Christian Wiens is a mechanical engineer and founder and CEO of Getsafe. He is on a mission to reinvent how people do insurance, building the radically best insurance experience at their fingertips. Here he shares how insurtechs are fuelling the insurance worlds tech monopoly.
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The status quo can be quickly summarised: Established insurers are struggling with their reputation, outdated tech processes, intransparent and inflexible products, and a disappointing customer experience. To date, the industry has not delivered a modern and mobile customer experience that many insurance customers have come to expect – not just since the corona pandemic.
This is surprising, considering that the largest global insurers are large corporations with annual revenues well over $100 billion each (putting them in the same league as Amazon, Apple, or Facebook). While more and more insurers are working on offering an online policy or app, a half-hearted attempt to make paper-based products a bit more digital is not enough.
It’s also worth noting that although many large insurance companies are active in many countries around the world, their respective products and sales structures are local. A global insurance player is still missing.
Technology for global solutions is lacking
The reasons for this are not only a patchwork of different and incompatible hardware and software, but also these companies’ culture and mindset as well as competition from within. Corporates like Allianz, which work with their own insurance agents, have a much harder time offering digital products that compete directly with their own sales channel. Long decision-making paths and rigid hierarchies don’t make it easier to establish digital solutions. As a result, very few insurers have a modern IT system that would allow them to collect customer data across the entire value chain and all interfaces.
Enter insurtechs – young companies that want to turn the industry upside down with the help of technology. The market is consolidating. Insurers see emerging insurtechs as potential partners; the signs are pointing to cooperation instead of confrontation. At the same time, a handful of well-funded, serious insurtechs are pursuing an independent path with their own licence.
Thinking insurance globally and holistically
A subset of insurtechs are the so-called neo-insurers. These neo-insurers include Germany’s Getsafe, the US-based Lemonade, France’s Luko, and Sweden’s Hedvig. They do not focus on individual products (such as Bought by Many or Metromile) and they do not see themselves as digital brokers (such as wefox or Clark). Instead, neo-insurers are taking a platform approach similar to Netflix, Uber, and AirBnB, which allows them to think of insurance holistically while scaling globally. They plan to offer all standard insurance products from a single source – but adapt to the needs of a digital target group.
Their advantage is that neo-insurers have founded their companies (like all insurtechs) on a greenfield site, with a modern tech stack that allows them to fully digitise sales and the customer journey. Their platforms are able to map all processes for all types of insurance products in real time and across multiple countries, currencies, and languages at incremental cost. It’s an approach that enables rapid growth, bringing the idea of a global insurer within reach.
Upset at rates through neo-insurance
We are not currently witnessing a loud revolt against the established groups, but a creeping overthrow in instalments. In contrast to the banking industry, insurers have not experienced a crisis that would have necessitated a rapid rethink. The average customer is 50 years old and will continue to pay their premiums for another 30 or 40 years. Even the corona pandemic left insurers relatively unscathed. Insurance is a long-term business – there is no urgent need to change.
Insurtechs that are determined to stay need to be patient. Insurance is a long-term business by design. And yet, tomorrow’s insurance industry will have to change radically to remain competitive. Big tech companies like Google and Amazon are entering the insurance market, as are financial service providers, and Tesla, Daimler, and Ikea are also offering product-specific insurance solutions. The tech monopoly of insurance has already begun. The neo-insurers can lead the way.
Source: Fintech Times
