Insurtech: Putting power back in consumer hands
We buy home insurance in case of a flood or fire. We buy life insurance in case we die earlier than expected. We buy travel insurance in case of a cancellation or overseas injury.
But we usually don’t want to buy insurance products. Our reluctance might be because we judge the external risks to be low, because we feel policies are too generic and not suited to our needs, or because we’re confident our choices can reduce risk to the extent that paying policy premiums simply isn’t worth it.
Would we be more inclined to pay for insurance that doesn’t treat us all as equally susceptible to risk? There are insurtech providers and insurance companies banking on the answer being ‘yes’.
Insurtech: Automatic, systematic, telematic
Insurtech startup ThingCo provides a highly advanced dashcam called Little Theo, which records thousands of pieces of data and converts them into a driver score. Then it’s up to us whether we want to share this score with insurance companies. Of course some people are better off keeping that information to themselves, but if you’re competent and cautious the data has the potential to get you a well-deserved discount on premiums.
This approach avoids lumping people together based on group averages, which may unfairly penalise one individual while being overly generous to another. It’s perfectly possible for a teenage boy to be a sensible driver and a middle-aged mother to be reckless, even if this isn’t reflected in big picture statistics. Digital innovations such as telematics tech developed by insurtech companies take the individual into account and passes the buck back to us.
Wearing your heart (rate) on your sleeve
An even more personal expression of the rebalance toward the consumer comes in healthtech. Wearable fitness devices such as Fitbits have proliferated in the last few years, and devices such as Apple watches have the same facilities for recording step counts or monitoring heart rates.
These devices can help people with their bank balances as well as their waistlines. North American insurance firm John Hancock has had its ‘interactive’ life insurance policy in place since 2015. It rewards customers who hit exercise targets – recorded by fitness devices – or log healthy food purchases through an app.
The financial incentive is as good as any to get moving so it’s a no-brainer for those of us that need the motivation. But it’s also an attractive proposition for the insurance industry. A paper from Munich Re advocates “evidence-based risk determination” because said evidence clearly indicates a positive correlation between inactivity and mortality. If we hit our step count we’ll be alive longer to pay our premiums, which is excellent news all round.
Insurance industry 2.0
These examples are just a couple of ways digital innovations and insurtech are putting the power back in consumer hands, and there are plenty of companies doing similarly exciting things. With their help, the insurance industry will shrug off the stereotype that it is detached from consumers or immune to disruption. And we’ll all be better off for it.