Digital disruption is creating turbulence for established business models everywhere. Although APRA’s strict regulation around the insurance industry means that it’s better buffered in these uncertain times than most, it is far from safe.
It’s no use saying, “I refuse to be disrupted!” either, as one CIO of an Australian-listed company was overhead huffing. It’s not a tide that can be turned: consumers will go to where they perceive cheaper, more convenient, intuitive solutions – sometimes without considering if there’s a catch. Here, we run through some recent and powerful disruptive forces already sending tremors through the insurance landscape, both in Australia and elsewhere.
Bot-driven broker-free insurance: Lemonade
“When I look at insurance, I look at an industry that is antagonistic, annoying, difficult – a process with no trust and high dishonesty.”
This is coming from Dan Ariel, the Chief Behavioural Office at Lemonade. The property and casualty insurance company (backed by Ashton Kutcher and with such reputable coinsurance partners as Lloyds) has set a provocative challenge to incumbents, promising a more transparent, simplified and hassle-free process. Though currently available only in New York, California and to renters in Illinois, it has seen an explosive growth rate since it launched in September last year. Less than a year in, it has already captured 27% of market share among first-time buyers in New York, with its story covered by outlets from Forbes to The Wall Street Journal.
With the model removing intermediaries from the process, customers manage almost every part of their insurance through interacting with Maya, Lemonade’s custom AI bot. Dispensing with paperwork by accommodating digital signatures, direct messaging and video-capture, customers interact with the bot over smartphones or on their computers to suss out quotes, sign up, cancel and get refunds from previous policies and file claims. Under this model, Lemonade boasts they have shaved claim time down to 90 seconds, with money transferred in minutes. Co-founders Daniel Schreiber and Shai Wininger – both from tech backgrounds – position themselves as a “tech company doing insurance, not an insurance company doing an app.”
The main distinction, however, is how the company understands the finance part of its business. Rather than structuring claims as a business loss, Lemonade takes a 20% flat fee from monthly payments. “It’s not our money,” says Schreiber. “We repeat that sentence like a mantra, and have it emblazoned on our office walls. We never want to be in conflict with our customers.”
What’s more, whatever premium ‘pie slice’ is leftover at the end is distributed back into the community through causes nominated by policyholders. It’s an annual initiative the co-founders have named ‘Giveback’, with causes ranging from child trafficking prevention to breast cancer research.
It’s got its head in the content marketing game too. While a large cut of its blog is devoted to sharing stories of its progress and future visions, the ‘Life Hack’ and ‘News’ categories are aimed at informing and educating its policyholders. For instance, one article lets you know that domestic insurance may cover you if otherwise good boy Lassie takes a nip out of a guest.
With insuretech venture funding growing 31% annually between 2011-2017, the landscape is ripe for Lemonade-style disruption.
Peer-to-peer microinsurance: Suncorp’s Kevin
It’s not only happening in Silicon Valley and surrounds, either. Australian insurance corporation Suncorp recently partnered with Traity – the so-called “lubricant of online business” – to launch a peer-to-peer microinsurance chatbot. Understandably, most peer-to-peer (P2P) transactions with complete strangers for intangible items have the cling of dodginess about them. Kevin restores buyers a little more peace of mind, promising to protect them on digital marketplaces like Gumtree, Facebook and Craigslist.
Driven by blockchain technology, Kevin assesses the reputation of both parties involved. In demanding accountability from the buyer, it sends would-be scammers scuttling off to take their shady business elsewhere. If and when Kevin gives the all-clear, messages between the two parties are recorded and time-stamped. Should the seller fail to deliver as promised, the buyer is guaranteed $100 worth of microinsurance for free – a significant amount, given most using P2P platforms are hesitant to part with larger sums. Still, Traity CEO Juan Cartegena isn’t ruling out enlarging the freemium service amount in the future.
“It opens a completely different story about how to engage with an “insurance service”, a companion who helps you along the way,” Cartegena wrote on Medium. “This is a small concept today, but it can lead to big things in the future.”
On-demand microinsurance: Trōv
Suncorp has its fingers in more than one microinsurance pie too. Last year, it partnered with mobile-based microinsurance company Trōv, a technology developer offering coverage for single items like laptops, photography gear and phones. Hailed the Tinder of insurance (“Swipe right if you want to insure your $2000 Apple Macbook Pro, and swipe left if you want to ends its cover,” wrote SMH), the pair collaborated to set up the Australian market as its testing site last year. Its success (growing 55% per month on average) and fine print-free promise has given it the confidence and funding to expand into the UK and America. With a 6% interest, in April Suncorp put a further $4.1 million into the company as an equity stake, on top of an initial $6.6 million last year.
“This partnership enables us to gain further insights and understand the challenges that may affect our customers,” said Suncorp CEO Michael Cameron.
With two-thirds of its customers under 35, Trov has used digital technology to meet millennials in their native environment and answer their specific needs. Built from the understanding that this itinerant generation is sometimes more attached to their devices than their place of stay, they’ve successfully offered atomised solutions while forging reputable corporate support for future growth.
Handling digital disruption with content
Digital technologies are splintering and reconfiguring the way that customers think about and handle their cover. Whether it’s for their homes, the second-hand rollerblades they saw on Craigslist, or their GoPro camera they want to take on holiday to Spain, the digital disruption revolution is serving audiences with flexible choices to sync up with their evolving habits and needs.
With disruptors promising insurance customers better ways of dealing with them, legacy insurers can’t take their customer loyalty remotely for granted. In an increasingly competitive and fragmenting marketplace, content marketing is needed more than ever to build a different, stronger relationship with clients. It can help them better understand their own relation to risk, and to live more mindfully so as to minimise that risk. It grounds them, and it serves them – and sometimes, entertains them.
In this period of adaptive change, then, content marketing is a stabiliser. In a sea of choices, it gives audiences valuable resources and tools, so that they’re more likely to opt for and stick with a plan that isn’t just the cheapest, but the one that will secure themselves, their possessions, and their loved ones best. In focusing on user-centricity in all areas, content can therefore help companies not only prove themselves the best provider to manage risk. It distinguishes you as an ally in helping your audiences lead fuller, richer, and more secure lives.