Insurtech versus traditional companies: 7 topics where the former dominate the latter

As already happened in other industrial sectors overwhelmed by the digital tsunami, insurance companies are also beginning to see the perimeter of their own organization and their own offer fade away. Technologies bring flexibility, integration and scalability to next-generation products and services

Published on 10 Jan 2018

The innovative strength of Insurtech is its ability to create processes, products and digital systems from scratch, using different technological combinations to design new business models, playing ahead of both needs and demands. Insurtech winning strategy is to successfully address and resolve the critical points that exist today in the relationship and experience of customers compared to the offer of traditional insurance companies.

Experts talk about Insurance Disruption, describing the evolution of a substantial change that only in the last two years has led the insurance world to rethink itself and its benchmarks.
The value of the offer is not only changed by the type of products, which are increasingly closer to a mode of consumer offer, with an on-demand and pay-per-use approach taken from the service models triggered by the digital economy. Insurtech, in fact, is reinventing all the channels of relationship and interaction, but also the way in which demand is understood in order to elaborate an increasingly specific supply, moving from a proactive model to a predictive one through an increasingly indepth and smart use of available data and algorithms.

Increasingly liquid policies and services
As already happened in other industrial areas overwhelmed by the digital wave, the perimeters of the organization and the insurance offer fade.
The digital tsunami sweeps traditional insurance branches, bringing new, more liquid models that embrace flexibility, integration, scalability and personalization, assuming ever wider connotations: cars, health, home, life, for example linked to monolithic and verticalized policies, predefined and pre-coded over time, are being reformulated to be dynamically reinterpreted according to the life time of each policyholder, who may have different needs, at different times and in different places.
Digital culture, in fact, changes customs and habits: according to Accenture, 96% of traditional insurance companies are sure of this. Analysts talked about it some time ago, during the 16th edition of Insurance Day presenting the results of its latest research entitled Insurance Technology Vision 2017 highlighting that 86% of Insurance Executives agree that their organization must innovate at a faster rate in order to maintain their competitive advantage while 87% are aware of how technology can bring to the business a non-linear but exponential advantage.

7 things Insurtech are making a difference in
The many strengths of Insurtech undoubtedly include its ability to increase customer interest and encourage value-added interaction. McKinsey analysts identify 7 strategic drivers making the difference.

1) Increased connectivity – Only in Europe digital brokers, such as Knip in Germany or Clark in Switzerland, are using artificial intelligence and robots to provide automated advice and support, using a fully digital user interface and fully virtual distribution models.
2) Targeted Products – Insurtech is able to offer customized products, starting from very low prices thanks to progressive contractual formulas, designed according to the actual use of the customer and/or the addition of a package of diversified services. Cuvva, for example, allows customers to purchase daily car insurance on request using simply and directly their mobile phone. Kasko and Simplesurance offer additional insurance cover for purchases on their e-commerce websites, offering policies as extra-bonus opportunities.
3) Full automation – Through an automated approach, Insurtech is able to reduce costs and accelerate processes to meet customer expectations. SnapSheet, for example, offers automatic end-to-end claims management, while the mobile app “Claim shake and go” provides a unique service for claimants: in the event of an accident, the user on site can interact directly with the service operators by simply waving his or her phone.
4) Data-based decisions – Thanks to the access to different data sources, from black boxes integrated to vehicles to sensors in mobile devices, from apps to telematics detection and measurement systems, from social networks to browser monitoring systems, Insurtech matches a lot of information, linking it to automatic learning systems that allowing to elaborate and then offer innovative and customized products and services. In the USA, Metromile, for example, offers car insurance based on mileage calculations so that drivers who travel cheaply pay less. FitSense allows life insurers to use data from wearable technologies to formulate more attractive and cost-effective policies according to the customer’s lifestyle.
5) Social commitment – Peer-to-peer insurers, such as Friendsurance, Lemonade, Guevara or Inspeer, use a variety of social engineering to create a target consisting of real groups of insured who benefit from low-interest policies, building a type of quality relationship with each client. This is the case of ERSTE Digital, a digital broker that sells through social media channels (including YouTube, Instagram and Facebook) offering insurance coverage to those being the new market targets.
6) More frequent interactions – On-demand insurers such as Trōv are able to offer consumers an on-off switch that, via mobile phone, allows them to activate or deactivate the coverage plan, so as to ensure consumer coverage. This is certainly a new way to propose the service but also to define a more specific offer, where, when and to whom it really needs.
7) Digitalize the moment of truth – The Zmot, which stands for Zero moment of truth, is the moment before the first moment of truth (the moment when a customer actually purchase a thing) and the second moment of truth (which is when customer takes possession of a product or service). Why is it so important? As it represents the moment when the idea is followed by the real decision that leads the consumer to want a certain good or service. Improving the experience of each individual customer, resolving any kind of criticality that may exist when buying a policy is a priority for Insurtech that has understood many things of digitalization compared to the incumbent. PolicyGenius and Brolly, for example, are designed to address customers’ concerns about being over or underinsured. In the same way, Bauxy allows its customers to immediately start processing complaints: just take a picture of the invoice and send it by e-mail.

In conclusion, the horizons of development are so many. Insurance companies need new talent capable of seizing the opportunities that open up with the digitalization of relationships and services. We don’t just need technology: we need new entrepreneurship capable of imagining disruption.

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Donatella Cambosu

Scrive di tecnologie, startup e innovazione da oltre 15 anni. Dal 2015 collabora con il Gruppo Digital360, in particolare con le testate Startupbusiness, University2Business, EconomyUp. Collabora con InsuranceUp sin dal lancio del portale avvenuto nel 2015 e ha maturato un'ampia esperienza in ambito insurtech.

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