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Is Insurance Ready For Millennials?

How 'InsurTech' is influencing and insurance industry that's ripe for change.

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How 'InsurTech' is influencing and insurance industry that's ripe for change.

Opinions

Is Insurance Ready For Millennials?

How 'InsurTech' is influencing and insurance industry that's ripe for change.

Share this article

The insurance industry is famous for being stuck in the doldrums, with legacy systems and years old processes holding back innovation. The thriving InsurTech industry promises much-needed change, but will it be enough to drag the industry into the 21st century and appeal to the digital generation?

We’ve all been there. Staring at another insurance quote form, or scrolling down the results page of a price comparison site, trying to work out what it all means. Then just picking a policy at random because, well, they’re probably all the same, right?

If you own a business, it can be even more confusing, trying to ensure you’ve got the right protection for what you do, and the right level of cover for your size and stage of growth. Then having to sign up to a long-term contract, even though you don’t know if your business and risks will change over the next 12 months.

It’s experiences like this that have given insurance a reputation for being behind the times, confusing and distinctly customer unfriendly. Insurance is a complex world, there’s no doubt about it, and years of history and layers upon layers of process and bureaucracy have led us to a point where it can make life unnecessarily difficult for customers.

Too often buying insurance means wading through mountains of legalese, forms and policy documents. And that’s before you even come to make a claim; a process that can be equally painful, with further paperwork and often a significant delay before you see your money.

A potted history of insurance

Of course, back in the day, customers would buy insurance through a broker who would guide them through the process and help them make an informed choice.

Then the internet changed everything. Brokers were replaced by price comparison sites and aggregators, which, far from making the process simpler, often make it more complicated. You’re never sure if you’re getting a true picture of the market, or if you’ll end up with the right cover.

insurance brokers

The internet has forced insurance brokers to adapt

From a business perspective, brokers have stayed more deeply ingrained in the process, to advise on the more complex risks involved. As a result, commercial insurance has been even slower to modernise, with generic products based around old-fashioned sectors, failing to account for the real risks faced by businesses today.

Digital start-ups and SMEs have been left feeling like insurers don’t understand or meet their needs, whether relating to cyber and online threats, co-working, the gig economy, or the desire for greater flexibility.

Expectations of the Millennial customer

Compare the complexity of insurance with the simplicity of some of the other areas of our lives that have been revolutionised in recent years. From checking your bank account, to making online payments, transferring money abroad, or booking a holiday, we increasingly expect a slick and personalised user-experience and a level of customer service that insurance has been slow to deliver.

Consumers and businesses today expect the insurance experience to be quick, simple and connected, as recent research has shown. GMC Software found that consumers want to see greater use of technology by their insurers, with 56 per cent happy to see health monitors or connected cars to provide a more accurate premium.

A further 85 per cent would like their insurer to give them insights into how they can lower their premium, suggesting changes in behaviour. Yet such innovations, while often talked about, have been slow to materialise.

Enter InsurTech

Now, after years of inertia, we’re starting to see some steps forward, as a flurry of InsurTech start-ups challenge the status quo. There were 173 InsurTech start-up investment deals last year, a 42% rise on 2015, with total funding hitting $1.69bn.

Founded by a combination of ex-insurance professionals frustrated by a slow-moving industry, and tech-specialists with an eye for an opportunity, these innovators are tackling the industry’s issues head-on!

Brands like Lemonade in the US, are making the process of buying and claiming on insurance more transparent, promising to pay claims almost immediately, while companies such as Trov and Back Me Up, are offering greater personalisation, allowing customers to just insure certain belongings, rather than paying for a broad policy they don’t need.

City of London

City investors have been switched on to insurance sector start-ups

From a technology perspective, we’re seeing the use of data and artificial intelligence by companies such as Brolly, to improve customer service and more accurately calculate premiums.

Long term contracts are also on the way out, with brands like Cuvva providing car insurance by the hour, while here at Digital Risks, we offer subscription business insurance designed for the needs of fast-growth tech and media companies.

There’s so much more to come

InsurTech has only scratched the surface and much more is possible, from providing greater ongoing risk management support, enhancing the customer experience through mobile, and using connected devices to provide even greater personalisation.

Insurance must become real-time and interactive, so that customers know they have the right protection as their needs change and are rewarded for proactively reducing their risk exposure.

The insurance industry is a big beast, with lots of interconnected parts – which is part of the reason why change can be painfully slow at times. As a start-up operating in the sector, we know that you can’t do it alone; collaboration is key if you want to move forward.

But with the new wave of talented and determined innovators coming through, the industry is finally on its way to meeting the expectations of today’s demanding customer.

Ben Rose if founder and insurance director of Digital Risks, a specialist insurance provider that focuses on digital businesses.

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Is Insurance Ready For Millennials?

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