As a child, I didn’t exactly dream about working in insurance. And in some ways, I’m still getting used to it. But if you happen to see injustice, you have an obligation to do something — I think my younger self would agree with that.
My journey with Hedvig started in 2017 while working as a management consultant at McKinsey. I was tasked with completing a cost efficiency project for a large insurance company; and even though I knew almost nothing about insurance, I could feel that something wasn’t quite right.
I observed loyal customers being treated as if they were potential criminals, being required to complete onerous information requests and in return receiving inadequate support, whilst dealing with some of life’s most stressful and challenging situations.
Selling a promise
When the idea of insurance was invented it relied on people believing in a promise: if they suffered a loss, they would receive support from others and be compensated for that loss.
People trusted this promise. They trusted institutions. They even trusted strangers.
Think about this if you have ever found yourself asking Google ”does my phone listen to me?”. The fact that this question generates more than two billion results, suggests that much of modern life is characterized by mistrust. Some would even argue that we live in a post-truth world.
Why should you trust your insurance company if they don’t trust you?
Insurance companies are desperately asking “how do we get our customers to trust us?”. I believe that this is the wrong question. As Abe Lincoln once said;
‘The people when rightly and fully trusted will return the trust’.
Trust is contagious, reciprocal and easy; when we put our trust in our members, they, in turn, put their trust in us.
In 2017, with this in mind, we launched an insurer very different from its predecessors. At Hedvig, we are showing that it is possible to remove the checklists, skip the fights over rights and wrongs, and totally embrace what we believe over what we can prove.
Yes, it may sound naive, or even unrealistic, but we‘re proving that it is actually the most realistic, effective, and financially responsible way to run an insurance company.
Service is not what we do, but who we are
We give everyone access to an unprecedented level of service whilst maintaining, or even beating, the price of standard coverage. No scripts. No outsourced call centers. Service is not what we do, but who we are.
That’s why we’re always available through our app, because you should have it your way. That’s why you can record your claim in seconds, because you shouldn’t need to lift a finger. And that’s why you’ll be compensated immediately, because your time is precious.
There is no greater fraud than a promise not kept
We are even using the dynamics of trust to protect ourselves against insurance fraud. In a world where trust is broadly on the decline, our natural defense mechanism could have been to tighten control. But trust is cheaper.
It’s an understatement to say that my jaw dropped the first time a member alerted us to the fact that she had found her lost bag and wanted to reimburse us, or on another occasion when a fraudster sent us a handwritten letter asking for our forgiveness. When we trust, we get honesty in return and the willingness among our members to inflate or exaggerate the extent of a claim decreases.
Being able to create this seismic shift in the level of trust that can be achieved between an insurance company and consumers ultimately comes down to how we make money.
At Hedvig, we only take a fixed fee from our member’s monthly premium, and the rest of the premium is earmarked for paying out claims. By only ever taking a fixed fee we have removed any incentive to pay out less money in claims. We have no reason to question your story or over-complicate your claim. And even if there is money left at the end of the year, we can’t take it. Instead, we donate everything to charity.
Finding ways to reject claims may have been an excellent recipe for financial success historically, but it won’t be ahead.
Feeling trusted has a profound effect on people
We have seen that our members are better able to deal with adversity and loss if we can assure them that they are not alone, we are there to help. Together, we are rejecting the old, two-dimensional concept that the ideal life is challenge free. It’s not. We’re all going to face challenges. That’s life. What matters is, how we respond in those situations.
It may seem controversial, but we want to prove that the art of losing doesn’t have to be hard to master. Accidents are inevitable, but adopting a new attitude isn’t — we see this happening every day when we assist people in letting go of the reality they had planned, to find the one that’s waiting for them.
In just two years, we have built a movement of people who believe that acceptance is the gateway drug to a happy life. There are now thousands of people beating to this drum, and that says something about the importance of being intentional with your purpose. The most compelling brand stories are the ones that are true.
Just ask yourself, how many insurance brands perceive the world in the same way you do? How many insurance companies’ merch are you going to wear?
Insurance has always been something that was passed down to you by your parents. But now, the people who are spending the most time online, who are buying digitally, are introducing Hedvig to their parents.
We are building a generation-defining company where purchasing insurance isn’t a quiet decision anymore.
If the Swedes need Hedvig, everyone needs Hedvig
The lottery of life made Sweden Hedvig’s first market, and with hindsight, we couldn’t have chosen a better test. A large percentage of the population can be described as educated and middle class, with social security and personal freedom as a consequence. Swedes have all the reasons in the world to trust that they’ll get help when needed, and no reason to question that.
Today, Hedvig is signing more new home insurances each day than some of the Swedish insurance companies that have been around for over 100 years.
And in case that doesn’t drive home the mania, maybe the fact that the market shares in Sweden have remained static for the past 25 years will help put things in perspective. If the Swedes need Hedvig, everyone needs Hedvig.
The future lies in the past
Some say that the future of insurance lies in the ability to analyze countless data points in seconds and that humans will no longer be needed in the industry.
It may not come as a shock that I believe that to survive as an insurance company, you have to become a service provider.
You need to build relationships, not transactions. Not only because it’s the moral thing to do, but the smart thing to do. You can spend the majority of your resources attracting and signing new clients, but once that contract is signed, you have to provide continued value for that person in order to make them stay.
Not your average start-up pitch
People ask us all the time if we are an insurer, a tech company, or a startup. The answer is we are all of these, but above all, we are a service company — online, offline, however, or wherever people need us.
We are creating a product that is going to serve our members for the rest of their lives. It will live with them and grow with them. It will act in their interest and keep its promises. Hedvig is a belief in the honesty, integrity and reliability of others.
We didn’t invent anything new. Trust has been around forever but somewhere along the way, it just got lost.
All we had to do was to find it.
Lucas Carlsén
CEO & Co-founder of Hedvig
