Nexxworks’ recent five-day trip to San Francisco outlined that there’s a rocky road ahead for insurance incumbents. InsurTech start-ups are scaling fast, fuelled by the ruthless power of focus and data. All these evolutions are as much a threat as they are an opportunity, depending on how you react to them. That’s why I wanted to share some insights that I gathered on this eye-opening tour.
Follow the money
Investment companies confirm something is cooking. Funding for InsurTech start-ups took a steep leap in 2015. Though the growth was driven by 2 outliers (Zenefits and Zhong An Insurance), 2016 confirmed that the sector remains attractive to the disruptors ‘eye and is, therefore, as full of opportunity for existing players.
Convenience is the new ‛glue’
I’ve never quite met anyone who believed that insurance is fun. You get a stack of boring paper, scaring you to death with too long sentences and difficult vocabulary. And once you actually need the insurance, you don’t have a clue on whether your situation will meet the actual requirements of your contract. Plus, once you’ve read it through, you often realise that you have way too much coverage. No wonder that so many customers are fed up with the traditional way of insuring. But it was inspiring to see how so many Silicon Valley disruptors are finding ways to remove these frictions:
Insurance on demand
Trov wants to become the world’s biggest insurance company by giving customers the insurances they want, when they want them. Through a mobile app you can protect your things with a simple swipe. Another swipe lets you cancel the insurance or make a claim. That’s it.
MyHippo is reinventing home insurance and making it 25% cheaper. Instead of focusing on the risk message, they look at how to celebrate their customer relationship and offer a proactive form of insurance. Why aren’t we warned if a storm is coming? If it’s known that burglary is a problem in a neighbourhood, why doesn’t an insurance company alert me?
Make it fun and sexy!
If you insure your camera on Trov’s platform, you get confetti all over your screen. If you sign up for MyHippo you receive a stylish wrapped gift. Insurance is one of those sectors that is saddled with the biggest image problems, so why not make your customers love and trust your brand in a fun manner?
Rethink the insurance distribution platform
In a world where car insurance might no longer exist within 5 years, it’s important for everyone working in insurance to grasp the sense of urgency. The alternative might just be worse. Metromile ‘s CEO “never really understood the brokers-thing.” It’s hard but it’s happening. Incumbents shouldn’t be blind to a changing distribution model but, more than ever, rethink their insurance platform.
Start-ups are going to market directly, cheaper and with a better customer experience. MyHippo simplified the sign-up process, proactively feeding data that is already available. Why bother their leads with a 10-page form if a lot of information such as how many square metres the land contains, how far it’s away from a fire station, etc. are readily available?
It’s time to kick old routines and empower people by blending technological capabilities with human emotions and completely rethink the role of insurance brokers.
Who will be the customer?
Pimping the customer experience and digitalizing distribution channels is the future. Sounds like a no-brainer but we’re only hitting the tip of the iceberg. The future of insurance will be far less linear. The real question is: who will be the insurers’ customer in the future? A future in which we might share self-driving cars that we don’t own. A world in which personalized medicine prevents health issues. A workplace where big data is preventing every technical issue.
Access will be more important than ownership. The sharing economy is facilitating this shift with human-to-human practices like Uber and Airbnb. It’s complex to insure but it’s still a direct transaction from human to human. What if tomorrow, the autonomous world leads us into a machine-driven society? Which algorithm will be to blame if car A and car B make a wrong decision?
Yes, insurance is changing. Start-ups are eating pieces of the incumbents’ pie and if they won’t make their products sexy soon, they’ll die.
However, as society and products are changing profoundly, there is a lot of sugar on the table. The opportunities for insurances in the autonomous world are so big, that the time is now to reinvent themselves.
The only real risk they have, is not risking the change.