Insurance is not a product, it’s a service to meet customer needs
Why does the insurance claims process fill policyholders with dread? Done wrong, it feels interminably long and loaded with anxiety. Will they accept my claim? Does my policy even cover this? What was my excess again? Is this even worth it?
The experience belies the fact that many insurers have failed to recognise the actual needs of their customers or that those needs might ever differ. It’s generic, impersonal and can’t really be expected to deliver peace of mind.
Committing to build a genuine understanding of how the needs of different customers, who have bought different policies, acting in different contexts, change, can drive differentiation in a highly commoditised industry. This commitment is allowing businesses to see past the policy to the potential of enabling insurance ‘services’ beyond, specific to a significant niche.
Understanding of these needs is being facilitated as we become more comfortable with the trade off between data sharing and personalisation. In its simplest interpretation, this knowledge has encouraged a tweak to the policy (see most implementations of telematics) but it can also feed entirely context-specific cover. At its core, Metromile offers traditional car insurance, but combined with hardware that monitors customer behaviour, it powers a pay-per-mile model that turns on and off with the start of an engine.
Whilst they use customer data in a useful way, at their heart, Metromile still sell insurance policies, that remains their product. More interestingly, the gradual proliferation of connected devices both in and out of the home, and the understanding of customer behaviour they provide, is beginning to surface opportunities for insurance as a service, hidden as an enabler for a broader customer need.
Neos might be backed by traditional insurance, but first and foremost it’s a collection of devices that together provide a service that protects your home from intruders and damage. With access to data about the health and wellbeing of millions of people, Fitbit (along with recent acquisition Twine Health) are looking to partner with healthcare providers to provide a service that coaches people towards better health; lowering hospital admission rates and insurance premiums in the process.
Businesses like Neos are realising that, because customers are looking for peace of mind, and not a pile of paperwork, services that deliver on a key customer need (into which insurance is built, as a hidden component) are considerably easier to sell, than an insurance policy that has become a utility. Knowing this, it’s hard to think of a retail sector that couldn’t adopt this approach — the world where your travel insurance starts and stops as soon as you arrive at the airport linked to your AirBnB trip probably isn’t so far away.
