Insurance companies are not usually synonymous with digital innovation. However, a number of insurtech start-ups are changing the scene by offering customers with new and unique ways to insure their most prized possessions.
Renters insurance startups are enabling customers to insure individual items of importance quickly, without the need to speak to anyone or getting tied to a long-term blanket cover policy.
These on-demand insurers are making waves in the property insurance markets and with good reason. They are identifying customer needs and creating innovative products that provide the solutions that users want.
What This Use of Technology Means for the Wider Insurance Industry
Currently, most insurance companies require consumers to purchase policies that insure everything within their household or a particular vehicle to a certain value, locking them into long-term contracts that have little regard for the customer’s overall needs.
Start-ups have begun to unbundle the insurance package and allow consumers the opportunity to simply cover goods of importance for the period they feel it will be at risk – like when they are in use or in transit.
This trend is likely to see larger insurance businesses either with the intent to try to buy up innovative insurtech businesses or unbundle their coverage plans in a similar way that Apple unbundled their music albums on iTunes. Unsurprisingly, established insurance companies are already investing in these on-demand startups. Zensurance is one example of a company in the insurtech space that is changing the way that businesses are shopping for commercial insurance.
However, that’s not the only way these companies are growing. As platforms for the modern age, some look to raise funds through various crowdsourcing platforms like Seedrs. These companies gather investments and funding from a few hundred people who will then have a stake in the business and be able to contribute to development and ideas. To keep up, bigger, established insurance firms will need to invest in their own innovation.
Lessons For Established Insurers
Traditional insurers will need to consider a number of areas within their own businesses in order to evolve and innovate with the rest of the industry. The importance of acquiring digital skills to aid services such as dynamic pricing, reducing the cost of renewals, and coverage gaps cannot be stressed strongly enough. Doing so will allow insurers who wish to remain in the industry over the coming years to stay competitive.
Regulatory hurdles are another area that established insurers will need to address, particularly those looking to unbundle their service offerings. Finally, understanding customer needs and wants rather than trying to shoe-horn consumers into pre-packaged insurance deals is a must. Brokers willing to innovate and create insurance solutions that will keep up with these changing times will benefit from doing so.
Contrary to popular belief in the insurance industry, customers can, and will, tell companies what they want – insurers simply have to ask the right questions. For example, businesses need to be exploring what customers need or wish to accomplish, rather than which insurance solution they feel best fits their circumstances.
The essential questions that will aid traditional insurance businesses to evolve with the future of the sector are:
- Why is the customer purchasing my product/service? What does it do for them?
- What purpose does the product/service allow the customer to fulfil?
- Which problems does it prevent or solve for the consumer?
- How should we be measuring the success of our insurance offering?
If customers are asked questions like these, the answers given will allow insurers to identify opportunities and areas for innovation and growth. People still wish to protect themselves against damage and financial loss from all manner of incidents just as they did decades ago.
However, the solutions they are looking for to do this have clearly evolved. Insurers who recognize this fact and act upon it will weather this tumultuous time for insurance firms. Those who chose to ignore it will sink.
About Rae Steinbach
Rae is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to NYC to pursue her career and continue curating quality content. Rae is passionate about travel, food, and writing, of course.
Follow Rae on Twitter @araesininthesun