Tag Archives: travel insurance

Travel Insurance: An Exemplary Experience

Lately, I’ve been talking a lot about the impact technology has had on the travel insurance industry – from chatbots that answer customer questions to apps that guide them through the claim process – and it got me thinking about just how far our industry has come and just how much customer needs have changed in only a few decades.

Consider this: In the 1990s, consumers could purchase travel insurance, but distribution was far more limited than it is today. Printed brochures – which customers completed by hand and returned via snail mail – ruled as our primary distribution method. Online travel agents (OTAs) were not much more than a concept. AOL was just beginning to gain momentum as a mainstream communication tool. We were conducting business as we had for years.

By the middle of that decade, the industry began to change, setting the stage for the experience we know today. Recognizing the value travel protection could provide its passengers, Cunard became the first major cruise line to offer a plan designed specifically for their needs. Others began to follow suit, and today virtually every travel supplier offers some sort of travel protection customized for its customers.

Then along came Cancel For Any Reason (CFAR) plans.

See also: Has Digital Insurance Failed?  

Much like the supplier plan, CFAR seized on the need for customization – then it layered in a degree of flexibility that consumers simply hadn’t seen before. A concept almost ahead of its time, CFAR has exploded in recent years as the desire for travel – particularly abroad – collides with a growing number of global uncertainties. Consumers want to see the world, and CFAR is helping them do just that.

The industry continues to evolve with benefits such as parametric coverage and fully online/mobile pre-sale questions, purchase options, post-purchase support and claims platforms. Essentially, we’ve put the security of travel protection in consumers’ pockets, giving them instant access to coverage tailored for everything from their traditional Caribbean cruises to their bucket-list experiential journeys to Mongolia.

The future is exciting. According to a recent survey by flight information specialist OAG, more than 75% of travelers would be willing to use fingerprint and facial recognition scanners at stop-points if they could simplify their journeys. And 73% of all travelers and 89% of millennials said they would like artificial intelligence to better predict flight pricing during the booking process. The survey also indicates growing comfort with the integration of technologies like virtual reality and robots into different phases of the travel experience. Just imagine blending some of these technologies into the travel insurance experience to further tailor and streamline it for consumers.

See also: Practical Tips for the New Traveler  

Consumer travel preferences may be changing rapidly, but the travel insurance industry is right there with them and will continue to be right there with them – enabling new adventures with a sense of security. I look forward to what the future holds for our industry.

Innovation Trends in 2016

For the past few years, the innovation rate in the global insurance industry has run at peak levels, in good part because of digitization, which continues to be a pervasive influence—if not as disruptive as early projections.

Initial expectations of a departure from traditional distribution channels turned out not to be the case. Clients preferred direct, personal contact when buying insurance products. While online channels have not generated major changes—for example, in the vehicle insurance sector in Italy (5% of premiums today are generated online, compared with 1% in 2012) —telematics has had a substantial impact. It represents 15% of all insurance policies today in Italy. (These policies did not exist in 2002.)

Digital transformation is, of course, leaving its mark in four macro areas.

First, consumer expectationsA Bain survey suggests that more than three out of four consumers expect to use a digital channel for insurance interactions.

Second, product flexibility: The traditional Japanese player, Tokio Marine, for example, started offering temporary insurance policies via mobile phone, e.g., travel insurance limited to the dates of travel and personal accident coverage for people playing sports.

Third, ecosystems: They are created when the insurance value proposition depends on collaboration with partners from other sectors. For example, when Mojio sells a dongle (at, say, a supermarket) that requires connection to an open-source platform to be installed in a car, third-party suppliers are able to extract driving data from that platform and create services based on it. Onsurance, for one, offers tailor-made insurance coverage based on the data collected.

Fourth, services: Insurers today are moving away from the traditional approach of covering risks to a more comprehensive insurance plan, which includes additional services.

Connected insurance: a telematics “observatory” to promote excellence 

The fact that the Italian insurance market represents the best of international automotive telematics practices gave rise to the idea of creating an “observatory” to help generate and promote innovation in the insurance sector. Bain, AniaAiba and more than 25 other insurance groups are among its current participants.

The observatory has three main objectives: to represent the cutting edge of global innovation; to offer a strategic vision for major innovation initiatives while reinforcing the Italian excellence paradigm; and to stimulate research and debate concerning emerging insurance issues such as privacy and cyber risk.

The Observatory on Telematics Connected Insurance & Innovation, will focus not only on vehicle insurance (where Italy has the highest penetration and the most advanced approach worldwide), but on additional important insurance markets related to home, health and industrial risk, which, I am convinced, represent the next innovation wave.

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Italy is currently the best practice leader in connected insurance. Italian expertise in vehicle telematics is finding applications in other insurance areas, particularly in home insurance—where Italy is the pioneer—and in the health sector, where we recently launched our first products.

InsurTech on the rise

Another sector that has seen an increased number of investments in 2016 is InsurTech. Until last year, attention focused on many types of financial service start-ups. Today there is significant growth in investments in insurance start-ups: almost $2.5 billion invested in the first nine months of 2015, compared with $0.7 billion in 2014 [according to CB Insight]. Many new firms are entering the sector, bringing innovation to various areas of the insurance value chain. The challenge for traditional insurers will be to identify firms worth investing in, and also to create the means for working with those new players.

The challenge is integration

Ultimately, the main challenge for insurers will be to find ways to integrate the start-ups into their value chains. The integration of user experience and data sources will be key to delivering an efficient value proposition: It is untenable to have dozens of specialized partners with different apps in addition to the insurer’s main policy. It will be necessary to manage the expansion and fragmentation of the new insurance value chain.

To come up with an answer to this problem, start-ups are generating innovative collaborative paradigms. One example is DigitalTech International, which offers companies a white-label platform that integrates various company apps and those of third-party suppliers into a single mobile front end, even as it offers a system for consolidating diverse client ecosystems (domotics, wearables, connected cars) into a single  data repository.

Integrating and managing complex emerging ecosystems will be one of the greatest challenges in dealing with the Internet of Things (IoT) for the insurance industry.

(A version of this article first appeared on Insurance Review.)

Will Policies Break Down Into Apps?

With the news that Uber is partnering with Metromile to offer Uber drivers “pay-per-mile” insurance, along with AirBnB announcing host protection insurance to supplement existing insurance policies on rooms and houses, we may be seeing the first cracks in the decades-old marketplace for all-encompassing insurance policies.

And really the change should not surprise us. After all, it was just a few years ago when an airline ticket bought you everything: the seat you wanted, free drinks and hot meals even in the economy cabin and transportation for your luggage. These days, your ticket buys you admittance to the inside of the airplane-and basically nothing else. Every other option is now on an a la carte menu-Wi-Fi, beverages, meals, bags, preferred seating, movies. The whole experience is an upsell by the airlines.

Now that the door has been cracked a bit, what might be next? Well, as seen with the awesome app MyFitnessPal being acquired by UnderArmour, in industry after industry the advantage is all about the apps and the data. And if apps in cars can now track how far we drive and how often we’re slamming on the brakes, to save us money on our auto insurance, might we also be able to save some money on our health insurance by providing our health data to our carriers as well?

Fitbit

After all, when I step on my Fitbit Aria scale, it knows my weight and body mass index (BMI). MyFitnessPal knows what I’m eating and drinking, and, if I’m lying, the scale will catch me. If I go paleo and lose 10 pounds or complete an hour of CrossFit every day, shouldn’t I be rewarded with a lower health premium? Previously, you’d have to take a blood test and tell the underwriter if you were a smoker. But what if my rates could vary based on how healthy a lifestyle I’m leading?

And once you drive your health through this gap, you can disaggregate any part of our lives into the proverbial Chinese menu of costs. Might I pay more for life insurance if I drive my family vs. flying, which is inherently less safe? What about feeding my travel itinerary into an app and getting personalized travel insurance based on what I do on vacation? And don’t get me started on the “Internet of Things.” We already provide our thermostat and carbon dioxide levels to Google through their Nest products-shouldn’t we get a rebate from our homeowner’s policy for keeping the house at a cool 68 degrees?
Digital Thermostat

What’s interesting about these scenarios is how easily they flow once you get started. Which is how the whole apps market works-you break down a process into pieces and start to handle the individual parts.

So why wouldn’t we want to do the same with our insurance?

As younger people continue to lead the movement toward the sharing economy, showing less propensity to care about exchanging data for cost savings, it’s an increasingly interesting question. In a recent survey by the National Association of Insurance Commissioners (NAIC), 43% of drivers between the ages of 18 and 29 said they would consider enrolling in a pay-per-mile insurance policy-and that’s with only a few carriers offering such programs. There’s no doubt that the world is moving to this model.

Of course, the $100,000 question is, “when is enough, enough?” Will altruistic motivation among younger people to lower greenhouse gases and pollution triumph? Will $200 a year less in health insurance premiums be worth the cost of sending your Fitbit data to your health insurer? Will I choose to let someone track my movements in my house in exchange for preferential rates on my homeowner’s policy?

While we can’t say for certain right now, it’s not a huge leap to expect that, at some point, we’ll all be asked to “name our price.”

Venture Capital and Tech Start-ups

Unicorns – to some they are just mythical creatures of lore. To today’s tech world, a unicorn is a pre-IPO tech start-up with a billion-dollar market value. These are the companies driving innovation, technology and disruption in every corner of every business, and their impact is truly being felt across the insurance industry.

The number of unicorns is as elusive as the creatures themselves, as the herd is growing rapidly.

“Fortune counts more than 80 unicorns today, but more appear with each passing week. Some even received their horns, so to speak, as the magazine went to press. And they’re getting bigger — there are now at least eight ‘decacorns,’ unicorns valued at $10 billion or more. So much for being mythical.” — Fortune

Recognizing the powerful sway that unicorns have over new technologies, business models and more, insurers are now getting into the unicorn game themselves. They are identifying technology start-ups that can transform insurance and are becoming venture capitalists to tap into this great potential for creating the next generation of insurance.

Different models and approaches are being used to identify, assess and influence these companies’ offerings. By understanding the benefits of outside-in thinking, insurers are finding ways to leverage these innovations. Some insurers are partnering with leading technology firms. Some of the large insurers are setting up their own venture capital firms. Still others are creating consortia to fund new start-ups to help accelerate innovation.

Insurers and Unicorns

The following are a few examples of new partnerships in 2015; the trend is continuing;

AXA– In February 2015, AXA announced the launch of AXA Strategic Ventures, a €200M fund to boost technology start-ups focused on customer acquisition, climate change, travel insurance and more. The goal is to advance AXA’s digital and customer strategy by connecting with new technologies, new solutions,and new ways of thinking. The company anticipates the fund will complement AXA’s major operating investments, across all entities, into research and digital developments that will help transform how customers experience AXA.

XL Insurance – On April 1, 2015, XL Insurance announced the formation of a venture capital fund, XL Innovate, to support insurance technology start-ups, with a focus on developing new capabilities in the insurance sector. XL indicated that this effort would extend its capabilities in existing markets and give it new opportunities to address some of the most pressing and complex risk problems in the global economy. In addition, XL sees it as a critical element to driving focus on innovation forward while securing relevance in the future.

Global Insurance Accelerator – In February 2015, a group of seven Iowa-based insurers announced the formation and launch of the Global Insurance Accelerator (GIA), an insurance accelerator for start-ups. The start-ups receive $40,000 in seed money from the pool to create a minimum viable product to present to the Global Insurance Symposium. The insurers involved believe that the accelerator program will bring potential innovation and technology insights to the insurance industry.

The Future

Innovation, technology and the need to be future-ready are fueling today’s unicorns and their capital supporters rapidly expanding the herd. In turn, these new business models and market leaders are spawning challenges and opportunities for all companies.

Today’s forward-thinking insurance companies are running their businesses while simultaneously creating their futures as Next-Gen insurers. It’s critical to recognize the power and benefits of innovation and the role that unicorns play in planning for tomorrow.

This is a decisive time as Next-Gen insurers emerge along with their unicorns to disrupt and redefine insurance and competitive advantage. What is your company’s approach to leverage and experiment with emerging technologies, start-ups and unicorns to fuel the potential and enable future market leadership?