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How tech companies are powering the customer revolution in insurance

How tech companies are powering the customer revolution in insurance

Amazon’s recent flirtationwith insurance may come as a surprise to some who primarily associate the brand with super-efficient buying and deliveries. But, it’s precisely these consumer-pleasing characteristics that place companies such as Amazon in a strong position to thrive in an insurance market that is currently undergoing customer-driven change.

The experience economy

Insurance has traditionally been one of those things your sensible side (or the law) says you should buy, and an unpleasant chore more than anything else. We buy a cheap, one-size-fits-all option and disregard the jargon-heavy terms and conditions. And the idea of actually having to put in a claim and go through a long-winded, potentially contested, process fills us with dread to the point that we often don’t bother doing it at all.

This no longer needs to be the case. A new customer-centric culture of high quality experienceshas opened up opportunities for Amazon and dedicated insurtech start-ups alike to bring their offerings to the insurance industry.

Companies leading the charge

Rather than being a direct challenge to incumbent insurers, tech companies can help the established players adapt to the experience economy. An ongoing industry partnership is the AXA-backed Setoo, a B2B2C company, which provides a platform for businesses such as online travel agents to create their own insurance policies. The beauty of this arrangement is that online businesses, who know their customers better than the insurers, can easily create tailor-made products that address their specific needs.

On the other hand, some insurtechs are taking on incumbents directly. Home insurance provider, Lemonade, has made waves with its user-friendly website and its AI-powered customer response rates. The largest insurance provider in the US, State Farm, was so unsettled by the growth of Lemonade that it paid for a widely ridiculedattack ad on the insurtech.

A new way in for tech

Although Setoo and Lemonade have different business models, they both value simplicity and transparency – qualities traditionally lacking in insurance – to make insurance quicker and more convenient for consumers. This approach has introduced an unprecedented level of customer service in insurance, which consumers have come to expect in other areas of their lives such as retail.

But the technological transformation of insurance is in its early stages and competition is rife. The future of the sector will be determined by companies with the capabilities to make insurance experience-oriented as much as it will be by the incumbent insurers.

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