Engagement: Where the insurance customer comes first

For me, the defining characteristic of InsurTech is the focus on the customer. By that I mean actually putting the customer at the heart of the insurance proposition. Through building a digital experience that suits the way the customer wants to engage, not how the insurer wants to engage.

Incumbent insurers will argue that they have always been customer centric. But they dont mean it the way that the InsurTechs mean it. You only have to line up digital examples from InsurTech start-ups with traditional insurance offerings to see the difference.

BTW, I'm not making a "bash the incumbents" point. My point is that the InsurTech startups have brought a new perspective to the table. And it's now rubbing off with the incumbents. Which is a good thing all round.

Value can beat Price as the key buying criteria

Incumbents can also give credit to the InsurTech start-ups for unlocking the 'race to the bottom' conundrum. Treated as a commodity, insurance has been oversimplified and price become the single determining factor when buying it.

The big problem in any price-only driven market is that cost of sale is a killer. Price points go down faster than sales and marketing costs and this continually squeezes the whole supply chain. In the highly intermediated world of personal lines insurance, friction and inefficiency simply compound the cost (margin) issue for insurers.

Which is why the emergence of "engagement insurance" is significant to the insurance industry. Enabled by tech, this is where insurers give something more than the insurance protection bought by the customer.

Last month, at The Digital Insurer conference in Singapore, James Eardley from SAP Hybris presented the findings of a current report from Ovum “Driving Engagement through Value Creation”. The report found that customers would pay higher premiums for value engagement.

Interestingly, when you look at the demographics, the Under 35s showed the highest willingness to pay more.

Metromile are the pioneers of Engagement Insurance

For the latest issue of InsurTech Insights, I spoke with Metromile CEO, Dan Preston (this is the link to the full article).

Metromile are one of those InsurTechs that were around a couple of years before the social media hashtag #InsurTech took hold. But there is no doubting that they can legitamtely be labeled as an InsurTech (unlike the growing number of established software companies claiming to be "25 years (or so) in InsurTech". They're missing the point on InsurTech, IMHO).

The thing about Metromile is that they put the customer first when they built their first of a kind pay-per-mile insurance product. But this wasn't just about providing a cheaper way to buy auto insurance. Metromile added value by including customer friendly features into the app. Like, where's my car? Or, street sweeping schedules so that customers could avoid parking fines. Or details of local maintenance and servicing establishments. All features designed to help the customer.

Creating Value for EVERY Customer

Here's the thing about engagement insurance that Metromile figured out. When you add value through the insurance product, EVERY customer gets a piece of it! Compare this to the traditional insurance experience. A customer either makes a claim or they dont. If they dont make a claim, they get nothing in return for their premium (except piece of mind and legitimacy).

And if they make a claim, they may be satisfied with the experience, or they may not. And many are not!

InsurTech Insights: Customer Engagement in a Connected World

The November issue of InsurTech Insights is expertly edited by Andrew Dart. As I said earlier, I wrote a feature on Metromile and insurance engagement (the link to access the article is here).

Alongside me, KPMG perspective on this subject was provided by Louise Portelli and Adrian Clamp. Their closing remark is;

It’s a major challenge for many insurers to truly increase customer engagement. But it’s something that they need to tackle as an urgent priority, if they are not to be pushed aside by new digitally smarter competitors.

And I couldn't agree more!

Rick Huckstep is an InsurTech thought leader, keynote speaker and investor to tech start-ups. Rick is the Chairman of The Digital Insurer.