Tag Archives: trov

Can Insurtech Rescue Insurance?

Is insurance broken and in need of rescue?

That was the question I recently asked myself while hiring a rental car to visit the infamous “White Line” mountain bike trail in beautiful Sedona, AZ.

When I discovered the full Hertz insurance cover was going to cost me double the price of the actual car hire, I couldn’t help but relay my shock to the salesperson. She proceeded to tell me about customers’ typical reaction to the accompanying insurance cover purchase, and three things, from the conversation, stuck in my mind:

  1. Many customers opt not to take the liability cover even though it leaves them quite exposed.
  2. A surprisingly high percentage of customers ask for a refund on their insurance payments, at the end of the rental period, if they didn’t need to make a claim!
  3. Customers are generally very distrustful of the insurance product they are buying. Customers are often unsure whether it will actually cover their needs if they have to make a claim.

To my mind, this random conversation captured three big problems the insurance industry currently faces:

Problem #1: Consumers often don’t value insurance

Insurance is quite an unusual product. Except for maybe a coffin and a fire extinguisher, it’s the only purchase I can think of that you make but hope to never have to use.

Let’s face it. Buying insurance is usually an uninspiring “grudge purchase.” Tedious paperwork, arcane questions, having to think about what can go wrong in your life. Is it any wonder that the experience is up there with a visit to the dentist? Of course, the reality is that should your home be destroyed in a storm or should you be involved in a car accident deemed to be your fault (especially with third-party injury) insurance can be the saving grace preventing potential financial ruin.

Problem #2: Consumers don’t always understand insurance

After going through the pains of considering the potential financial impact of personal tragedy, you are rewarded with the product: a paper contract. Not just any old paper contract, but a long-winded, very conditional and often confusing document. How exciting! Again, is it any wonder that insurance customers can’t or don’t want to take the time to understand the precise nature of what some deem to be the world’s most boring product?

Problem #3: Consumers generally don’t trust insurance companies 

To highlight the trust issue, I turn to the most popular definition of “insurance company” from the crowd-sourced Urban Dictionary:

Insurance Company: “An affiliation of pirate-gamblers who accept bets called premiums. The dollar amounts of the premiums are non-negotiable, but the amounts of the claim settlements, should the company lose the bet, are rarely delivered without argument.”

While the quoted source may be a parody, I believe the underlying inclination signifies the typical level of distrust that consumers have of insurance.

See also: Where Will Unicorn of Insurtech Appear?  

Don’t get me wrong. I believe insurance plays a critical role in our lives, and insurance companies can provide a great service as well as a very rewarding career path. But, when it comes to the general consumer view of insurance, there seems to be an issue.

Ask 10 random people on the street to describe “insurance” in three words, and you can be nearly sure at least one person will allude to issues of distrust

Insurtech to the rescue?

So what is the industry doing to solve these problems?

It appears that the nimble insurance technology startups (insurtechs) are playing a large part in leading the way in attempting to overcome these issues.

Below are three insurtech companies focused on addressing these issues and arguably changing the insurance world for the better:

Solution # 1: Improved Value – Metromile

Telematics has been around for a few years now, particularly in Italy, the U.K. and the U.S.

Onboard car technology is used to monitor and potentially assess the driving behavior of each individual driver, thus moving insurance from a pooled pricing model to a more individual specific model, one where the underlying policyholder risk is more closely monitored.

These telematics technology devices (also known as a “black box”) are able to pick up a number of diverse driving metrics such as:

  • mileage
  • location
  • time of day
  • driving frequency
  • behavior around hazardous zones
  • speed
  • rates of acceleration
  • braking habits

This information can then be considered in a more accurate and individualized pricing model, one that potentially allows the previously trapped (i.e pooled) policyholder to break free from his or her age or gender (non-EU) status, etc. and prove worthy as a safe driver that is a good risk and unlikely to have an accident and hence claim.

Low-mileage drivers, as well as young male drivers, can benefit, and this is the market that Metromile has targeted.

The usage-based customization of insurance certainly seems to be keeping customers happy, with policyholders reporting they feel like they are getting a fairer deal. After all, should a low-mileage, safe driver really be subsidizing a riskier driver just because they share common old-school rating factor characteristics?

Metromile has been forging ahead with this lifestyle app-based continuous digital engagement model since 2011. And the company shows no signs of slowing down. In late 2016, the company raised a further US$150 million in funding through which it acquired a carrier enabling the company to now underwrite its own policies.

Solution #2: Simplicity and Understanding – Trov

The Trov promise:

“As simple as Tinder and as beautiful as Airbnb” — Scott Walchek: CEO of Trov

Trov provides on-demand insurance for personal items that can be toggled on and off via a few simple taps from your phone. The company aims to give the mobile generation easy protection that they can enjoy “without worrying about rigid policies and confusing fine print.” 

In addition, Trov seems to be jumping on the personalized cover bandwagon – treating policyholders as individuals instead of an average risk within a cohort. The flexible app gives customers the option to tweak their cover toward their own personal circumstances. As one customer put it: “Why pay for an expensive insurance plan designed to cover your worldly belongings when all you really care about is your mountain bike and your laptop?” 

“Protect just the things you want – exactly when you want – entirely from your phone” — Trov website

This simplicity and flexibility seems certain to appeal. I personally like the idea of being able to quickly and easily protect my mountain bike by getting temporary insurance for the times when I do actually take it out and use it. And if a claim is required, it’s all handled via an in-app chatbot. Insurance for the smartphone generation indeed!

While I do wonder how Trov counters fraud (given the ability to so easily turn the cover on and off), as we are living in the age of convenience, it would seem that this model is sure to appeal beyond just tech-savvy millennials.

Solution #3: Enhanced Trust – Lemonade

Lemonade is the poster child of insurtech, or at least the king of savvy insurtech marketing. When the company shouts about paying a claim in three seconds, using AI not actuaries and bots not brokers, it certainly makes one stand up and take notice. Lemonade began selling insurance nearly two years ago and has now amassed a sizable level of funding and following. The companyy promised to bring trust back into the insurance world – the way it should be and how it was in the beginning.

The tools of their trade: behavioral economics and artificial intelligence.

The promise to the customer: simplicity, convenience and affordability.

But back to the trust issue. How is Lemonade approaching it? The business model attempts to disrupt the cycle of distrust between the insurer and the insured. This is done by separating the pool of risk capital from the company’s own 20% flat fee. Essentially this model aims to remove the incentive for the insurer to minimize claim payouts on the basis that doing so will not affect its bottom line (the remaining 80% claim pot gets paid out to small peer groups under a giveback scheme, after some unavoidable expenses such as reinsurance cover).

Basically, the deal is: Trust us to pay out your claim quickly, with minimal fuss and without any sneaky “catching you out in the fine print” shenanigans, and we will trust you to only claim if it’s genuine.

“Knowing that every dollar denied to you in claims is a dollar more to your insurer brings out the worst in us all… Since we don’t pocket unclaimed money, we can be trusted to pay claims fast and hassle-free. As for our customers, knowing fraud harms a cause they believe in, rather than an insurance company they don’t, brings out their better nature too. Everyone wins.” — Dan Ariely, chief behavioral officer at Lemonade

The behavioral implication, with the removal of potential conflict, is that the enhanced two-way trust will drastically reduce fraudulent claims. This, combined with the operational cost efficiency savings from AI and technology will allow the company to have happy customers and still make a sustainable profit.

At least that’s the theory.

See also: Convergence in Action in Insurtech 

Now, while I love what they are doing, I’m not entirely convinced their model is altogether different from some of the smaller mutuals, especially those that still maintain some level of social bonds. Maybe I’m biased because Lemonade doesn’t seem to like actuaries, but I also wonder whether the company’s pricing, underwriting and risk management will allow its loss ratios to stay low enough to not affect their 20% flat fee over the long term. It takes some time for reality to test the theory, in insurance. So I, for one, will be watching the Lemonade space with interest.

Conclusion

So is insurance really broken and in need of fixing?

Let’s not forget what insurance is all about. In essence, insurance is about the pooling and sharing of risk. Swapping an uncertain, and potentially large, outgo for a small(er) more certain outgo (the premium). This is unlikely to change, and insurance companies obviously already do this.

But, I do believe, there is a need to modernize, especially in relation to the customer experience. I don’t see insurtech companies causing a complete revolution. But they are likely to play a big part in the evolution of insurance.

What do you think? Does insurance need to evolve? Is insurtech the answer to the customer experience issues? Are these insurtechs all marketing talk and lacking substance? Will the asset-rich insurance incumbents ultimately lead the way in the unfolding tech world evolution?

This post first appeared on the ProActuary blog here.

Will Amazon Disrupt Insurance?

In the last months of 2017, I wrote – together with my friend Andrea Silvello – “All the Insurance Players Will Be Insurtech,” and the book was published in the first days of 2018.

See also: Is Insurance Really Ripe for Disruption?  

I included all the foundations of my insurtech thoughts; the elaboration of many discussions I have had since I published my article “Will fintech newcomers disrupt health and home insurance?” in August 2015; and a review of my five insurtech predictions from a year ago. Here is that look back, followed by a prediction on the hottest discussion at the start of this year: whether Amazon will enter the insurance industry:

Prediction: Exit

Not everyone will prosper. Although many amazing insurtech companies are seeing great results and scaling up—and many will continue to enter the field—some will surely leave the game, as well.

Result

I was dreaming of an insurtech unicorn’s exit. Well, dreams become reality sometimes: Well Zong An – the Chinese full stack insurtech – made its IPO with a $10 billion evaluation in fall 2017. Also, Travelers acquired Symply Business for $400 million.

On the other hand, Guevara left the game in the second half of the year. This winnowing down, a Darwinian “survival of the fittest,” should ultimately strengthen our industry.

Prediction: Reconversion

This is the other side of the moon. I saw many initiatives doing a great job putting together a fantastic team and a sexy equity story, and some raised relevant capital, but their business models look (to me) not sustainable from an insurance perspective. I don’t want to claim that no one of them could succeed, and history has already shown how skepticism can be wrong. But I’m expecting to see some players use their great skills and the funding raised to change radically their business models.

Result

In spring 2017, Trov did a round of financing of more than $40 million with a valuation higher than $300 million, but, from what we heard from the CEO at different conferences, the company is focusing its efforts on a back-end system that insurers can use on their customer base rather than on growing its customer base and portfolio of on-demand risks. Also, Zenefits went through a difficult 2017, stepped back from the brokerage business and started to license its technology as an SaaS (software as a service) player.

Prediction: Connected Insurance

My two cents are on any insurance solution that uses sensors for collecting data on the state of an insured risk and on telematics for remote transmission and management of data on the insurance value chain. A crazy prediction: Let’s consider the most mature use case, auto insurance telematics in Italy, which represents one of the best practices globally. In the country, I’m forecasting more than 7.5 million cars connected with an insurance provider by the end of 2017 (compared with 4.8 million cars connected at the end of 2015).

Result

In line with the expectations, Italy’s insurance telematics policies had reached 7 million by the end of third quarter 2017, according to the IoT Insurance Observatory.

Prediction: Culture Shift

Incumbents are becoming always more interested in debating innovation and concretely testing new approaches, including collaboration with startups. I expect to see this new breeze surround old-style insurance institutions, with a growing awareness on how all the players in the insurance arena will be insurtech players.

Result

A board member at one of the largest global reinsurers recently summarized the essence of insurance as assessing, dealing and accepting risks using the latest technologies. That’s one sign that the industry is coming around. We saw 3,800 more signs at InsureTech Connect, the world’s most prestigious insurtech conference. In 2016, the conference had 1,200 participants; in October 2017, it sold out with more than 3,800 attendees. Andrea and I were there on the stage and witnessed the incredible energy of those insurance professionals, regulators and startups.

Prediction: Sustainability

Many value propositions are bundling risk covers and services, thus allowing the insurer to influence behaviors and prevent risk, contributing to the sustainability of the sector. In the next months, I expect to see some insurers becoming more relevant in the life of their clients and act as partners and not only as claim players.

Result

The speeches of top insurance executives show the sector’s ambition to go in this direction. A slide projected on a wall is just that, however: in the field, we see very few examples of implementation.

What will happen in coming years?

Unfortunately, I damaged my laptop a few days ago so my crystal ball for the 2018 predictions is also not working…but I want to provide my middle-term view about the issue most-discussed at the end of 2017: Amazon activity in the insurance sector.

I predict Amazon will not disrupt the insurance sector. I believe it will do something – especially around insurance coverages on the products it sells – but will not be able to touch the core of the insurance profit pool on either commercial lines or personal lines (auto, property, life, health). My view is based on two main beliefs:

  • One of the key elements to be a successful insurer is underwriting discipline, as highlighted by Mario Greco recently or some famous Warren Buffett sentences in the past. Well, I believe that underwriting discipline conflicts with the culture of any tech giant. Amazon could buy an insurance company or hire talented people to close the gap on insurance knowledge, but the corporate culture doesn’t fit with the insurance business fundamentals.
  • In insurance, each market has its particular characteristics. One size doesn’t fit all — the opposite of how things work in social media or in internet businesses. I’m speaking about what the customers want (need) to buy in the different markets and how they want to buy it. In life insurance – the usual push product, which needs to be sold – digital channel at global levels represent less than 1% of new sales. But even look at auto insurance. The U.K. auto insurance market is controlled by online distribution, and, 10 years ago, insurance executives assumed that all Western European markets would follow the U.K. path within a few years. But auto insurance distribution in Europe continues to be dominated by traditional channels. You can argue that local carriers executed poorly, but even branches of U.K. insurance groups, with their great expertise, couldn’t duplicate the success that was had in the U.K.

I don’t think things cannot be changed. In fact, I believe there are a lot of opportunities to do things in a different way. But “one size fits all” doesn’t work, and I’m skeptical about the tech giants’ ability to deal with those local insurance characteristics. A tech giant based in Silicon Valley or with a European hub in Dublin will dirty its boots on insurance distribution (or other steps of the value chain).

It is an interesting time to be in the insurance sector, but I’m pretty confident GAFA (Google, Amazon, Facebook, Apple) and BAT (Baidu, Alibaba, Tencent) will not disrupt this sector.

The Industry’s New Dynamic Duo

Insurers are full of economy-speak these days. We have the gig economy, the digital economy, the data economy and the sharing economy. There is the economy of one, the economy of the many, the service economy and, of course, the experience economy. These concepts are all real and vital considerations for insurers, yet most deal with the implications of external impact, asking, “How will the world affect our business?”

In one striking case, however, we are faced with an alternative question: How will our operations affect our world? We are in the midst of the digital age race where survival and winning will require rapid adaptability and innovation. The digital age represents a seismic shift in the insurance industry, pushing a sometimes slow-to-adapt industry by challenging the traditional business models and assumptions of the past 30-50 years. The business models of the past will not meet the needs or expectations of the future for digital insurance. So insurers will be drawing upon the strengths of a new type of economy that will provide internal energy to the organization and competitive drive to the industry.

This economy is the platform economy.

Cloud platforms are the future because they are the core of revolutionized business models. They are proven. They are intelligent. They combine sought-after technologies. Best of all, they fit an industry that has been trying to become consumer-centric.

Of course, there is an issue. The cloud-based, digital-ready platforms within the platform economy are easiest to plant in uncultivated environments. Most established insurers are in the thick of modernization of a different type and scale. When faced with the options, many will choose digital answers that are painted over modernized frameworks. At the same time, they will be flirting with the idea that a real platform shift may represent a hyper-jump into insurance’s agile future.

The Rise of the Platform Economy

In our new thought leadership, Cloud Business Platform: The Path to Digital Insurance 2.0, we note that the use of big data, artificial intelligence and cloud computing is changing the nature of work and the structure of the economy. Companies such as Apple, Amazon, Netflix, Facebook, Google, Salesforce and Uber are creating online structures that enable a wide range of activities. They have opened the doors to radical changes in how we work, socialize, create value in the economy and compete for profits. This is why a digital platform economy is emerging.

See also: Busting Myths on the Cloud (Part 2)  

Cloud business platforms represent a new era of impact and industry upheaval. A cloud business platform is one that can run key business applications and services to match the reality and requirements of the current business environment. That environment is characterized by constant disruption, heavy competition and growing market demands. Insurtech entrants are embarking upon business and technology initiatives that exploit untapped markets and address under- or un-met needs. Incumbents with outdated technologies are at a huge disadvantage because they are unable to respond with the flexibility, agility and speed that has become the hallmark of companies that are digital natives.

With investments in this market subset being tracked at just under $16 billion since 2010, insurers need to immediately take notice. Successful companies across all industries leverage technologies such as mobile, social and cloud to make better decisions, automate processes, strengthen their connection with customers/partners/channels and pursue innovation. They do all of this at an increasingly rapid pace, positioning them as “digital first” companies. The acceleration in the uptake of digital technologies and cloud foundations is a crucial first step to entering into the platform world and the shift to a new era of insurance we call Digital Insurance 2.0.

The implication from all this is that the digital age economy is powered by the platform revolution.

Digital Insurance 2.0

Traditional insurers must have digital daydreams now and then. What if we could have started like Amazon instead of like a traditional insurer? What if we had a digital native architecture like Netflix? Why couldn’t we have turned an app into a multi-billion-dollar business as Uber did? Google was disruptive because its framework and model were created to meet the future head on. How do we do what they have done while we are shackled to the constraints of insurance? The advantages these companies enjoy compared to the challenges faced by insurers can make digitalization of insurance seem like an impossible task. The reality is, however, that insurers now have every opportunity for freedom within traditional insurer constraints utilizing a Digital Insurance 2.0 framework.

What are the attributes of Digital Insurance 2.0? In every aspect, digital platforms are driving toward business models with fewer barriers and greater data access with improved flow. Digital insurance  platforms share these traits:

  • Maximized effectiveness across the entire customer journey with deeper, personalized engagement;
  • Process digitization that improves operational efficiencies and customer experience;
  • The ingestion and use of digital data-driven insights for better decision-making and to actively identify customer needs;
  • The ability to rapidly roll out new products and capabilities while expanding into new markets or geographies; and
  • Quick adaptation to rapid changes.

The crucial technology underpinning digital insurance platforms is cloud-based. The idea that a 10-year old technology like cloud computing could provide new opportunities for insurers seems far-fetched.

Cloud platforms, however, have become the option of choice for Greenfield or startup operations that are offering digitally-enabled traditional insurance products — like Lemonade, Slice and TROV. Cloud platforms are the basis of a new generation of core systems based on a micro-services architecture that is needed for innovative new insurance products like on-demand and micro-insurance offerings.

Shifting from Products to Platforms

Since the beginning of automation, the insurance industry has seen fundamental design, architecture and technology shifts in insurance core software solutions. First, we had the monolithic solutions running on the mainframe from the 1960s to early 2000s. This was followed with the best of breed components in early 2000s for policy, billing and claims based on J2EE and service-oriented architecture — but with each still using different business, data and technology architectures. Next, beginning in the early 2010s, came the loosely coupled “suites,” inclusive of the policy, billing and claims components but with a consistent and common business, data and technology architecture.

Yet, through these transitions, they maintained a product-focused business architecture view, emphasizing policy and billing and claims capabilities and with implementation primarily on-premise or in a private hosted environment, often a “pseudo cloud environment.”

Today’s digital shift will require cloud-based platforms that provide a great promise to address new challenges and opportunities that enable insurers to disrupt their markets before they are disrupted. This requires a new thinking of our solutions… one that makes the transition from products to platforms and is underpinned by three key attributes: ecosystem-friendly, centered on customer experience and enabled by cloud computing.

Unfortunately, too many insurers are taking a page from their old business transformation playbooks and are expecting it to work in today’s digital age. They are forging a new path by “paving the old cow paths,” which is simply creating greater complexity while moving in a direction that will not serve them well in the future. Instead, insurers need to look outside their companies to a new cadre of digital leaders and imagine the art of the possible. What can insurers do now that they could not do before because of technology, customer and market boundary changes?  Today’s emerging new competitors are answering these questions ahead of traditional insurers, positioning themselves as the new generation of market leaders in a time of significant disruption and change.

See also: ‘Core in the Cloud’ Reaches Tipping Point  

Fundamentally, to succeed in the digital age, an insurer’s strategy must focus on the following attributes:

  • Customer experience and engagement is priority No. 1 (People)
  • Business innovation is mandatory (Technology)
  • Ecosystems extend value (Market Boundaries)
  • Speed-to-value is the differentiator

For an effective digital transformation, it is important that core, data and digital capabilities are broken out into micro-services. They are then integrated back into the platform to provide a digital experience. Innovative, “digital-first” companies like Google, Amazon, Salesforce, Workday, Uber, Airbnb and Netflix have successfully used this architecture and technology that is disrupting industries. In the case of insurance, digital experiences are enabled by cloud economies of scale — an advantage that many digital-first companies do not have.

Why is this important? Because it will allow insurance companies to more rapidly position themselves in the digital era of Insurance 2.0 and enable them to:

  • Accelerate digital transformation to become digital era market leaders;
  • Accelerate innovation with new business models and products;
  • Accelerate ecosystem opportunities and value; and
  • Avert disruption or extinction by new competition within and outside the industry.

At the heart of this disruption is a shift from Insurance 1.0 to Digital Insurance 2.0 and a growing gap where innovative insurtech or existing insurers are taking advantage of a new generation of buyers with new needs and expectations and are capturing the opportunity to be the next market leaders in the digital age.

The path to a cloud business platform will evolve differently for each insurer undertaking it. Being open to operationalize around the cloud platform’s promise as a new business model paradigm acknowledges the role innovation will continue to play as insurers encounter future insurance ecosystems. The time for plans, preparation and execution is now — recognizing that the gap is widening and the timeframe to respond is closing.

Will established insurers suffer at the hands of tech-savvy, culture-savvy competition, or will they turn their digital daydreams into dynamic realities?

In a rapidly changing insurance market, new competitors do not play by the traditional rules. Insurers need to be a part of rewriting the rules, because there is less risk when you write the new rules.

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!