test and deploy their own on-demand insurance products will be the beginning of the insurance industry transformation in response to the sharing and gig economy.

Legacy carriers have centuries of experience writing insurance policies and have the historic industry knowledge that insurtechs need to be able to grow – emerging industry players that don’t see that are missing a huge opportunity. On the flip side, technology is changing fast and, therefore, changing the way people work and live. It’s the new norm for consumers to get what they want, when they want it; and while insurers might have the industry knowledge needed to be competitive, what most don’t have is the ability to be agile to protect against emerging risks and meet increasingly demanding customer needs. Largely due to the lack of technology and resources available, our partners tell us there is much higher value in cooperation, as insurtechs have the technical resources insurers need to improve time to market. For both parties, it’s a win, win.

Cloud platforms are allowing insurers to quickly ideate, experiment, test and deploy new, on-demand insurance products. Since making our Insurance Cloud Services platform publicly available in January 2018, we’ve experienced higher-than-anticipated demand, causing us to make a heightened focus on global expansion as insurers increasingly realize the need to adopt agile technology.

AXA XL and the Co-operators both launched their first on-demand cyber and homeshare insurance products in the last two months. Through cooperation vs. combat, the two are now ahead of the curve, with AXA XL’s product being the first ever on-demand cyber insurance product in market, and Co-operators launching the first on-demand homeshare insurance solution in Canada, allowing the company both to reach and work with customers in a way that works for them vs. the other way around.

See also: A New Way to Develop Products  

The path forward for fully digital on-demand insurance is moving quickly, and, as the industry continues to experience disruption, it’s critical that insurers consider not only what type of technology they need to improve internal processes and compete in the market, but also the changing, increasingly in-demand needs of their customers. Insurtechs that are able to provide solutions for insurers that allow them to quickly ideate, experiment with and launch new products are set to lead the future of the insurance evolution.

New Entrants Flood Into Insurance

New entrants seem to be coming out of the woodwork in insurance. The insurtech movement, the advance of emerging technologies and the appetite of the global tech titans are all contributing to new entrants, new partnerships and new business models. A few recent examples illustrate the new interest in insurance from those both inside and outside of the insurance industry.

  • WeWork partners with Lemonade. In what seems like a very natural partnership, WeWork plans to offer its WeLive members renters’ insurance through Lemonade. WeLive members rent fully furnished apartments from WeWork for short-term situations.
  • Credit Karma enters insurance. This fintech intends to build on customer relationships to expand into auto insurance. While the initial focus will be education – helping Credit Karma customers understand how credit and adverse driving affects insurance rates – the longer-term goal is to provide yet another shopping/comparison site.
  • BMW and Swiss Re partner for ADAS scores. BMW Group and Swiss Re will collect telematics data from vehicles related to the use of ADAS (Automated Driver Assistance Systems) and build scores that can be used by primary insurance companies.
  • Lending Tree buys QuoteWizard for $370 million. Fintech Lending Tree, which has been on a buying spree, moves into insurance with the acquisition of insurance comparison shopping site QuoteWizard.
  • Travelers partners with Amazon for the smart home. Travelers will set up a digital storefront on Amazon featuring smart home devices for a discount (especially security-related devices) as well as discounts on homeowners’ insurance.
  • JetBlue invests in insurtech Slice. This appears to be a pure investment play, but it is still interesting that an airline would be following insurtech and seeking investment opportunities.

Something is going on here. It is not as if there have never been new entrants or that companies from other industries have ignored insurance. But the flurry of activity and innovative partnerships, investments and market approaches may represent a bigger trend. Insurance is transforming, and, despite some of the doom and gloom warnings, a case can be made that there is more opportunity than ever for the industry. Even in the examples provided above, the emphasis is more on new opportunities than displacing incumbent insurance players. Indeed, in the Swiss Re and Travelers cases, the incumbents are part of the new partnerships – and these are just two of many examples.

See also: 5 Cs of Transformation in Insurance  

One of the main themes of the examples highlighted above is the attention on distribution and customer relationships. While insurtechs are working with insurers on many opportunities to improve underwriting, claims, and other areas, so far the new entrants from outside the industry don’t appear to have the appetite to underwrite risk and handle claims. This may change, but it is likely that there will be even more interest from outside insurance in capitalizing on customer relationships. Above all, these new entrants and innovative partnerships serve to accelerate the transformation of insurance.

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.

Predictions From 6 Insurtech Leaders

Insurtech, a hotbed of deal and growth activity over the last two years, is gaining traction and credibility. The leaders of top insurtech startups in the U.S. — focused on renters insurance, auto insurance, life insurance, small business insurance, mortgage lender insurance and on-demand insurance — share their thoughts about 2017 and predictions for 2018.

Participants (alphabetical order by company)

  • Fabric, cofounder and CEO Adam Erlebacher
  • Jetty, cofounder and CEO Mike Rudoy, cofounder and President Luke Cohler
  • Metromile, CEO Dan Preston
  • Next Insurance, CEO Guy Goldstein
  • Slice, CEO Tim Attia
  • Spruce, cofounder and CEO Patrick Burns

Q. What will be different about insurtech in 2018, compared with 2017?

Theme 2017: opportunity

“The unveiling year,” Slice CEO Tim Attia

“A grace period,” Next CEO Guy Goldstein

“An explosion of investment into insurtech across existing and new insurance lines,” Metromile CEO Dan Preston

“Lessons learned from being live in market,” Jetty cofounder and President Luke Cohler.

Theme 2018: maturation

Fabric cofounder and CEO Adam Erlebacher, “Where startups begin to gain traction and work toward meaningful scale”

Jetty cofounder and CEO Mike Rudoy, “A year of maturation where consumers’ trust in insurtechs deepens, cementing marketplace standing”

Next CEO Guy Goldstein, “Mistakes will have far bigger implications”

Slice CEO Tim Attia, “2018 will be all about proving that we can scale and build real businesses”

Metromile CEO Dan Preston, “Emerging winners will likely announce second or third rounds of capital”

Q. What was your company’s greatest 2017 achievement, and what is your greatest 2018 goal?

Fabric cofounder and CEO Adam Erlebacher, “Fabric launched in 43 states in one year”

Jetty cofounder and President Luke Cohler, “In 2017, our greatest achievement was validating our thesis and finding product market fit with renters and property managers. Our largest goal for 2018 is simple: expansion”

Metromile CEO Dan Preston, “Metromile’s biggest achievement in 2017 was the launch of AVA, our entirely automated claims process that uses AI to validate and automate claims. In 2018, we are excited to expand AVA to nearly all claims we handle”

Next CEO Guy Goldstein, “In 2017, we established our company foundation and core pillars, sold 10,000-plus policies and cracked the code on SMB insurance. Our goal for 2018 is to expand reach and accelerate our growth”

Slice CEO Tim Attia, “Our 2017 achievements included a Series A funding and Progressive partnership, but the largest was our homeshare product launch in nearly all 50 states. In 2018, we’ll expand our existing product, launch other on-demand products, go global and release our cloud-based offering”

Spruce cofounder and CEO Patrick Burns, “In one year, we went from serving homeowners and mortgage lenders in one state to 48 states. Our biggest goal for 2018 is to serve more customers, leveraging scale to drive down costs”

See also: Insurtech in 2018: Beyond Blockchain  

Q. What was your company’s greatest challenge in 2017; what do you anticipate as its greatest challenge in 2018?

Theme: 2017 challenges, validation

Slice CEO Tim Attia, “When re-imagining insurance, you truly have to re-imagine it. You have to forget everything you know and are used to and recreate the experience”

Jetty cofounder and CEO Mike Rudoy, “In 2017, we had to validate and fine tune our model and customer experience”

Metromile CEO Dan Preston, “Our big shift from MGA (agency) to full insurance company. It required the entire company (and more) to get it done.”

Theme: 2018 challenges, scale

Jetty cofounder and President Luke Cohler, “The challenges we face in 2018 will be associated with scale. New volumes of customers will require improving technical infrastructure, customer support functions and product experience”

Metromile CEO Dan Preston, “The biggest challenge will be managing growth while launching in new markets (as every market is very different!)”

Next CEO Guy Goldstein, “In 2018, our major challenge will be growing our offering from 20 classes of business to hundreds, while still maintaining excellent customer service”

Slice CEO Tim Attia, “2018 will be about scaling the company and executing, in ways that fit with what customers want”

Spruce cofounder & CEO Patrick Burns, “In 2018, we anticipate our biggest challenge will be hiring the highest-quality engineers and sales people as we continue to scale”

Q. What was a surprise to you in 2017?

Theme: Positive surprise at the intensity of consumer and partner buy-in to new insurtech options

Jetty cofounder and CEO Mike Rudoy, “We were genuinely surprised at the rapidity and size of buy-in from all types of consumers eager for better solutions and experiences that fit their lifestyle. This isn’t unique to Jetty but across the insurtech landscape”

Metromile CEO Dan Preston, “A big surprise came from the 2017 InsureTech Connect conference in Las Vegas, which had more than 4,000 people, orders of magnitude bigger than the entire world of people who knew what ‘insurtech’ was when we started Metromile in 2011”

Next CEO Guy Goldstein, “We were very surprised to learn that companies were underwriting business insurance policies manually, based on individual underwriter experience. SMB insurance is a $100 billion industry, and not using data to evaluate risk was bewildering”

Slice CEO Tim Attia, “We were surprised that our customers enjoy interacting with us regularly and being able to tie coverage directly to a successful and safe stay”

Spruce cofounder and CEO Patrick Burns, “We’ve been pleasantly surprised with the receptiveness of mortgage lenders to working with a new company”

Q. How will incumbents interact with insurtech companies in 2018?

Theme: shift to action

Metromile CEO Dan Preston, “I would expect the number of partnerships to grow significantly”

Slice CEO Tim Attia, “I think incumbents have no choice but to embrace insurtech companies”

Jetty CEO Mike Rudoy, “As insurtech players continue to capture market share, incumbents will be forced to identify response strategies”

Next CEO Guy Goldstein, “The incumbents understand that change is coming and is required”

Spruce cofounder and CEO Patrick Burns, “The industry is in the beginning stages of a multi-year shakeup as end-to-end digital sales and servicing become the norm”

Theme: expectation of beneficial partnering

Metromile CEO Dan Preston, “Competition fostering strong collaboration. Especially when expertise and assets are concentrated in different ways: incumbents with scale and capital, startups with new products, technical expertise and lack of legacy systems/thinking”

Fabric cofounder and CEO Adam Erlebacher, “Many [incumbents] are engaging directly with startups. On a basic level, most carriers lack the digital infrastructure needed to execute a direct digital strategy”

Next CEO Guy Goldstein, “Generally, [incumbents] seem very open and keen to work with new insurtech companies. Acquisition strategies are probably their best bet to integrate new technology”

Slice CEO Tim Attia, “Insurtechs are faster and more nimble than the incumbents; [who] should be excited to engage and leverage new offerings”

Q. What do you admire about other insurtechs?

Jetty cofounder and CEO Mike Rudoy, “Munich Re is hardly a startup, but their willingness to partner and help quickly grow great insurtech companies is impressive”

Slice CEO Tim Attia, “I admire how well insurtech companies complement one another. We have a similar goal: to enrich the customer experience and engagement”

See also: 2018: A Look Back, Then Forward!

Q. What’s the one book you read in 2017 that you can’t stop thinking about or recommending?

Jetty cofounder and President, Luke Cohler: “Deep Work: Rules for Focused Success in a Distracted World” by Cal Newport. “A great guide that explains how we can regain our ability to focus without distraction on cognitively demanding tasks, despite the common distractions of our work environment”

Metromile CEO Dan Preston: “The Wright Brothers” by David McCullough

Next CEO Guy Goldstein: “Red Notice” by Bill Browder. “About a builder of an investment business in Russia. It left me feeling impressed and inspired by his drive to push through and find solutions to any challenges facing him”

Slice CEO Tim Attia: “Misbehaving: The Making of Behavioral Economics” by Richard H. Thaler, who cowrote “Nudge” and won the Nobel Prize in Economics in 2017

Spruce cofounder and CEO Patrick Burns: “The True Believer” by Eric Hoffer. “It was written in the 1950s, but it’s immensely relevant today. Every startup CEO (and every politician) should read it”

4 Insurers’ Great Customer Experiences

McKinsey research has found that insurance companies with better customer experiences grow faster and more profitably. In 2016, 85% of insurers reported customer engagement and experience as a top strategic initiative for their companies. Yet the insurance industry continues to lag behind other industries when it comes to meeting customer expectations, inhibited by complicated regulatory requirements and deeply entrenched cultures of “business as usual.”

Some companies–many of them startups–are setting the gold standard when it comes to customer experience in insurance, and are paving the way for the industry’s biggest insurers to either fall in line, or risk losing out to smaller competitors with better experiences. Through a combination of new business models, clever uses of emerging technology and deep understanding of customer journeys, these four companies are leading the pack when it comes to delivering on fantastic experiences:

1. Slice – Creating insurance products for new realities.

Slice launched earlier this year and is currently operating in 13 states. The business model is based on the understanding that, in the new sharing economy, the needs of the insured have changed dramatically and that traditional homeowners’ or renters’ insurance policies don’t suffice for people using sites like AirBnB or HomeAway to rent out their homes.

According to Emily Kosick, Slice’s managing director of marketing, many home-share hosts don’t realize that, when renting out their homes, traditional insurance policies don’t cover them. When something happens, they are frustrated, angry and despondent when they realize they are not covered. Slice’s MO is to create awareness around this issue, then offer a simple solution. In doing so, Slice can establish trust with consumers while giving them something they want and need.

Slice provides home-share hosts the ability to easily purchase insurance for their property, as they need it. Policies run as little as $4 a night! The on-demand model allows hosts renting out their homes on AirBnB or elsewhere to automatically (or at the tap of a button) add an insurance policy to the rental that will cover the length of time–up to the minute–that their home is being rented. The policy is paid for once Slice receives payment from the renter, ensuring a frictionless transaction that requires very little effort on the part of the customer.

See also: Who Controls Your Customer Experience?  

Slice’s approach to insurance provides an excellent example of how insurers can strive to become more agile and develop capacities to launch unique products that rapidly respond to changes in the market and in customer behavior. Had large insurance companies that were already providing homeowners’ and renters’ insurance been more agile and customer-focused, paying attention to this need and responding rapidly with a new product, the need for companies like Slice to emerge would have never have arisen in the first place.

2. Lemonade – Practicing the golden rule.

In a recent interview, Lemonade’s Chief Behavior Officer Dan Ariely remarked that, “If you tried to create a system to bring about the worst in humans, it would look a lot like the insurance of today.”

Lemonade wants to fix the insurance industry, and in doing so has built a business model on a behavioral premise supported by scientific research: that if people feel as if they are trusted, they are more like to behave honestly. In an industry where 24% of people say it’s okay to pad an insurance claim, this premise is revolutionary.

So how does Lemonade get its customers to trust it? First, by offering low premiums–as little as $5 a month–and providing complete transparency around how those premiums are generated. Lemonade can also bind a policy for a customer in less than a minute. Furthermore, Lemonade has a policy of paying claims quickly–in as little as three seconds–a far cry from how most insurance companies operate today. When claims are not resolved immediately, they can typically be resolved easily via the company’s chatbot, Maya, or through a customer service representative. But perhaps the most significant way that Lemonade is generating trust with its customers is through its business model. Unlike other insurance companies, which keep the difference between premiums and claims for themselves, Lemonade takes any money that is not used for claims (after taking 20% of the premium for expenses and profit) is donated to a charity of the customer’s choosing. Lemonade just made its first donation of $53,174.

Lemonade’s approach to insurance is, unlike so many insurers out there, fundamentally customer-centric. But CEO Daniel Schreiber is also quick to point out that, although Lemonade donates a portion of its revenues to charities, its giveback is not about generosity, it is about business. If Lemonade has anything to teach the industry, it is this: that the golden rule of treating others as you want to be treated, holds true, even in business.

3. State Farm – Anticipating trends and investing in cutting-edge technology.

The auto insurance industry has been one of the fastest to adapt to the new customer experience landscape, being early adopters of IoT (internet of things), using telematics to pave the path toward usage-based insurance (UBI) models that we now see startups like Metromile taking advantage of. While Progressive was the first to launch a wireless telematics device, State Farm is now the leading auto insurer, its telematics device being tied to monetary rewards that give drivers financial incentives to drive more safely. The company also has a driver feedback app, which, as the name suggests, provides drivers feedback on their driving performance, with the intent of helping drivers become safer drivers, which for State  Farm, equals money.

By anticipating a trend, and understanding the importance of the connected car and IoT early on, State Farm has been able to keep pace with startups and has reserved a seat at the top–above popular auto insurers like Progressive and Geico–at least for now. If nothing else, unlike most traditional insurers, auto insurance companies like State Farm and Progressive have been paving the way for the startups when it comes to innovation, rather than the other way around. For now, this investment in customer experience is paying off. J.D Powers 2017 U.S Auto Insurance Study shows that, even as premiums increased for customers in 2017, overall customer satisfaction has skyrocketed.

4. Next Insurance – Automating for people, and for profit.

Next Insurance believes that a disconnect between the carrier and the customer is at the heart of the insurance industry’s digital transformation problem. In essence, it’s a communication problem, according to Sofya Pogreb, Next Insurance CEO. The people making decisions in insurance don’t have contact with the end customer. So while they are smart, experienced people, they are not necessarily making decisions based on the actual customer needs.

Next Insurance sells insurance policies to small-business owners, and the goal is to do something that Next believes no other insurer is doing–using AI and machine learning to create “nuanced” and “targeted” policies to meet specific needs.

An important aspect of what makes the approach unusual is that, instead of trying to replace agents altogether, Next is more interested in automating certain aspects of what agents do, to free their expertise to be put to better use:

“I would love to see agents leveraged for their expertise rather than as manual workers,” Pogreb told Insurance Business Magazine. “Today, in many cases, the agent is passing paperwork around. There are other ways to do that – let’s do that online, let’s do that in an automated way. And then where expertise is truly wanted by the customer, let’s make an agent available.”

See also: Smart Things and the Customer Experience  

While innovative business models and cutting-edge technology will both be important to the insurance industry of the future, creating fantastic customer experiences ultimately requires one thing: the ability for insurance companies–executives, agents and everyone in between–to put themselves in their customers’ shoes. It’s is a simple solution, but accomplishing it is easier said than done. For larger companies, to do so requires both cultural and structural change that can be difficult to implement on a large scale, but will be absolutely necessary to their success in the future. Paying attention to how innovative companies are already doing so is a first step; finding ways to bring about this kind of change from within is an ambitious next step but should be the aim of every insurance company looking to advance into the industry of the future.

This article first appeared on the Cake & Arrow website, here. To learn more about how you can bring about the kind of cultural and institutional change needed to deliver true value to your customers, download our recent white paper: A Step-by-Step Guide to Transforming Digital Culture and Making Your Organization Truly Customer Focused.