The first week of April, we took 15 European Insurance experts to San Francisco on an Innovation Tour in order to inspire them about their Day After Tomorrow. Their mission? Learn! Learn! Learn! That mindset is the essence of their future success, Shelby Clark advised them. ‘You’re already asking the right questions’.
The first stop on this journey towards the future was Shelby Clark. Shelby calls insurance a key enabler for innovation. It’s sexy. It’s what made his company RelayRides, now Turo the world’s largest peer to peer car rental platform.
The sharing economy is built on the paradigm of access instead over ownership. Why would you own a car if you just use it 5% of the time? But how do you shift that ownership mindset? Shelby expressed his belief in the power of the crowds. A sharing economy business is about a network of peers. It’s very hard to start, but once it exists, it’s extremely powerful and unbelievably smart. Much smarter than any company by itself.
The sharing economy idea is one thing but what made Turo so successful is how they figured out insurance. This is obviously one of the biggest challenges of the sharing economy, because:
- It’s not black and white. It’s grey.
- Is it even legal? There is no law against it, but no law allowing it either.
- It’s expensive.
- You start with no data.
Insurers today are obliged to question which role they still have in the sharing economy. When these P2P businesses are the ones they will be selling insurance to instead of consumers, it implies they’ll lose the customer relationship.
Lastly, Shelby confirmed the striking truth of unicorn dreams: it’s unbelievably hard. Entrepreneurship is by far the most breath-taking rollercoaster one can take. Only it’s not fueled by optionality, it’s about your baby, your personal assets, about everything you care about. You only get to the end when you persevere in your dream. Even when people leave your project. Even when investors turn their back on you. Even when solutions are grey or questionable.
That’s why the right investors are so key, according to Shelby. “I prefer a venture capitalist over a strategic investor”. That might seem odd, but “What happens if the next year, you’re no longer part of that investor’s strategy?"
The week couldn’t have started more eye-opening. Eagerly our audience explored the key take aways and stepped out of the room with a sense of urgency they couldn’t have anticipated. “Why did you succeed and not your competitor”? a participant asked. The answer was “We figured out insurance and we were the first at the party”. He went on to state that the latter was crucial.
Next stop was one of the first direct selling insurer in the world: Esurance.
Haden Kirkpatrick, (function), shared 4 trends, happening in the market today (P2P networks, collaborative economy, on-demand services, customer experience) and 4 that are coming quickly. The complexity lies in the fact that these numerous macro trends will simultaneously converge. That is what’s disrupts traditional industries. An eye on Haden’s predictions:
- Machine learning: low level tasks will increasingly be handed over to machine learning and AI. Easy questions can be captured more easily but trusting it with complex contracts? Way too early according to Haden.
- Rugged transparency: It’s a great trend to have, when your customer actually WANTS to buy your product. “They don’t want to pay for insurance. They just want to have it. But they don’t like it”. But some companies are taking the momentum, such as Credit Karma or Everlance.
- Internet of thing: One would think this is part of the currently happening trends but not yet according to Esurance. “It has lots of potential but the truly connect home is still 15 years away.” One to watch.
- Blockchain: Very exciting technology for finance though Haden wasn’t sure it would mean for insurance, except for re-insurance. If combined with IoT, you have the potential to have a very sleek customer experience.
15 European Insurance experts hit the road with 3 sources of food for thought. First, Focus. Start with a particular thing and go all in for that. Partnering with others or extending to more products and services, can follow.
Secondly, if you want to run with the squirrels, make sure you think like the squirrels. Think like them, work with them but don’t expect from yourself to be able to understand them all.
Finally, a shared worry was how incumbents can be fast enough to keep up with the squirrels. Acceptance is the first step to solution and Haden Kirkpatrick rightfully closed: “Be freaking ready once you get your approval ready. You have to be able to roll it out the next day. That’s your job.”
Having visited a lot of fledgling start-ups, it’s always a bit guessing what to expect. One thing it always has in common: you meet really exceptional people. Assad Wand, Founder of MyHippo couldn’t be more convincing. Describing insurance products, services and experiences that he truly hated, he couldn’t demonstrate better how he thought through MyHippo’s offering. What else fuelled it? Having a dad working in insurance and being able to build trusted brands online today. Yes. The momentum plays but the following 4 aspects make it valuable:
1. Data is the fuel
- Plug in data sources that are already available. Instead of asking 70 questions to your customer, prefill what you can. Turns out that’s no less than 90% (!). Often, it’s even more accurate as you use a more objective source.
- Use the weather forecast data or virtual imaging of houses to estimate your risks.
- Instead of building your business on averages, today it’s a big data game in which personalization will win.
2. The customer experience is the journey
Instead of being there when a claim arises, MyHippo wants to be a proactive insurance company. This goes further than close the deal, renew the deal and claim. They for instance warn you when risks - like a storm - are arising. They send you a coupon when you live in your house for a year. They offer you a smoke detector if you buy a house. They alert the customer if there is burglary going on in the neighbourhood.
3. People are the engine
Instead of focussing on the functional aspects first, a person on the phone filing a claim should be empathic. If there is a burglary, you first want to ask if everybody is ok, ask whether there is a hotel room needed for the kids. It starts with hiring the right people and there is nothing more important than culture.
Want to join us on one of our innovation tours? Check our upcoming tours here.