- 18.02.2021 12:30 pm
- 19.05.2020 11:15 am
- 13.03.2020 10:00 am
Digitalization has reached the insurance industry later than in other sectors. The pressure is coming particularly from the customers themselves: They expect a consistently digital insurance experience - a trend heavily fueled by the coronavirus crisis.
Insurance by smartphone - customers today in particular want digital solutions. One third of Brits want to take out insurance completely digitally because of the COVID-19 outbreak. The rising interest in digital insurance is independent of age or gender.
While COVID-19 influences preference of buying channel, it does not impact how Brits in general think about their insurance coverage. More than 36% believe that their own insurance coverage is sufficient in view of the events surrounding the pandemic; while only 8% feel they need to change something.
The need for psychological safety - especially in times of crises - is at a constant high. Based on its research, Getsafe predicts that millenials in Europe will purchase 1 billion insurance policies over the next ten years, amounting to a combined value of around €300 billion. Reimagining the way people experience insurance through innovation will be key to tapping into this potential.
The established insurance companies are aware of these customer expectations - but consistent implementation is still missing. For most established insurers, meeting changing customer expectations and fully exploiting the potential of digitisation is a mammoth task. They are not lacking in willpower, but the hurdles are great.
On the one hand, life, health and property & casualty insurance sectors are often separated into independent legal entities, which often work with different IT systems. On the other hand, cost and competitive pressures in recent years have led to smaller insurance companies being bought up by the "big ones" without integrating the IT infrastructure. The result is a patchwork of incompatible hardware and software in which customer data cannot be exchanged within a group or across multiple departments or divisions. Under these circumstances, it is difficult to realize a digital customer experience.
In addition, most insurers work with brokers who, in turn, know their customers' lives much better than the insurers themselves. The motor insurer knows what kind of car the customer owns, the liability insurer at least knows the family circumstances, the household contents insurer can draw conclusions about the income and assets of the customer. But even full insurers do not have an infrastructure that allows them to bundle customer data over the entire contract term and all interfaces. In particular, the question of where customers come from remains unanswered despite cooperation with brokers.
Insurtechs, on the other hand, have two decisive advantages here: they build their insurance solutions without any inherited burdens, so to speak "on a greenfield site". Obsolete IT infrastructure, sceptical employees who act according to the motto "We've always done it this way" - a foreign word in startups. Agility is the order of the day here, and while established insurers need months - if not years - to introduce new software, Insurtechs spurn reflection in favour of implementation. The (partially blind) activism of the "boys" may cause head shaking among established insurers - but it is also clear that their speed is an important strength.
Companies such as Lemonade in the USA, Bought By Many in Great Britain and Getsafe in Germany are working intensively on platforms with which they can record and analyse customer data in a structured manner. Not only do they lay the foundation for feeding self-learning algorithms with classified training data, they also manage to make the insurance experience simple, transparent and digital.
Figuratively speaking, a manoeuvrable and partly D.I.Y. sailing ship is competing against a giant steamship. The steamship has an experienced crew, well-rehearsed processes and a venerable captain who has proven his skills over many years - but the sailboat sets the pace and the course. The steamer can better withstand a storm on the high seas, but as long as the sea remains calm, it will reach its destination much later than the manoeuvrable sailboat, despite its much greater power. And: Due to its more precise data, the sailboat may not even run into the danger of a storm.
Amazon, Spotify and Netflix have shown: Technology has dramatically changed the way people interact with products and services. Buying insurance has to become as easy as shopping online.
In times of social distancing, digital insurance is gaining momentum, while the need for psychological safety - especially in times of crises - is at a constant high. Based on its research, Getsafe predicts that millenials in Europe will purchase 1 billion insurance policies over the next ten years, amounting to a combined value of around €300 billion. Reimagining the way people experience insurance through innovation will be key to tapping into this potential.