How Insurtech Offers New Hope for a Customer-Focused Future

The insurance industry is desperate to have its tables turned over. Anything that can bleach stained traditions and offer new points of entry for customers is a “due yesterday” deliverable. The first step in any revolution is to expose the problem. That couldn’t possibly be more obvious for an industry that continues to be a notorious public enemy of the people.

So how can emerging tech turn the tides? From a business perspective, there’s money to be made. Accenture projects that the profit boost from introducing intelligent insurance solutions could range anywhere from $10-$20 billion. But, from a user perspective, these profits could come from a more value-added, customer-focused place.

Bad Rep is an Understatement

Tied to accidents, natural disasters, damage, and, of course, death, insurance doesn’t exactly have cool kid status. But the fact is, during these stressful “life comes at you fast” times, customers this industry to deliver more than a warm blanket. They need real solutions and a plan to move forward. So far, it’s lacking on every front.

Painful experiences compound with tedious claims processes, unexpected denials, and other generalized ridiculousness. And to make things more complicated, it’s not like insurance is always a consumer choice (but that part is a policy–not technology–issue).

If there’s anything good about a downtrodden reputation, it’s the immense opportunity for improvement. That’s where insurtech comes in. Compare these Net Promoter Scores (NPS), which offer a numerical measure of customer satisfaction:

The NPS of insurtech startup, Lemonade is 70.

The insurance industry as a whole? < 20.

Apps: Making Lemonade is a Good Start

Fintech apps push traditional financial services companies to offer digital conveniences. Insurtech startups and products similarly work to yank down the festooned cobwebs on the insurance industry. Progressively optimistic mobile apps like Lemonade, for example, build momentum with user-friendly functionality.

Carefully calibrated to engage customers with a positive, encouraging tone, this app’s fresh air travels far beyond brand voice. The basic architecture of insurtech is wholly different from that of traditional companies. For example, Lemonade explains, “Unlike any other insurance company, we gain nothing by delaying or denying claims (we take a flat fee!)” With its API and sales platform available to other companies, while directing its underwriting profits to charitable donations, Lemonade squeezes a bright path forward.

Accepting Help Shows Strength

Some legacy insurance companies develop joint ventures with new digital platforms in hopes of enhancing services to attract new customers. While apps like Lemonade are stand-alone companies, other insurtech apps act as a coverage sherpa.

Users are always looking for direction and guidance tools. Apps like Insureon and Covr deliver on this need, steering users to the “best fit” insurance policy for their situation. These apps focus on offering an alternative to independent agents, rather than competing with established insurers as a whole.

Adding value with a different approach, WeGoLook maintains a pool of thousands of gig workers — including many drone operators — whom it calls upon to investigate damage reported by policy-holders. The platform offers these services as a compliment and UX upgrade to traditional auto and home insurers’ claim processes.

On-Demand Functionality Promotes Consumer Control

On-demand insurance solutions allow people to base their coverage directly on usage, or switch it on and off based on need. Apps like Trov and Metromile present another illumination for selling policies, by taking coverage to a more granular level. With all transactions taking place via the phone app, there’s no paperwork involved. And it gets even better…

Metromile uses an in-vehicle IoT device, charging customers a mileage fee each month for the distance they actually drive. Trov allows customers to turn personal item coverage on or off with a single swipe. These apps expand upon Lemonade’s philosophy of consumer control. Customers can make real-time changes to their policy coverage, within the app, at any time.

When Insurance Operations Get Digital

Positive change isn’t restricted to disruptive startups and app development. Being viewed as monolithic, inside and out, can hurt. Insurtech looks to make a swift, strong impact when it comes to operational efficiencies. Smarter digital solutions and automation open up opportunities to streamline operation workflows within traditional insurance environments.

As a whole, insurance has been slow to go digital. Only 15% of insurance customers say they feel satisfied with their insurer’s digital experience, which means it’s still stumbling around (and likely trying to adjust to agile iteration). Fortunately, the trailblazers who are implementing intelligent solutions are going all in–introducing updates at every point in the insurance cycle:

• Underwriting
• Claims
• Distribution
• Pricing
• Customer service

Big Data for a Big Industry

Big data and IoT works to propels insurance away from actuarial averages and toward underwriting on the basis of individual behavior. The Big 3 coverages continue to evolve as personal data informs action.

Life Insurance

Averages determine insurance profits. That’s a cold truth when it comes to dependency on human life. But as customers gain deeper insight into their own biologies through genetic testing and health IoT, they can make more informed decisions around life insurance. The industry will have to adjust.

In an article entitled “The Death of Underwriting and Underwriters,” the Insurance Journal states: “[Insurance companies] will be adversely selected against by well-informed insureds.” As a result, insurance companies will try to get their hands on the same information to match premium costs to long-term survival probabilities. Legacy insurance company John Hancock has already discontinued standard life insurance policies. Instead, they offer “interactive life insurance,” based, in part, on data transmitted from customer fitness tracking devices.

Health Insurance

Health insurers try to glean as much information as possible about customers: primarily looking backwards at medical history, peppering in health questions about smoking and weight to round it out. Anything additional is a matter of actuarial statistics. Bigger health data works to refine this process.

The new expectation is real-time health information, on every individual. Fitbit offers a “Health Solutions” program through which it markets its enterprise health platform to health insurers, as well as to employers. Health insurance companies need to be open and willing to empower people to take more control over their physical and mental wellness. They also need to proactively take part in this movement, emphasizing user experience, and adjusting KPIs.

Auto insurance

The vision: a new auto insurance model based on personal driving behavior rather than the trends of average groups. IoT continues to build upon this vision. In-car telematics (IoT sensors) track hard braking episodes and other driving behaviors. They also monitor mileage, providing objective evidence in response to accidents. Simply stated, better drivers enjoy lower prices.

The longer-term revolution on the horizon takes shape in autonomous cars. As this plays out, insurance will gradually shift from insuring the driver to insuring the vehicle itself — including its tech network.

A New Machine for the Machine

Accenture suggests that “Human-Machine Collaboration” is the future of insurance. Their 2018 report predicts intelligent solutions, which combine the efforts of human beings and machines, will “achieve returns in excess of 10 times their investment in the technology.” Over 90% of the respondents reported planning or considering the use of AI in their underwriting or claims processes to:

• Lower customer service and claims costs
• Reduce fraud risk
• Enhance portfolio management
• Create larger product impact

Empowerment Cannot be the Enemy

Redefining the insurance industry in terms of user satisfaction is no small act. It’s going to take riding the waves of emerging technology, but it’s also going to take genuine, continuous investment in consumer demand. Regaining consumer trust requires prioritizing user experience, depending on real-time personal data, and redefining success metrics around consumer behavior.

Originally published on Mutual Mobile, “How Insurtech Offers New Hope for a Customer-Focused Future.”