Insurances of the future (2015)

(original article from Nov 2015)


Last Sunday I’ve built the summerhouse in my garden. While I was taking a picture with my phone of my brother in law on the roof of my almost-finished creation, I was wondering to what extend he was actually insured. I could have searched in the polis that should be tucked away somewhere in my office. But I did not have the time for it. So I did not know. I couldn’t easily find it. But even if I would have known whether he’s (not) insured, there wasn’t a way to get him easily insured on the spot.





The spoiled consumer

In the past year consumers have been accustomed to having everything available at their fingertips: agenda, encyclodia, calculator, pictures, banking, maps,… All is available within one or two clicks. Many industries offer this service today. The travel industry has moved from a business where everything was done for you to a business where the customer takes control via digital and mobile. Payment have been made possible via mobile, while it previously was considered not being safe enough. Fresh groceries are delivered the next day after being ordered online. But it was impossible to access my insurances without having to dive into a pile of paper.

Start ups are filling in the void

In the past year (ie. 2014) , 1.4 billion dollar of Venture Capital was invested in insurance start ups. Many don’t have a background in insurance. But each one of these start ups are focusing on types of services that are largely left untouched by the incumbent companies. With consumer research indicating that over 30% of customers are willing to switch "Utility Supplier" for a better app experience, it seems like these consumers are up for the grabs. Insurances are bound to evolve towards new type of services, driven by the possibilities of technology and desired by the expectations of the consumers.

1. Insurances will become simpel

If there is one returning complaint about insurances it is about the complexity. It is complex to know your premium. It is complex to organize a meeting. It is complex to make a claim. It is complex to stop your insurance. Mobile offers the possibility to make things simple. In fact, mobile only works when things are straightforward and simple. It should be addressing a clear need, and be designed to a specific context. For example, Kroodle addresses this need for simplicity with a 100% mobile approach: They allow signing up via Facebook; don’t use polis numbers; give mobile access to your info; easily allow you to make a claim or quit the insurance. This is the kind of services consumers will require from their insurances.

2. Consumers want a personal insurance.

Digital allows consumers to search for the product that fits them best. Insurance on the contrary offer general, one-fits-all products, which leaves the client largely unsatisfied: Health insurances are based upon very little personal health data, car insurance is primarily based on the car and the years of experience of the driver, and so on… In the US and the UK, insurance companies like Metromile and Progressive, today offer tools that can be plugged into your car. They allow gathering and sharing data with the insurer in order to receive a personal quote for your insurance. Beam is a dental insurance that connects your electronic toothbrush with the insurance premium, by adapting your quote based on how often and long you clean your teeth. Today, connected devices and sensors allow the client to share their personal data with their insurer to receive a more personal insurance product. Based on the success of the “shared economy” business model, insurances can expect this to be a radical game changer in their business.

3. Transparency is key

When buying an insurance it is very difficult to compare between products. Today however, we see companies like Coverhound in the US, or Google in the UK, offering clients the means to compare between different insurance products. These companies try to answer the need for more transparency between insurance products.

But transparency will play another big role in the future of insurances: Insurance clients that did not make a claim, feel most unsatisfied. They've paid for something they didn’t need so they are left puzzled where their money went to and whether that cost was actually worth is. Different start ups are addressing this need by taking insurance back to its’ roots: creating a peer-to-peer type of insurances. Companies like Guevara and Friendsurance allow people to group online and create a pool in which the premium goes into. This offers the insured not only the transparency on where there money went to, it also allows them a refund when the money wasn’t used for claims.

4. Proactivity will lower insurance costs

As mobile is a perfect tool to change behaviour and motivate people, there is a huge opportunity for insurance companies to focus on prevention. For example, Oscar is a google-funded health insurance start up that is strongly focusing on proactivity. Driven by the opportunities technology offers, Oscar focuses on reducing the insurance cost by facilitating their customers with easier access to medical assistance. They even pay their customers to track their activity and stay healthy. Many other companies are focusing on this preventative approach. Also Cigna has been executing successful pilots where activity trackers have led to lower insurance cost.

5. Insurance is about reassuring

Insurance products must be reassuring in time of need. Compare it to Google maps on your phone that assures you that you’ll never will get lost; the weather app that helps you in choosing your clothes before your leave; messaging when you are meeting somebody without having exactly agreed upon time and place. An insurance should help people when they need it most, with the least effort and the best result. Beaglestreet is a life insurance startup that not only focuses on each of the points above, it assures your that your family will receive all necessary support when you come to go.

Insurance tomorrow

Tomorrow, customers will shop their insurance products online. By uploading personal (health, car, house, …) data, people will immediately receive a personalised, simple offering that will allow them to compare between companies. Signing up for an insurance will be done in a couple of clicks. The insurance rates will change daily, based upon the data from their lifestyle, sleep, food & drinking habits, driving, in-house air quality, etc… Insurance companies will have to gather and manage all this data is a fast and flexible way, allowing them to have more information on people than any other company. This in turn wil radically change the type of products insurance companies might offer in the future.

Incumbent insurance companies must start today

Of course, Rome wasn’t built in one day. Incumbent insurance companies cannot change their business model and technological architecture overnight. Nevertheless, it is important to gradually take steps in satisfying the customers’ needs. Insurance companies can already shape new customer experiences by offering other means of communication or access to their insurances. Today, it is also possible to gather data and - to a certain extend - already challenge the existing pricing granularity. Only when taking it step by step, insurance companies will learn how to create new and enhanced products. By starting today, incumbent insurance companies can start adapting their services to the current needs of their customers and protect their business model for future new challenges.

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