A series of 3 articles looking at technology within insurance, where it is now and where it needs to go… (Go to Part 1).
It Should be About Making Life Easier for Customers…
When you think about insurtech making a meaningful difference to customers’ lives, there are very few examples combining a game-changing front-end experience with a scalable, sustainable business model.
What does it take to make a “meaningful difference” to a customer from an insurance perspective? Perhaps it’s the following, amongst others:
- Simplicity – can you make insurance easier to understand and buy?
- Competitive – is it the price right, or can I pay for it in ways that make my life easier?
- Hassle – can it be a one-stop-shop like a broker or insurance company is?
- Relevance – should come if you have made the offering simple, but is the product the best-fit for me and my insurance requirements?
- On-demand – can the proposition service me when I need it, day or night?
I am not saying that fintech, in the guise of the previous example of mobile banking, is there yet on all those aspects, but it has made significant strides on many of them – enough to make a material difference to the way people now interact with their bank.
…But insurance has been good at only focusing on itself
Conversely, there are two unfortunate truths with almost all of the consumer-facing insurtech propositions out there. Firstly (and the biggest issue currently), because many of them are conceived within a highly technical environment, they are focused on demonstrating a brand new technology rather than delivering on an established customer need. Secondly, where they are hitting a customer need, they only tend to resolve part of it.
A good example of the latter is Trov* – you can’t go to Trov and offload your whole home insurance requirements on them and use their lovely platform for all your needs. They will look after your headphones, your smart watch or your cell phone, for example, but they currently can’t offer you something that would pay to rebuild your home if it were flooded. So while Trov is undoubtedly a very well-executed platform, and will definitely evolve over time to be a more comprehensive solution, if we are considering where we are now against those criteria that result in a “meaningful difference”, it is not there yet.
On the other hand, you have another potentially great insurtech business Lemonade which, on the face of it, ticks many if not all of those “meaningful difference” boxes. The problem is it is yet to find a scalable, sustainable underwriting model. Is it the tech that is creating the volatile underwriting performance or is it in the risk selection or pricing – or a combination of all three. No doubt too that it will sort things out, but whether that will result in a watering-down of the tech proposition as a result, and somehow compromise the nature of its comprehensive solution is yet to be seen.
In both of those cases I hope they can find the right way forward so that we, as an industry, can point to true innovation that is dedicated to meeting customers’ insurance needs in the 21st century.
Thinking 5 Years Ahead Not just Until Next Renewal
Even if they do, and even in the 5 years or so that both of those businesses have been going, the world has continued to move on. I was at a tech conference earlier this year where one of the original founders of Tesla said that back in 2003 he couldn’t see autonomous, driverless cars becoming a reality in his lifetime.
In a world of technology that is moving as quickly as it is, and with insurtech bubbling away as it is, what does “good”, meaningful insurtech need to look like in order to capture the customer’s loyalty? Given that in auto insurance, the next 10 years, if not sooner, is going to see the advent of widespread adoption of driverless or autonomous cars, what does that mean that we, as brokers and insurance providers within the industry need to be thinking about now?
Read part 3 of Insurtech and the Great Blue Yonder… Really? – Part III.
* Trov has since been purchased by Travelers Insurance Group.
