Customers are jumping ship for a new fleet of digital insurers, writes Jon Reay, Founder of Rewrite Digital.Travel insurers have been exposed to a new breed of competition, and customers are switching to providers that best meet their needs. Some insurers are introducing new models that don’t hold customers to year-long contracts, use data to more accurately assess risk and customise products and adapt to the changing needs of today’s consumers, like those who rent out their homes on Airbnb. So, what does this mean for traditional travel insurers? Should they stand firm or join the competition? Digital, and its rising influence on all businesses, is rapidly disrupting the insurance industry. You’re probably not investing in digital as much as you should.
New entrants are shaking up the marketAlmost US$2 billion was invested globally in insurtech firms in 2017. These startups are heavily funded, growing rapidly and eroding market share from incumbents. Examples include: Global Warning System, which shifts the focus from incident resolution to risk prevention using data intelligence and geo-location to provide real-time, targeted notifications to travellers; Pablow, which enables property rental hosts to offer white-labelled travel insurance to their guests independently of rental payment; Revolut, a fintech startup now joining the insurance market, providing travel cover that activates and deactivates automatically based on your location; and Trov, which challenges traditional home and travel insurance products with an entirely mobile-based platform for insuring valuables wherever you take them, with instant quotes on a pence-per-day basis and a message-based claims process.
Traditional players are making waves tooBut it’s not just insurtechs forging new paths in digital. Many insurance heavyweights are also getting involved. Some are building their own in-house teams from scratch, but Capgemini’s World InsurTech Report 2018 cites the importance of collaboration between incumbents and startups. While the insurance giants may lack agility and innovation, they bring generations of brand recognition, customer trust, and regulatory know-how. Earlier this year, Zurich set up its Innovation Foundry in order to meet the ever-changing needs of consumers and promote a culture of innovation throughout the insurance industry. An example initiative includes the insurer’s partnership with easyJet to dynamically offer personalised travel insurance based on destination, time of year, group size and flight add-ons. AXA, meanwhile, has launched ‘Fizzy’, a travel insurance product that automatically pays out compensation for flights delayed for more than two hours. It doesn’t just streamline the claims process – it completely removes it.
it’s not just insurtechs forging new paths in digital. Many insurance heavyweights are also getting involved
Customers go where the experience isAlthough price is the leading factor in choosing an insurance product, customer experience is increasingly important. Today it’s so easy to switch providers. Loyalty is dead, consumers are switching more than ever, and they are following – and expecting – great digital experiences from insurers. Traditional insurance providers get a poor rating from consumers. New breeds of insurer that have designed customer-centric products and services from the outset typically score much higher. There is a huge opportunity for insurance companies to use digital to improve the customer experience and customer satisfaction, for example by speeding up claims processing or providing real-time information on the status of claims. As digital-first platforms continue to infiltrate the market, the expectation from consumers will grow. Insurers slow to adapt will see their satisfaction not only stall but decline.
It’s time to upgradeThere are five steps every travel insurance provider must take to stay on top of digital:
- Put digital at the centre
Make digital an instrumental pillar of your business, resource it well and continue to invest in it.
- Rethink your products
Create products and services that align to changing consumer needs and stand out in the market.
- Harness data effectively
Lower premiums and reduce risk by using data to assess pricing more accurately, support risk prevention and automatically gather evidence for claims.
- Better meet customer needs
Improve customer satisfaction through automation, personalisation and transparency. Enable experiences that customers can interact with the way they want to. Test and learn, take on board what people say and do.
- Continuously review your digital maturity
Know where you rank in the market now and reassess every quarter. Don’t be left following a strategy that’s not fit for the future.