InsurTech In-Focus: Distribution

TigerTech
TigerTech
Jul 22, 2017 · 2 min read

InsurTech, like many tech movements driven by Silicon Valley, can trace its origins back to tech savvy consumers looking to find a better solution to their own problems and frustrations.

As with FinTech and its push to disrupt the way we bank, InsurTech has been initially run by industry outsiders who, through their frustration with the insurance industry, sought to find a better solution. With this context in mind, it is easy to see why the initial focus of InsurTech was on distribution or, more simply, how we purchase insurance.

Some of the earliest tech companies to emerge in the insurance space set their focus on tackling what they perceived to be the biggest challenge consumers faced: how to know if you’re getting the best price or not.

The result was the creation of numerous aggregation sites helping consumers compare prices for their auto insurance. Despite pushback from industry incumbents who wanted to differentiate on more than price alone, start-ups like Compare.com, Coverfox, Insurify and Cover Hound have gained significant traction and have made comparison a core element of the insurance purchasing process.

Comparison sites eventually expanded the coverage they offered from auto insurance to also provide support for renters and homeowners policies and are now challenging the business model of the traditional personal lines broker as customers become increasingly comfortable making complex purchasing decisions online.

This increased willingness to make insurance purchases online has opened the door for new, full service distribution companies to emerge. Companies like Lemonade, Trov, and Metromile have all entered the market offering an intuitive and seamless mobile and online purchasing experience.

While many of these companies are yet to match the full product offering of traditional carriers it is worth noting that a large portion of millennials will have their first interaction with insurance through these platforms which will determine how they will expect to interact and purchase insurance in the future.

The success of these start-ups should be used as a case study for incumbents to understand the purchasing behaviour of millennials as they look to develop and evolve their own products and customer experience. Lemonade, for example, has a 27% marketshare in New York for customers who are purchasing insurance for the first time and provide a great example on how to target millennial consumers.

The insurance industry is undergoing a significant change which should be seen as an incredible opportunity for incumbents looking to differentiate themselves on the customer experience rather than on price. Developing a deep understanding of what customers expect when they purchase insurance will be a critical towards developing a distribution strategy which both attracts and retains customers.

TigerTech

The cutting edge of the InsurTech landscape

)
TigerTech

Written by

TigerTech

Leading the conversation for (re)InsurTech

TigerTech

TigerTech

The cutting edge of the InsurTech landscape

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade