Start-ups, or insurtechs, in the travel and health insurance sphere have forced some significant changes in the industry. Even before Covid-19 hit, there was a lot of talk about disruptors in terms of how much disruption they have actually caused and what innovation they have spurred the industry to implement. Now, though, these changes have been accelerated.
It is not straightforward to assess whether the travel and health insurance industry needed disruptors to force innovation, or if it would have happened anyway. Indeed, the needs and desires of customers are the drivers of the insurance industry to innovate, and disruptors have just rapidly recognised and responded to those customer demands, observes Cara Morton, Group Chief Executive Officer (CEO) of Cover-More Group, a company within Zurich Insurance Group. “Today’s leading insurance companies continue to understand that everything must centre on the customer and the customer experience and innovation is just one tool they are using,” she said.
According to Joan Cusco, Global Head of Transformation at MAPFRE, there is a need for traditional insurers to constantly reinvent and transform themselves: “Customers are increasingly demanding more from their companies. They want products customised to their specific needs, and they also want us to anticipate their needs. Moreover, the rise of the internet of things (IoT) makes new insurable objects appear,” he said. “That is why we have been incorporating many innovations or technologies into our processes for years, such as automation, artificial intelligence (AI) and big data. However, the pandemic has disrupted our way of life and has incorporated new habits and solutions in the insurance business, so it has forced us to accelerate the implementation and use of these new technologies.”
Sasha Gainullin, CEO of travel insurer battleface, affirms that those who work in the industry can see how traditional players were not keeping up with changing travel patterns and the dynamic world of geo-politics: “New entrants can force innovation, but Covid forced traditional travel insurance products off the shelves.”
New initiatives in travel cover
Start-up disruptors in the travel and health insurance sectors have implemented several initiatives that have changed what customers can get from their insurers, this includes new ways to use technology to engage with customers. According to Gainullin, start-up disruptors have simplified customers’ experience by using state-of-the-art tech, a friendly and easy-to-understand marketing style, and a customer-centric approach. “Improving the products with benefits and services relevant to today’s travellers has been key, and the use of AI is a common practice for customer-centric and tech companies. Data science and AI help companies to continue to re-invest back into customer’s products in better ways,” he told ITIJ.
Cover-More’s recently launched new customer app-based proposition Freely challenges how travel insurance is currently purchased, and how insurers interact with the customers. “Not only does it respond to the way consumers want to purchase insurance, but it also changes the way travellers are protected and assisted,” explained Morton. “This is the culmination of a lot of hard work, imagination and creativity and has been built from the ground up by us to meet the needs of today’s travellers.”
It is well known that the insurance industry is thoroughly regulated both nationally and internationally. Moreover, each jurisdiction comes with its own regulatory hurdles. “Introducing new innovative technologies whilst ensuring compliance with the ever-changing regulatory landscape is an ongoing challenge for insurtech companies,” agreed Gainullin. “In general, regulators have customers’ best interest in mind and provide useful operating guidelines. The single hurdle when it comes to regulatory bodies is the speed of decision-making and response.”
Indeed, regulations in the insurance industry exist mainly to protect consumers and their rights, privacy, and data. “Therefore, insurance providers like Cover-More have these regulations as the starting point for planning and designing new customer propositions or enhancing existing products,” said Morton.
MAPFRE has created insurtech sandboxes in different countries, one of which is Brazil, where recent regulatory changes offer both challenges and opportunities for insurers brave enough to take the plunge. “While it is true that regulation can limit some market opportunities, we are optimistic about the contexts that these changes create for innovation, and we hope to see a snowball effect for the rest of the countries,” Cusco told ITIJ.
Established players’ reaction
The most direct formula is the collaboration with insurtech companies, according to Cusco. “As MAPFRE, we do that via insur_space, our fast-track-to-market programme for startups, and with investments through our participation in the Alma Mundi Insurtech Fund,” he said. “Emerging technologies are not usually created directly within the insurance world itself. To get closer to the action, we collaborate with venture capital funds that specialise in deep tech, with universities and research centres, and, of course, we maintain very close relationships with the digital giants through strategic alliances.”
innovation and emerging technologies are much more than a bet on the future: they are the guarantee of a better product for our clients
‘Freely’ is the disruptor proposition of Cover-More Group for modern travellers that is currently piloting in Australia and is then foreseen to roll out globally, affirms Morton. “In terms of purchasing other disruptor products or companies, this will always be on the table, because one is essentially acquiring a bundle of unique talent and commercial creativity.” This is what Cover-More and Zurich did in 2017 when they acquired UK-based Halo Insurance Services, an online rental car insurance platform providing customers with competitively priced, innovative products. “Halo’s products and strategy have revolutionised the rental car insurance market by taking an established product traditionally sold in a sub-optimal setting – i.e. the rental car point of sale – and delivering it online and on mobile at a much cheaper price with more comprehensive cover,” explained Morton. “Halo were very much a consumer champion and market disruptor and that was what attracted us to look at Halo in the first place. And since 2017, the Halo team has become an integral part of Cover-More’s approach to global customer propositions.”
The travel and health insurance business has multiple innovations on the horizon that are going to continue pushing the industry forward. According to Cusco, the innovations that are going to keep changing the industry are AI, predictive models using advanced analytics, the IoT and insurance on demand to improve customer service times and process resolution, as well as the increase in communication channels that allow insurers to offer customers their preferred ones. “In the insurance sector, we have been aware for years that anticipation is a virtue, and we have verified it throughout the last year. We found that innovation and emerging technologies are much more than a bet on the future: they are the guarantee of a better product for our clients. That is why it has been essential that our learnings, mechanisms, processes, solutions, and connections with third parties were prepared in advance. As an insurer, one had – and has – to anticipate and act,” he says.
In terms of innovation, Cover-More Group has launched a new travel assistance app called Travel On for leisure travellers in North America with its Travelex Insurance Services brand, explains Morton. “This is the first version of our app, and the first step in a significant new customer proposition in leisure travel.” Key features are travel advice, risk rating and security alerts for traveller destinations 24/7, real-time safety notifications based on traveller location while travelling including Covid-19 restrictions, transportation disruptions and terrorist incidents and click-to-call emergency assistance from anywhere in the world.”
Travel On is planned for roll out in Asia Pacific in the future. “Underpinning all this is the investment we have made in World Travel Protection (WTP), Cover-More’s travel risk management and assistance business,” said Morton.
Instant insurance products are the future
The rise of telemedicine is already changing the way claims are being handled and, combined with an increase in wearable technology that can provide additional metrics, this will only continue to gain traction, according to Gainullin. “New products will give customers the possibility to instantly get the insurance they need instead of getting stuck with a standard one size fits all, this gives power back to the customer allowing them to customise the products and services they want easily through their own devices,” he said. “AI, machine learning and data science will continue to disrupt the market from the aspect of product creation, pricing, claims handling and even how we market products.”