Digital XP: The New CX
The 4 tenets for creating a better digital experience.
Today when we make a big financial decision, like which car to purchase or where to invest our money, we want it to be as easy, personalized and stress-free as ordering a pizza.
Enter insurtech. Similar to the way fintech is disrupting the financial services market, insurtech uses technology to develop innovative solutions within the insurance industry. Although insurance companies have managed to maintain the status quo for decades (if not centuries), the emergence of insurtech startups over the last 10 years is resulting in seismic shifts.
While some insurtech companies are positioning themselves to challenge major insurers, others are working together with established companies to transform specific areas of the insurance landscape. In the Post’s 2020 Insurtech 100, these companies took the top three spots, and all three pose a significant threat to traditional ways of doing business:
Other notable companies on this year’s list include:
Insurtech companies are on the rise primarily because they offer ultra-customized policies with better pricing and coverage to suit each individual. This diverges from traditional insurance, which uses general risk categories to ensure profitability for the company, but results in some people paying more than they should. Insurtech solutions use available data from devices, such as your GPS or FitBit, to build more specific risk categories and deliver competitive pricing.
By using individuals’ data, insurtech solutions are also better able to keep customers engaged than their more traditional counterparts, while at the same time actually helping them lower their risk levels and payments. For example, WeSure uses data analytics to provide real incentives, such as offering health insurance discounts if users get active every day.
Insurtech innovations result in more competitive pricing for consumers, but they can also produce cost savings for insurers too. For example, companies can cut operational costs by using virtual assistants powered by AI and deep learning to help policy seekers find the insurance coverage they need.
While some brokers may find their business disrupted by platforms like CoverHound, which helps people compare auto insurance rates and negotiate policies, there is also an opportunity for advisors to use insurtech AI and machine learning to optimize their services.
Insurtech brands are building their value propositions of ease, accessibility and immediacy specifically to address the traditional pain points consumers encounter with established insurers. Perhaps the biggest boon to insurers incorporating insurtech is the ability to target a younger demographic of Millennials and Gen Zers who want fast, online, AI-powered solutions.
Everything from its marketing to its social impact policies, is designed to appeal to policy seekers who care about saving time, having an easy experience, finding a personalized solution, getting the best possible price and knowing their dollars are doing good in the world.
As more insurtech startups aim to become licensed carriers and gain greater market share, they’re coming up against the complexities of a highly regulated insurance industry. The success of most major insurance companies is due to their cautious approach. And, of course, a cautious approach is diametrically opposed to the “move fast and break things” mentality of startup culture.
The recent case of WeSure being fined by Chinese regulators for misleading advertising is just one example of the need for insurtech companies to appropriately manage risk and understand the regulatory landscape. Perhaps the biggest challenge lies in creating a model for how old and new can effectively collaborate with one another. Insurtechs will need to incorporate the skills and expertise of traditional insurers, just as established insurers will need to be willing to disrupt their culture, workforce and technology to leverage the possibilities of insurtech.
For any business with a large @home workforce, read this.