We may have lots of InsurTech Ingredients, but we really just want cake!

How many companies do you hear say, we are customer centric? It's the holy grail of slogans!

Pretty much all of them right? To be fair, I can't imagine many would ever come out and say we are NOT customer centric. Many will also tell you we are employee/colleague first. I see this more and more, especially when it comes to purpose, values and direction. There's enough inspirational quotes and Branson's, Benioff's out there to say (and actually do!), do the right thing by your people and everything else will follow. I truly agree here.

Going back to the first point though - genuinely every company I know talks about being a customer centric company but I have to say I now rarely believe this. Maybe I’ve become cynical. What I think most companies mean is they:

are Product Centric, first, then and only then Customer Centric.

That is, what’s in our kit bag that we can sell to you. From an Insurance perspective, the net result is we as the end consumer end up with multiple product (centric) offerings and do the orchestration and administration ourselves. This is just the way it’s always been. There’s a whole bunch of stats out there showing the average consumer has between 12 and 17 individual insurance products. Think about it. home, motor, pet, life, gadget, protection, health... the list goes on. Then add up the number of people per household. What happens when you have 4 adults (2 parents 2 kids) is that 40 policies? For grudge purchases (I hate the word) that's a whole load of grudge! Another way to validate this - when you call your insurer and they ask you for your policy number before your name!

If we innovate and design products in silos, we create great individual products, which of course we still need - but do we miss the big picture?

Equally, it creates a fragmented and poor end-to-end experience for the customer, leaving them to do all the hard work, very much as we have it today.

We may as well buy products from multiple providers which in most cases we do to be fair. There are very few composite carriers that have got this right (or are moving towards it) that can equally offer the breadth of services.

Add to that, we advertise in the same silos (UK at least) on our Price Comparison sites (PCW's) and focus on how long it takes to get cover. Home Insurance in 8 mins, Travel in 3 mins and Life Insurance in just 3 mins! It reminds me, LV did a study saying we spend more time choosing our annual holiday than we do buying life insurance. That just seems mad to me!

How are we meant to engage with customers or get them to fall in love with what we are offering? Ultimately, we need new ways to address this in my view!

So time to mix things up: when is Insurance NOT Insurance?

Putting my insurance lens on, I am a firm believer of falling in love with the things we want. I don’t want... (well I do, but most people who don't work in our industry and sadly more and more that do)

• I don't want auto insurance - I want the ability to drive from place to place. 
• I don’t want buildings insurance. I want provide the cover I need so that my mortgage company gives me the money to buy a house. 
• I don’t want health insurance - I want the help to stay healthy and out of hospital and so on. You get the idea here.

Partly this is the move from reactive to preventive capabilities - or at least that's what we say in the insurance circles - but in reality, do customers really care what we call it. See here for the Great InsurTech debate which covered some of this.

I LOVE YOU

To help move away from these multiple product silos, key for me is the addition of some sort of value added services. Sounds a bit much - but in simple terms - things customers actually want, not necessarily (just) the insurance product underneath it. The same products, this time shielded by a services layer you actually need, engage with and more. In some of the feedback I have had on this from people, it puts the services layer right next to the customer, but I don't think it matters too much - it could be either or - the principal is the same.

This has a number of fundamental impacts, both positive and negative on the insurance industry. (feel free to add more in the comments here)

Positives:

• greater customer centricity as the value added services layer does the orchestration/administration
• removes burden on customer at product level - makes our life's more convenient and gives us time back
• Improves the number of products per customer for the carrier (usually an important or at least measured metric across the industry - and ranges anything from 1.1 per customer to 6)

Negatives

• May or is likely to reduce insurance premium written, however as a net result increases services/non risk income, often more profitable.
• Is there enough transparency? Will the regulator like this?

That leaves the new model looking more like this, the value added service layer getting bigger, the insurance slices shrinking, and all the lines blurred between the once product centric and siloed innovation world. It also means we innovate at the customer level, not the product level.

Feels like a WIN WIN WIN.

From a regulator perspective, I also appreciate the FCA announced its dissatisfaction recently with the industry distribution chain on not enough focus on Customer Outcomes with a number of other statements including:

Firms having a purpose and culture with insufficient focus on customers, particularly in relation to value and customer outcomes.

So what do these Value Added Services look like?

There are tonnes of examples here that can be called up. It's also not just personal lines, it's anywhere that I can augment with a service - in the same way I pay for uptime on aircraft engines, or I do from Hartford Steam Boiler given their IoT acquisitions, with preventative maintenance and servicing vs buying the policy outright in the first place.

Some initial examples of these could include:

For insurers the next question is do I need to own those services or could I just orchestrate/partner with multiple other providers to focus on the right outcome? In many instances - we do this today’s already. Think about emergency home repair in your home policy or legal cover on your motor cover. These are still at a product level but not owned by the insurer themselves.

The key difference is - what did the customer come out to buy in the first place? 

Step out a level and start to aggregate these at the customer (need) level not the (individual) product level. 

One of my favourite examples is this from Peugeot. Just Add Fuel, see here. It plays to many things for me - from mobility as a service to brilliant orchestration of the end to end things you need to drive, servicing, tax, roadside assistance, tyres and of course insurance! Making it super convenient and hassle free! I suspect many more will head this way.

I often refer to this embedded and invisible insurance. Many folks don't like this term or general principal, asking what happens to all those who spend millions on identity, brand and direct marketing? Will the regulator like this, is it transparent enough? Why would they give the customer up? Critical questions indeed. I’ve also often talked about the winner to all this will be the most efficient manufacturer. A great example of this is what CoverGenius are up to, integrating to the commerce level not making the customer do the swivel chair integration!. Hear from Mitch Doust too on the InsurTech Insider podcast Episode 31 here on what they are up to and how they enable embedded insurance experiences for their customers.

Of course this doesn’t just apply in insurance, it’s true in almost every industry. How do we as organisation identify and remove barriers so that customers can fall in love with what we offer?

Another great example from match.com - for any single parents wanting to go on a date, get up to 3 hours babysitting free of charge. Now, I’m not single but finding a babysitter is nearly impossible where we live anyway - so this is a great value add that removes the barrier to finding love! (Pun intended here!)

Beyond Insurance

So let's assume for one minute, that the top half of my customer circle is filled with tens of insurance products that we all have. Now expand the the services we engage with on a regular basis and are likely to love as little as insurance. I quickly arrive at utilities and banking with many lessons and observations that I think can be worked through for insurers too. Both hot topics when you start to look at Open Banking to Auto Bill Switching.

Utilities

It’s fair to say we love these (read: care as little) as much as we do about Insurance. It’s pretty much a commodity product with some big legacy incumbents and some startups. Sound familiar? The new startups have some unique and interesting propositions, be it great UX (bulb is my favourite) 100% renewable and more. It’s a regulated industry. There are price comparison sites helping you find the best/cheapest option based on your usage and preferences. But just like insurance, there is a level of inertia to switch . energy providers. That has as a net result had the watchdogs and regulators introduce Tariff caps and more.

I’m not sure I have too much sympathy for folks that do nothing or don’t shop around, especially when it’s so easy now. It’s constantly on the national news and in the national papers.

That said - there are a number of things going on here that may, just may apply to insurance and if they do have material impacts for how we engage insurers, but also plays nicely into the future of Value Added Services. 

specifically automatic provider switching!

There’s been a whole host of these firms pop up, and fail over the years. In the UK we have Labrador, Flipper, WeFlip and now AutoSergi from the price comparison website giants themselves plus many others.

With Flipper you pay a monthly subscription of just ￡2.50, but it's free until you gave made savings. Labrador make their money on the commission from switching. In the USA you have BillShark and this is just the tip of the iceberg. The Guardian ran a piece late last year on - too lazy to switch, how we can help people change providers for the best deal, in some cases saving ￡1,500 per year. There are easily 10 plus players in this space now, although not without challenge. I recall Flipper has been to the brink and back and just this month, it's reported that Labrador has gone bust - here.

challenges aside, take the idea of auto switching to insurance???

May 11th - Add - just seen this, and thought worth adding here. 40,000 flips since launch and 6,500 in 2 months! hello insurance!

Would most of us actually care if our journey out was insured to a different provider to the journey back, or house insured with provider X one month and a different one the next? Maybe the thing I'm really interested in is my home or elderly relative monitoring that I'm happy to pay a premium for with the backup of an insurance provider (pick anyone you like within my broad service level I have subscribed to). If the answer is no, what should we be doing now instead? Equally, if this is true, then it changes the business model for the PCW's too.

The final ingredient in the cake, Banking 

For banking - I genuinely see this as a transaction, and I’m sure all my FinTech friends will disown me and tell me I’m wrong. As much as I love all of the new Neo Banks and challenger capabilities such as Starling, Monzo, Yolt, Emma and 100's of others - my spending and life seems to take place on my credit card, not here. I see all these as simply transactional. 

While I have moved to a Neo Bank (and properly moved, shutting down my old account) - it genuinely does pretty much what I had before, yes, maybe a shinier interface, yes, they are more engaging - but I have my money in, and then bills out. It's not that complicated. That said, in my banks case - what set's it apart is the Market Place, which already enables access to insurance through a number of providers, as per below to it's 500,000+ customers as well as many other services and utilities to make use of the open banking & transactional data.

Likewise, Monzo, another one of the UK (currently) Neo Banks, who could be worth up to $2bn if their latest rumoured raise is correct, (just like Lemonade!) Whats interesting here is that Monzo have somewhat of an iconic following, after their Hot Coral card with over 1.5m customers giving them a very unique opportunity to service this customer base with more than just banking. What intrigued me most recently, was in a recent blog - they talk about some of the things they think about building into their proposition going forward (not yet confirmed) include the following. Sound familiar? 1. Bill Switching, 2. Clearer Fair Insurance & 3. Add on Services - to name but a few ideas!.

So with all these ingredients, how do we make cake?

As you will see from above, there are a great deal of component parts here. How or who turns this into something easily consumable by customers like you and I. It will be not much of a surprise to say many services already exist that offer all of this in one, and much more.

The whole bill consolidation and optimisation space is really interesting to me. One of my favourites here is - Onedox. Imagine taking all of the above and wrapping it into a single service. A website, an app that allows you to add:

• household bills including broadband, media, phone, streaming services. 
• other stuff like when my MOT is due, my TV licence, my local council tax and much more 
• Then download all the bills (pdfs) to one place without me having to log in anywhere else.

I can add multiple providers, I get 1-click Energy Switching and a neat app to store all this stuff in one place, rather than log into my separate providers & accounts.

Keep going - add Insurance providers (below) and soon insight through Open Banking. See here for their vision on that particular one.

Onedox is just one of the providers - I find it super helpful and already noticed behaviour changes in that I don't need to go to any of the other providers, when it all exists here. Others exist also too. Youtility was recently featured in the national press. Ultimately, this leads me back to one of my original and ongoing questions.

who will own the customer of the future?

Times are changing. We want our time back. Period. For insurers this means, we can no longer offer something people can't fall in love with, or want last in the chain of thoughts. We have to find ways to blur the lines. Why cant insurers take the front foot on this one, continue to create new and orchestrate partnerships that add value. It is also quite possibly a double edged sword, taking a knowing and meaningful step away from the customer process, until perhaps they need you!

Summary

So in summary. I have a few key questions that keep coming up again and again:

• When is insurance not insurance? Will we focus on the service not the underlying cover? 
• Who will own the customer of the future? Is it the utility, bank or insurance company?
• What other industries have done a great job at orchestrating their own and other service into a single convenient market place or offering?
• How does the UK Market differ from Central Europe to the USA or Asia
• Is this something you would subscribe to if offered?

I can summarise this story in 5 points, they would be:

1. Value added services blur the lines between product silos, changing the premium and profit mix for carriers.
2. Insurance (can) becomes embedded & invisible into the underlying service
3. Services move beyond Insurance Only, plenty of ingredients, but we eat cake!
4. Watch out for Open Banking & Utility Switching - if they win the race, where does that leave us?
5. This is happening already.

Ultimately, there is no point serving customers all the individual ingredients and saying, go make it yourself. They really just want cake! (and yes, I did make this one myself).

As always, would love your thoughts, builds, challenges on this.

Nigel Walsh | @nigelwalsh