Matteo Carbone – 4P’s of insurtechs

4P's of insurtechs

Matteo Carbone is an opinion leader in the insurtech industry today as one of the most prominent on the market. He created the Connected Insurance Observatory, an international working group, first in Europe, then in North America, dedicated to insurtechs. Matteo participates in numerous conferences around the world throughout the year. He unfolds his theory of 4P’s of insurtechs, and I wanted to make a presentation for a long time.

The 4P’s of insurtechs

First of all, you can listen to Matteo Carbone in his presentation at the 2017 Global Insurance Symposium in Des Moines.

You can also find slides at this link, if you are an aficionado of his prose, without listening to his wonderful English accent!

Key points to remember

According to Matteo Carbone, insurtechs can intervene on 4 axes:

  • Productivity : be more efficient
  • Profitability : get a better technical result
  • Proximity : to be closer to the customer and his needs
  • Sustainability of the portfolio (the term it uses is “Persistency” which means persistence over time, and therefore no attrition): Build a profitable portfolio on the long run term, with a small rotation.

In the absence of these objectives, there is no interest in innovating because the solution will not bring anything useful.

Telematics

The second subject addressed in this presentation is telematics, because it is one of the key topics of Matteo Carbone. The Swiss Re report which I was echoing a few months ago is directly worked with him, when it comes to the Italian example.

3 topics to consider:

  • The connected object : often a black box connected to the vehicle
  • Insurance coverage : and the notion of incentive reduction associated with it
  • Associated services : access to a set of additional services that can be provided for a fixed fee.

Under the arguments that telematics allows of itself and of course a selection of the best risks ( Note: it is questionable ) and a better controls of the compensations ( Note: that on the other hand, I share ), he comes to the conclusion that the financial result of the insurer is improved thanks to this technology.

4P's of insurtechs

It is also possible to rework the customer experience on all of its use of the vehicle and the different needs that might be relevant. Note: this aspect is absolutely essential, because it is from the use that one deduces the exploitation that one can make technologies.

4P's of insurtechs

Finally, the figures it presents show that attrition will be lower with telematics than without (11% instead of 14%).

In short, that positive points!

My conclusion

I share a lot of Matteo’s conclusions.

By reading, you will understand that the questions of use and business need interest me first. The 4P’s of insurtechs are a key to reading that is interesting to keep in the lead.

On the Telematics side, I am also convinced of the short / medium term prospects for the subject. I invite you to read again my note on it . Let’s discuss if you want to consider a deployment!

Gras Savoye – Insurance Markets 2018

marchés de l'assurance 2018

The broker Gras Savoye, belonging to the Willis Towers Watson Group, published in september 2017 an interesting economic note on the transformation of the insurance markets 2018. They come back therefore, by business line, on current trends.

Overview

Overall, the French insurance market is rather stable:

  • The world market is down slightly
  • France remains an important market (5th world player), with just over 200 billion euros of premiums
  • Personal insurance accounts for 75% of this figure, and sees a rise in pension premiums
  • Property insurance is subject to strong competition, and is experiencing a significant increase in claims, which affects the underwriting results. This is due in particular to climatic events.

In the details of the 2018 insurance markets

In brief

Given the richness of the report, it is complicated to synthesize it, and I prefer to suggest that you refer to it if necessary. I prefer to present the plan!

insurance markets 2018 insurance markets 2018

Each theme is treated according to 5 axes:

  • Capacity / Appetite
  • Price
  • Deductibles
  • Warranties
  • Flexibility

Some key things to remember

  • 3 alternatives to risk transfer are presented:
    • Structured Insurance: covering the multi-year consequences of new or complex risks. (terrorism, pandemics, strikes, etc.)
    • parametric insurance : or index-based insurance, which i have already talked a lot here
    • Mutli-line / Multi-year approach: which reduces volatility
  • D&O (Executive) policies continue to evolve and adapt to changing risks. The tailor-made is put on this profitable and dynamic market (new regulations, cyber risks, etc. which increase the risks for managers).
  • There is growing interest in combined fraud / cyber collateral, although these mounts do not always yield the best proposals. Note: It is understandable that customers are always looking to hedge against an unknown risk, but perceived as critical .
  • Kidnap & Ransom products are in full swing, because of an international geopolitical context that is sometimes hazardous.

Conclusion: My opinion

This report is a mine of information, very technical, but essential to a good understanding of the complexity of heavy risks. A disadvantage on the bedside table, but imperatively under the elbow!

In hollow, one sees there appear, as often, the insurance products which could be generalized tomorrow. The trends observed, especially on cyber, fraud or regulatory aspects are in this sense good indicators of the future.

Insurance, innovation and behaviorial evolution

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A conjunction of elements led me to reflect lately on the link between insurance, innovation and behavioral evolution! It is an opportunity to give you my point of view on the issue.

Insurance is often considered reactive. Indeed, it reacts to events called claims to compensate for the residual loss.

Campaigns, sometimes famous (I think about road safety), are intended to transform behavior upstream to reduce downstream losses. For the insurer, it is an initial investment that finds its ROI in reducing the indemnification. We are here in a model in which the insurer is a preventer and no longer just a compensator.

However, a lot of debate has taken place in recent years to give the insurer a more proactive societal role upstream to reduce risks and thus change behavior. The embedded telematics (with Pay-How-You-Drive offers for example) has often been seen as an incentive for good practice: if you drive better, I make you pay less. Ditto for connected bracelets of health: if you play sports, you will have a reduction.

However, we note that these approaches do not always work or that they are not effective. However, do not we say “chase the natural will come back at a gallop”? The challenge is therefore twofold:

  • Find new ways to influence behavior.
  • Adjust offers to better stick to individual behaviors rather than standardizing responses.

Nudges at the service of behavioral change

Context

It will probably not have escaped you that the last Nobel Prize in economics (2017 ) was awarded to research on the so-called behavioral economy. To learn more, read here . This is also called benevolent manipulation.

insurance innovation and behavioral evolution
Cover page of the book Guide to Behavioral Economics, free download here . Thanks to Yuri for giving me the paper book.

I will not attempt here to detail fully the possibilities offered for insurance, because it deserves to think seriously about it. Anyway, I invite you to read the very good article from one of my competitors on the issue. Here is the example cited:

For some American motor insurances, the declaration of the mileage achieved in the year (n) conditions the premium for the following year (n + 1). The average rate of under declaration is estimated at 15% compared to the Km actually made. A Nudge has been tested to try to improve the statements. Instead of signing the declaration on honor at the end of the document, the researchers put it on the heading of the document, before the declaration. This simple change results in a 10% increase in the number of Km declared, a gain for the insurer of $ 48 per insured. The simple reorganization of the structure of the document, the architecture of choice, makes it possible to modify the behavior of the insured and thus to increase the income.

Some examples of nudges for insurance

Here are some examples of nudges that are or could be relevant to insurance depending on the objectives:

  • Reducing risks: The incentive to drive better.
    • The solution implemented by Liberty Mutual and relayed here consists of a mixture of gamification and information to drivers. Thanks to embedded telematics, the solution allows everyone to consult their driving information and to consider how to drive better and therefore how to reduce their premium, the discount rate being updated live every day for 3 months before being fixed.
    • By extending the exercise outside the pure scope of intervention of the insurer, we can note that tracing, on the road, shorter white stripes gives the impression of going faster and encourages you to slow down without even realizing it.
  • The incentive to subscribe:
    • A study relayed in the book above (London Economics and YouGov in 2013 for the FCA) showed the impact of the presentation of the insurance offer in parallel with another product. This is the case for example when buying the insurance when buying a mobile or cancellation insurance.

 assurance innovation and behavioral evolution

Beyond the questionable ethical aspect, this shows the influence of the distribution strategy on the choices of insured.

  • The choice of priorities: Last-mile problems (read for it this article and that one)
    • Segmenting the populations can be done according to a probability of underwriting. By identifying 3 segments (low, medium and high effort) using artificial intelligence, we can then determine who has the strongest probability of traveling the last mile to the subscription. These populations, for which the effort is small, will be treated differently and maybe receive, when the time comes, a little nudge! This can be a text message, a small message on the screen or a welcome email when giving the little extra that will be enough to convince them.

I will come back to these questions later with other detailed use cases to imagine more precisely how to use these methods.

Adjust offers

Most of the current offers are very standardized. They take into account a need considered identical for all insureds. At the time of individualization, why could not we consider adapting the coverage more finely according to the real risks of the insured. I can already hear the reactions: “This is the essence of our job”, “We already do it”, the contracts offer options and choices of levels to ensure according to his needs. “Very good, but in truth, can one think otherwise?

The Wilov speech is very interesting on this point. Most auto insured drivers drive less than 50 days a year. Yet they are covered full time. By inventing the “Pay-When-You-Drive”, their starting premise is to charge drivers only when they drive! The price is not necessarily much lower, however, the feeling of the insured is much better (provided that the user experience is the appointment of course!).

The approach of Inspeer goes in a similar direction. Starting from the premise that changing the behavior is complicated, Emmanuelle Mury and her team are working on the notion of affinity groups that go around the use. Clearly, they identify similar behaviors, and create the corresponding supply. I will come back to this in a dedicated article!

In short, the notion of supply is still too much seen today as unique, identical for all. Indeed, IT systems did not allow to easily and quickly deploy variants and customization, or the illusion of personalization was at the marketing level. It’s time to move to a higher level!

 

And you what do you think? When do we start to revamp your offers?

Insurance innovators – Future of insurance 2017

future of insurance 2017

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Insurance Innovators (an offshoot of Market Force, which I had already talked about here for their report under the same title ) has just published the future of insurance 2017 (Future of General Insurance Report 2017).

7 themes are discussed (for a better readability I separated into several pages):

  • Innovation and Disruption
  • A changing regulatory environment
  • The future of underwriting and pricing
  • Value-added services
  • Touch Millenial Generation
  • Insurance in the Age of Machine Intelligence
  • Fraud in a connected world.

Written in partnership with the Chartered Insurance Institute , and sponsored by IBM, Sas and Smart Communications , this report is generic, but of quality. Market Force believes that insurers are poised to innovate and transform to keep pace with insurance companies, but the pace of transformation is still too slow. A tip: Act now! Continue reading “Insurance innovators – Future of insurance 2017”

Lexis Nexis – Best practices for predictive modelling

best practices for predictive modelling

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Lexis Nexis published this summer a white paper on the best practices for predictive modelling , or more precisely on the steps to follow to implement this type of solutions for small commercial.

According to them, 4 steps are necessary for a product creation of this type:

  • Ideation
  • Design and development
  • Implementation
  • Monitoring

So far nothing transcendent, isn’t it? Let’s check it out!

Ideation

Successful ideation assumes that two conditions are met: a strong sponsorship and a cross-functional team.

The responsibilities of this team are as follows:

  • Identify and validate the business problems to solve
  • Generate ideas on how to solve these issues with predictive models
  • Select the best ideas
  • Highlight the benefits of predictive models
  • Calculate implementation costs
  • Determine the ROI and justify the use of predictive models in relation to another solution
  • Establish acceptance of the topic among the teams.

Design and development

The report is focused on contracts / products for small businesses. The suggestion is then to go through an “insurance score” to analyze and estimate the risk and to price it, according to a probability of losses.

3 steps are needed:

best practices for predictive modelling

  • Data mining : nature of data, sources, refresh frequency, etc. For example, it is possible to use historical loss experience data ( Note: obviously …! ), but also credit data, or public data about the company. In a more detailed way, the geographical location is relevant. ( Note: at this point, note that we do not use anything complex! )
  • Model creation and validation : This is to determine, on the basis of a set of data, patterns or correlations that recur. We are here in deductive mode, we start from data to deduce a model. The challenge is to identify which data plays a role in achieving the desired goal . Then, it is possible to test the identifier models on data and production processes, to ensure that, when capturing the data, it is possible to categorize a new customer using the defined models.
    • Here is the kind of report that can be generated to define a number of groups to automate the subscription with 3 possible actions: acceptance (right), visa application (center) or automatic refusal (for worst groups).

    best practices for predictive modelling

  • Regulatory review : This aspect specific to the American market (but finally quite close to the regulatory aspects valid everywhere), suggests to compare the required data with the specificities of each state, and to apply, where applicable, restrictions.

implementation

The implementation is based on a few key steps

good practice predictive models

Monitoring

Finally, monitoring the relevance of the model assumes, on the one hand, to track the use that is made of this product, but also to measure its effectiveness.

best practices for predictive modelling

Monitoring

Finally, monitoring the relevance of the model assumes, on the one hand, to track the use that is made of this product, but also to measure its effectiveness.

best practices for predictive modelling

Tracking : Scores must be tracked when applied and when modified before application. In these latter cases, it is important to understand why and possibly modify the model iteratively to improve it.

Efficiency : The most important thing is to make sure in the long run that the model is good for achieving the business objectives that were originally defined. If this is not the case, it must either recalibrate (keep the mechanisms, but readjust the valuations), or rebuild it!

Small bonus on best practices for predictive modelling

Moreover, on this subject and always by Lexis Nexis, I invite you to consult this video, which includes some of the fundamentals:

best practices for predictive modelling

SwissRe – Global Insurance Review 2017

global insurance review 2017

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SwissRe has just published its global insurance review 2017 and its 2018 forecasts. The document is available at this link (Global insurance review) .

Innovation is essential, but to identify new answers, I remain convinced that we need to understand the state of the current market. This type of report is therefore essential to refine the grid of reading of what is happening in the world around us! This is particularly right as they give valuable insights into innovative solutions!

The four main themes covered in this document are:

  • Continued cyclical economic recovery at the macroeconomic level, although risks of instability persist;
  • Obviously, a big subject on the natural disasters of the year! These are causing great difficulties for all the systemic insurers in the area and therefore even more so for reinsurers;
  • Life insurance re-insurers adapt to the new deal;
  • Stable emerging markets in non-life and strong growth in life.

Key Points from the 2017 Global Insurance Review

More globally, here are the 10 points that SwissRe puts forward:

  • The rise of protectionism in large markets: in the United States, but also Brexit or the situation in Catalonia. This phenomenon is however not uniform (for example Latin America is liberalizing)
  • Monetary policy : what about the gradual end of quantitative easing?
  • Cyber ​​risk : The market is growing rapidly, and the stakes are high, particularly in terms of the quantity and quality of data needed for risk monitoring and pricing. A particular focus is to read p15 of the doc on this subject. Indeed, an estimated growth of 30% per annum of this market over the next 5 years should not be underestimated.
  • Increasing auto claims : More and more miles traveled, more traffic and distracted driving are the first drivers. The key is always technical results.
  • Brexit and the UK insurance market: Depending on the UK exit format, premiums should be reduced by 8 to 20%. This is a considerable shock on the market.
  • Innovate to increase the scope of insurability, especially in the “commercial” segments: I come back to this point just after
  • Losses related to Natural disasters (hurricanes).
  • Protecting Floods : Tools now exist to assess flood risk, and collaboration with states is needed to ensure the best coverage of this risk.
  • IFRS17 : Investments will be needed around the data to ensure good data collection and analysis.
  • Insurtechs in China : I’ll come back to this point below.

Increase insurability

On the perimeter of the “commercial” contracts (on which I am working rather seriously lately), innovation brings new solutions.

Swiss Re cites, of course, parametric insurance solutions, coupled with a global vision of risk, that solve complexities of the process at the time of the claims. On the other hand, it does not bring any real additional value talking about premium reduction for example.

The most important point about these contracts is that it is now possible to insure elements previously impossible to cover. This offers interesting growth opportunities. For example: image loss, product recalls, weather protection, or financial risks of increasing energy prices. This is now possible thanks to better access to risk data and a better assessment of its consequences.

Insurance can therefore strengthen its position as a protector of corporate investments and offset the risks of earnings volatility.

global insurance review 2017 global insurance review 2017

Insurtechs in China

A small recap is proposed on the issue of insurtech in China, where the growth of Zhong An is particularly impressive (insurtech largest insurer of the world).

2 successive waves took place in China:

  • A first from 2001, around the online distribution, which brought the online market share to almost 8%;
  • The second in recent years, which exploits new technologies and especially big data (telematics or insurance to use / UBI)

Prospects can still open up to cover the ecosystem of e-commerce, and even consider the entry of new players outside the insurance world.

The Chinese regulator seeks to constrain certain segments (such as online lending), but it is generally rather a support for innovation.

global insurance review 2017 global insurance review 2017

My opinion on the global insurance review 2017

Always of very good quality, the Swiss Re reports are full of information and figures. One could blame them for their lack of pedagogy and the austere aspect of their reports, which prevent a diffusion to the greatest number. It may be the price of quality!

Deloitte – The growth of connected cars insurance

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Deloitte published in November 2016 a European study on car insurance entitled The growth of connected cars insurance. This study is carried out for the second year in a row on approximately 15,000 consumers and in 11 European countries (Austria, Belgium, France, Germany, Ireland, Italy, Poland, the Netherlands, Spain, Switzerland and the United Kingdom) .

Briefly, Deloitte believes that these products are promising, that customers are ready, and that it remains to work the business model by moving towards services. One of the main elements to remember is the notion of service platform, presented at the end of the study .

Current situation of the European market

Deloitte presents the figure of 97 billion euros for the size of the European market (premiums issued) of motor insurance in 2015. They also present a potential of connected cars insurance by 2020.

connected cars insurance

Three lessons are to be remembered:

  • Overall, the potential is 17% (or € 15bn) of connected cars insurance, with two countries far ahead: Italy (see Swiss Re case study on this topic ) and to a lesser extent the UK. These two countries have a potential of respectively 27 and 23% of their market. Note, in Italy, there are already 4.5m insurance policies concerned.
  • The study shows a significant change between 2015 and 2016: the intention to change insurer increases more than 15% in Europe. For the authors, this indicates a transition towards a more volatile market, and therefore a necessary transformation. (Note: In France, we observe it through the consequences of the law “Hamon”)
  • 28% of respondents are willing to share their data with their insurer. At the extremes, France and Germany were the most cautious (27% and 25%), and Belgium, the most interested (40%).

connected cars insurance

Short summary sheets are presented by country and make it possible to explain specific local situations.

Sharing data

While insurers do not always have good press, customers are nevertheless rather ready to share their data with them. Insurers have a relatively better image than many other types of actors.
connected cars insurance
In an increasingly standardized, competitive and fluid market, this shows the appearance of a momentum for insurers. It could be interesting for them to exploit these good conditions to position themselves in this market and thus set up criteria differentiating from their competitors.
Nevertheless, it’s impossible to talk about connected cars insurance without talking about analyzing and processing the data collected. It is therefore a question of organizing the transition to more big data in order to benefit from real targeting skills.

Which potential customers?

6 categories of customers are identified by the study, with a very different interest towards connected insurance contracts:

  • Segment of curious elderly policyholders
  • Faithful elderly

connected cars insurance

  • Refractory aged insured categories
  • Versatile young people insured

connected cars insurance

  • Young faithful insured
  • High-Premium Insureds

connected cars insurance

If these categories deserve a little refinement, they already allow the authors of the study to make an international comparison.

connected cars insurance
Excerpt from the detailed country / segment analysis

What motivations for underwriting connected cars insurance?

Several scenarios were proposed to the respondents.

connected cars insurance

Consumers appear much more likely to share their driving data than data from social networks. In addition, as expected, price reduction is the main motivation that can encourage sharing of information. On the other hand, the provision of complementary services is well reflected in the expectations of customers.

The study then presents two interesting visions showing the correlation in the valuation of services and the confidentiality of data, first by country, then by population segment.

connected cars insurance

We will note here different profiles for the two most advanced countries (Italy and United Kingdom).

connected cars insurance

What services?

Is connected automobile insurance, in addition to an opportunity for differentiation in the market, the opportunity to renew or develop the service offer. This is what the authors of the study think.

Categories of Services

3 categories of services were studied:

  • Automotive related services : troubleshooting assistance, theft notification, etc.
  • Non-automotive services : geolocated promotional offer, etc.
  • Data analysis and driving behavior services : Travel and expense information, comparing driving with friends, etc.

Respondents then had to indicate whether they would agree to share their data in order to benefit from one of the 17 services offered.

connected cars insurance

4 services are therefore clearly of significant interest (more than half of the respondents would be willing to share their data):

  • free troubleshooting assistance
  • automatic assistance in case of emergency
  • theft notification / tracking of stolen vehicles
  • free oil change or vehicle maintenance services

These services (in relation to the automobile) could then serve as levers for insurers in order to gain maturity on the other 2 categories of services.

Case / smartphone application

Finally, the study shows a preference in almost all countries for a box installed in the vehicle rather than a smartphone application. A nuance is to be brought: the versatile young insureds show a rather opposite behavior (54% of preference for the application). As it is in this segment that there is a strong potential for development, this nuance is important!

As the choice of equipment is fairly structuring, insurers will have to choose the segments of the population they want to target as a prerequisite for any approach.

The usual worries of the insured are not excluded from this study. connected cars insurance

The issue of transparency in the use of data is therefore essential. In addition, three approaches are to be taken into account by insurers to integrate social responsibility issues:

  • ethical dimension of data usage
  • possibility to feed a new type of relationship with the insured
  • taking into account real risk prevention / loss reduction.

In the end, it should be clear to insurers that the data collected should be used for risk reduction and not just for risk selection. We find clearly in our study that the assessment of services is related to security issues.

The service platform

One of the main elements of this study is the notion of service platform. Insurers have the opportunity to move from a value proposition focused on claims management to a wider range of services around the mobility experience.

Connected cars insurance could be the product that will allow the insurer to renew its relationship with the insured, adding more frequent touch points.

This implies for the insurer to be interested, beyond tariff benefits, in the entire ecosystem of car insurance. More specifically, the insurer will probably have to participate more deeply and invest these new segments to reinvent the user experience.

The choice that presents itself is simple for the insurer:

  • Either do nothing and take the risk of being overwhelmed by new players that will spill over into its business segment
  • Either position itself as a service platform, which will allow the insured to access an ecosystem of partners.

The experience of a few players in other markets (eBay, Uber, TripAdvisor, etc.) shows the potential of such an economic model. These entities are indeed able to operate light and flexible structures that adapt quickly to the needs of consumers.

Auto insurance is already mature enough, and offers a clear environment. This will surely be one of the first branches for which we will have to reinvent the operational model. The first to launch will have a certain competitive advantage.

Deloitte is presenting a proposal for a range of services that could be addressed.

connected cars insurance

Heading towards insurance products redefinition

insurance products redefinition

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An example given by Alexandre Lebrun of Facebook at the Insurection event brought up a subject that I wanted to discuss here. This is the need for insurers to start thinking about insurance products redefinition.

Example

The example quoted is the following:

  • Alexandre Lebrun consulted the patent plans for the first washing machines.
  • It was then a question of proposing a technical tooling which made possible to reproduce by the machine the manual action carried out in the antique laundry
  • It was only afterwards that the industry modified the plans to adapt the washing process to what the technology could do more efficiently (the inside rotation that we know nowadays).

Underlying consequence

Technological change or innovation brings new solutions.

As a first step, it is a question of using the new technology to make more efficient the actions carried out previously. In other words, it is about consuming fewer resources (time, money, people) to achieve the expected objectives. For example, technologies such as RPA open up horizons for automating recurring tasks. So it’s about doing the same thing as before, but doing it better.

Another level of analysis is open with the surge of new solutions coming to the market. Like the washing machine, it becomes necessary to reinvent the insurance business and the way to realize it to adapt to the technical possibilities.

Attention, it is often said in IT projects that we must be careful not to be too influenced by the tools to not constrain the framework of expression of business needs. But the current business teams are themselves often constrained by a historical framework of thought that is not always relevant. Business need is therefore as this watermelon, constrained in its mold.

insurance products redefinition

The arrival of new tools, or new technologies must therefore be a pretext for an opening of borders, the extension of the horizon of possibilities.

Focus on the impact on supply: towards an insurance products redefinition

The assumption expressed above may have impacts in many aspects across the entire insurance value chain or business processes. However, I want to treat it under the axis that seems to me the most striking: the products!

A Standardized Offer Policy

Insurance has always been very product-oriented: a car product, a home product, a health product, an additional health supplement, a borrower insurance, etc.

In each of these products, the offer has become standardized, sometimes subject to regulations, sometimes under the influence of the market which is stabilizing and becoming standardized.

So we see products appear, all very close in terms of covers and exclusions, the comparison is not easy. Although initiatives here and there exist to simplify the terms and conditions, we still see exclusions against the fission of the atomic nucleus or this kind of thing (in French sorry, but the same examples may exist in english):

insurance products redefinition insurance products redefinition

It is not useful to say who are the insurers concerned, everyone, in his own terms & conditions, can find this kind of fomulation.

First impact of innovation

As we have seen above, innovation aims first and foremost to improve the current way of doing things.

The companies then call on insurtechs considered as “enablers”. These are intended to enable better management by reducing irritants, streamlining processes or improving operations.

Take the example of auto products, and claims management. All insurers have long sought to improve their process.

In that objective, they were able to deploy:

  • Process Improvement
  • Implementation of dedicated management tools with complete workflows
  • Deployment of solutions for teleexpertise
  • Opening of selfcare services

At this stage, it is not a question of modifying the products, but of adapting the context that goes around!

2 nd impact of innovation

Where the exercise goes further is that innovation imposes a new way of thinking.

On the claims management, to go further, it was necessary to automate the settlement of claims.

The first option was to speed up all operations, but that was not enough. For some time now, automatic payment solutions have appeared because of modified products. I am thinking here of parametric insurance, for example:

  • Weather insurance: if it rains more than a certain number of mm of water over a certain period of time ( as in this SwissRe contract in HongKong ), the conditions are met for an automatic claims settlement.
  • Cancellation Insurance / Flight Delay: Several solutions have recently been deployed. If a cancellation is announced, it is possible to adjust the loss automatically.

This involves two new elements:

  • A data feed, which is not structured today: Meteo France does not yet allow a systematic provision of forecast information or weather observations, companies or airports do not publish all the time via interfaces / API flight data.
  • The structuring conditions of the products must be adapted to these new rules.

Products as they exist today leave too much room for interpretation and therefore require human intermediation to be treated. Who says human, says subjectivity. When we add terms & conditions and very numerous exclusions, we get a lassitude of the customers and the famous phrase: “the insurers are all thieves! “. At this level, there is no question of a lack of security, just an offer that does not voluntarily cover the complexity of the needs of insured, to achieve controlled price levels, on the one hand and profitability, on the other hand.

Policies to cover needs

Thus, three progressive consequences are to be expected from the innovation on the offers of the insurers.

  • A simplification of the products,
  • An objectification of the products,
  • A coverage of needs, rather than standardized products.

Simplification

Gradually, the general conditions of 30 to 60 pages should tend to disappear. The goal is not only to express the same thing more clearly ( as we saw in Cardif ), but above all to remove the rules that pollute the customer experience. So it’s not so much the writing that has to be simple, but the product. Thus, there should be no question of looking for dressings in technology , but rather make confidence in the insured by a better understanding of what he is obliged to make sure!

Objectification

Once the simplification is in place, it is a question of objectifying! It must then make the contract dependent on objective rules, supported by recognized third parties or formal findings! At this stage, it will be necessary to consider that a home insurance is activable as soon as a water damage has taken place, and this, whatever the reasons which triggered it (check therefore in your contracts if the overflows are covered ). A borrower insurance will be acquired, as soon as the incapacity is noted, without playing on the terms (check if your contract covers you in case of incapacity to realize “any profession” or “your profession”, just a term which changes a lot things).

In short, it will obviously cost more to cover, but the price will be offset by customer satisfaction and the reduction of churn on the one hand, and the reduction of management costs on the other hand. Moreover, technology now allows the application of anti-fraud controls a posteriori and thus remove doubts on that side.

Needs coverage

A last level of maturity appears, via the two previous points, as well as by the new uses that appear on the market. Thus, when you are insured by car, you are insured for you as the driver of your vehicle. What about collaborative uses (you rent your vehicle on Drivy or rent another vehicle).

These needs are now covered by other insurance products. The insurance of tomorrow will surely have to cover “mobility”, and will include all your travel operations. This can be by driving your vehicle or rental vehicle, driving a bike or scooter self-service or by taking the train or plane, etc.

Home insurance will cover tomorrow the need for housing. Thus, there will be both a minimum insurance when you do not occupy places, and full insurance for where you are at the time you are there. With this in mind, Wilov’s proposal for auto insurance is interesting: you are insured all the time and only pay when you drive.

And you, what do you think of this necessary insurance products redefinition ?


PS: For atypical vegetable gardeners, molds for fruits can be found on the CoolGadget website !