Innovative Fintech companies are disrupting the value chain, and creating whole new ways of buying, assessing, recommending and using insurance.
Felix Anthonj, CEO of insurance communications platform experto, says: “The new entrants have noticed that the insurance industry has slept for the past decade and basically no innovation has happened. The insurance companies haven’t reacted to the changing customer needs, they have lost the connection to them, acting too greedily and as if they’re immune to disruption. They neglected the underlying principal of a business:
Beyond Black Boxes
Insurance is becoming increasingly tied to specific behaviours, and Telematics is a clear area in which this is being exhibited. Black boxes can be fitted to cars to assess how they are being driven, and consequently the appropriate cover can be tailored to the driver. However even this is becoming old hat as companies like TrueMotion introduce smartphone technology into the equation.
CEO Vance Loiselle tells The Fintech Times: “There’s a broader impact, which is ultimately the roads are safer. You start to improve your driving by minimising hard breaking, not speeding as much, not being as aggressive, and minimising distracted driving. All of those tie in to getting better insurance and improving the roads.”
With around 30 billions connected ‘things’ set to be in use by 2020, it’s no surprise that the insurance industry is becoming part of this growing IoT ecosystem.
Nikolaus Sühr, CEO of InsurTech specialists KASKO, tells us: “As every device is becoming connected, they will gain the capability to connect directly via APIs to services like ours. Imagine a world where when you first turn on your new phone or washing machine or car and it asks you if you want to automatically insure it with one click.”
Next generation insurance could use sensors and smart devices in your home to tailor appropriate cover to you, reward you for certain behaviours, or even keep you safe. If your pipes burst, your smart home would be able to turn off the water and notify your insurer, which would in turn contact the appropriate plumber to come and x the problem before your place is ooded. Lower payout, better service, win win.
On The Pulse
Wearable devices will allow your lifestyle and physical condition to be communicated directly to your insurer. Activity trackers like Fitbit can already provide data to insurance companies, and the likes of John Hancock, in partnership with Vitality, are offering customers a discount if they consent to the business gaining access to the information on your sports wristband. Providers will be able to use your heart rate, breathing, steps or miles covered to decide on your premium.
Mobile, Micro, and On-Demand
A demand for increased exibility has seen the birth of a number of innovations that allow users to pay for insurance as and when requiured. As TrueMotion’s Vance Loiselle explains, people no longer want to insure their skis for the entire year if they’re only going to ski a few times. Fintech companies like Trov are available to allow you pay for insurance on demand.
Mobile technology and social media is being leveraged to make insurance attractive and accessible to Millenials. Insurgram allows users to communicate with insurance experts through the likes of Facebook and Twitter, then commit to cover via a simple mobile-based system. AI chatbots are being developed to provide the majority of the advice at Insurgram, although humans are available to step in when questions cannot be answered adequately by the bots.
Protecting Each Other
It could be argued that another innovation, P2P insurance, is a move back to the way things worked when the concept of insurance was initially conceived.
Digital P2P company Guevera says: “Whether it was merchant ships in ancient China or health care in Welsh mining villages, people pooled their resources to protect one another from hardship.
“Guevara works on exactly the same principle. We provide a digital platform for people to team up, pool their resources and protect each other. You still get the fully regulated insurance the law demands, and the comprehensive cover you expect. But, by cutting out the middleman, you take control of your insurance and only pay for what gets used. It’s a system that’s worked for centuries. We’ve brought it to the digital age.”
Just a Matter of Time
Insurgram co-founder Antonia Ermacora reiterates that insurance has been lagging behind technologically, and that it was only a matter of time before it saw transformation.
“We want to be charged fairly (Telematics), we hate long contracts (Pay as you go), we love tech (Wearables, IoT) and we like new concepts which are based on trust (P2P). I ́m convinced that mobile is a big game changer for insurance too. Insurance products will be user-centric and integrate into the lives of people, speaking their language, supporting their usual ways of communication and acting in real-time.”
By Oliver Haenlein