Many sports fans have a saying, often expressed on a wall of their neighborhood building: “you will never walk alone”. It shows the mass support of the entire ecosystem designed to help the team. The same goes for InsurTech—the future of the industry lies in platforms and ecosystems. Everything in favour of interconnected services, giving the user the ultimate experience.

InsurTech innovations

What users want from InsurTech innovations…

Customer behaviour patterns, needs and benefits-driven decisions shape whole companies, their products and efforts, towards technological innovation as an ongoing process. High tech like artificial intelligence (AI), Big Data, and machine learning are used on a daily basis. Alongside the software-as-a-service (SaaS) business model, technology trends ignite the minds of executives inside the insurance industry. Thanks to their efforts, companies can adjust business models and tailor the experience for paying customers.

The shift towards a customer-centric approach stems from the fact that customers don’t want the communication to be about the product. They want it to be about them. According to Capgemini’s World Insurance 2020 report, customers trust online research, social media testimonials and friends over agent/broker advice, and want to make independent decisions.

At the same time, the gap between the Millennials and older generations is virtually gone. Both groups do online or mobile transactions on a similar level (around 63%). Their risk assessment is surprisingly similar. While people go through life cycles and obtain high-value properties, get married or find new jobs, their priorities are gradually changing. Customers want to feel covered and secure, and experts say the same is true for both age groups. The difference is, the new generation expects an even higher standard of care. That’s where InsurTech innovations come in.

…and how these innovations look like

The InsurTech ecosystem is more than a network of partnerships. As explained in detail by Accenture, “in an ecosystem, stakeholders are connected not only with the aim of obtaining a commercial advantage but also of disrupting the market by leveraging innovative experiences that are possible as a result of a partnership”. In plain English: many companies are upping their game. 51% of executives say they already experience market disturbance from companies partnered up with organisations from other industries.

What can traditional insurers bring to the table while undergoing digital transformation and developing modern financial services? They have at their disposal decades of industry experience and institutional knowledge of complex regulations. However, what insurers still lack, according to Accenture, are company culture, technology, and resources. To create or improve them all, insurance companies have to ask themselves two questions:

  • How to give the customer a better experience?
  • How to enhance the already existing business model?

The answer lies in Asia, where companies have managed to combine the three values typical for modern insurance solutions:

  • Friction-reducing gateways for customers switching between related services. Just like Facebook’s Messenger allows for shopping or checking into a hotel, new insurance products present similar opportunities. They will give you complementary services and help you manage insurance financing.
  • Integrating data from different services. Having data is having a market advantage. The know your customer (KYC) approach gives InsurTechs the necessary insights to better address customer needs and market their offer.
  • Building a network of companies and apps offering products, assistance, and combined value in a cross-selling model. This strategy is similar to the social mechanism used in recommendation engines (e.g. “a customer who bought product X was also interested in product Y”).

The future of InsurTech is here

The reason InsurTech thrives in Asia is that insurance processes serve everyday, real-life needs. PasarPolis from Indonesia sells micro policies from $2. And yes, that’s the total cost. The company promotes the “instant claim” service as a fully automated feature. If your flight is delayed—you get paid, no formalities or questions asked. Gigacover from Singapore offers insurance in bulk, maintaining low rates on a month-to-month basis. One of their most popular products is freelance income protection (FLIP), which costs under 40 US cents per day. Meanwhile, CareVoice uses mobile-based and data-driven SaaS solutions to deliver a more user-friendly and less complicated experience.

That’s the level of disruption the industry must face right now. It’s not one model, it’s flexibility and focus on local needs. Some say eliminating agents (middlemen in the sales process) is the way to go, but Asian markets prove that people still want to do business with people. Customers in this part of the world don’t like to browse through possibly outdated user manuals. The Indian MintPro by Turtlemint uses agents who can quickly explain policy details by phone. The sale itself is completed via mobile. The Indonesian Fuse Pro goes even further and hires smartphone users as part-time sellers of the company insurance products.

By the people, for the people

Many Asian ideas for apps and business models come from addressing very basic needs. In many parts of the continent, the public health service is much to be desired. Waterdrop, which goes by Shuidihuzhu in China (translated as “water drop mutual help”), uses a mix of models. One of them encourages customers to make periodic contributions to the mutual aid pool. It’s insurance going back to basics: when merchants co-founded themselves in case any of them ran out of profit. It’s similar, simply adjusted for modern needs—people are helping themselves using technology, instead of market gatherings.

Another interesting company is PolicyBazaar, an Indian app operating as an all-you-need offer aggregator. The platform lets you browse for everything: from car insurance, through retirement plans, to Covid-19 coverage. Instant claims and live assistants complete the picture of a customer-first policy.

Big Data and telematics

Driving behaviour is one of the biggest risks and variables for underwriters. That’s why insurance technologies make sure this risk can be mitigated. The adoption of telematics has unlocked new business models:

  • usage-based insurance (UBI)
  • pay-as-you-drive (PAYD)
  • pay-how-you-drive (PHYD)

There’s already a good use case. A British company O2 has launched a car insurance product that rewards users for safe driving. In a nutshell—the safer the drive, the lower the insurance cost.

There’s also an interesting case of using peer-to-peer (P2P) business model. The German Friendsurance connects a group of people (from 10 to 16) via their mobile app. Focused on small property risks, like a broken car window, the startup offers users a pre-agreed cashback from the collective fund. This InsurTech innovation wouldn’t be possible without knowing how people live their lives and how to help them.

IoT and InsurTech

Harnessing alerts from the comfort of your home is one thing. They can be about weather, traffic conditions, etc. What about when you’re out of home? Or in a situation that involve a possible payout? InsurTech in 2022 is rapidly changing. It’s not only about a mobile application for claims. Now it’s about metrics.

The trend is to move towards usage-based insurance models that will decrease risk and reduce claim numbers and volume. Since constant monitoring with smartwatches, smartbands and similar devices is here, companies may want to introduce micro insurance packages. It will meet shifting demands and on-the-spot requirement for a product that people forgot to purchase before the trip. Another trend is connected to other industries. Insurance companies can monetize the risk but also work with appliance, automobile and various equipment manufacturers to reduce risk. Reduction, management and monetization through IoT – this seems to be the future.

Increased investments in applications

Did you know that less than 20% of insurance companies in North America offer a smartphone application for their customers? This will likely change as people not only want to be connected but also in control. Having a product that can generate claims on-the-go, monitor spendings and possible investments (there are companies that let you buy an insurance and invest in stocks at the same time) is a must for many customers.

Nowadays, simple claim processing is not enough. It’s about availability and constant connection with insured. Having said that, we believe North American companies will try to modernize their infrastructure and products. Why? Because according to Capgemini’s World Insurance Report 2021, over 70% of all customers expect a mature omnichannel experience. At the same time, McKinsey predicts competitiveness of insurances in the next five years will significantly depend on an efficient cost structure and the intelligent automation of core processes. In other words, companies must evolve yet again.

Of leading 183 North American life insurance companies, almost 40% still don’t have an online customer portal. The same goes for property/casualty insurers. Workers compensation insurances also don’t have an equal representation in the online space. Only the biggest workers’ compensation insurance companies in North America (like Hartford Financial Services, AmTrust Financial or Chubb Ltd.) offer customer portals. Online presence still has to be discovered or improved, by some organizations. We believe that 2022 and beyond will be the turning point for some businesses in that regard.

This is a group walk

We are observing a strong trend of going back to basics. Insurance innovations come from cutting the “red tape” and including customers in the decision-making process. One click for a claim, one click away from every other functionality. Sports events are powerful because they generate emotions. Insurance is a touchy subject because it deals with emotions. Walking side by side with your customers allows you to create or improve the application. InsurTech software development isn’t easy so let’s walk together on this journey.