InsurTech Pressures Incumbents to Personalize Customer Experience

Incumbents need to look to the latest data analytics tools and AI technology to eliminate friction and deliver exceptional customer experiences.

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The insurance industry is becoming more competitive as traditional players race towards digital transformation. Today’s insurers need to offer enhanced digital experiences that better personalize the customer journey. To accomplish this they need to look to the latest data analytics tools and AI technology to eliminate friction and deliver exceptional customer experiences.

This doesn’t mean they necessarily need more data, but rather a smarter approach to how they are using the insights they already have. This is where InsurTech companies excel: leveraging the same data insurance incumbents have access to, but in a way that helps them to better empathize with and prioritize customer needs.

Here are a few examples where InsurTech companies are setting the pace for digital innovation.

A New Data-Driven Approach to Insuring Drivers

Many young drivers pay higher premiums simply because they are younger.

Root Insurance wants to change that. The InsurTech startup takes a mobile-first approach, which means potential policyholders simply download the mobile app and take a test drive to get started. For the next 2-3 weeks, the app runs in the background to track factors such as braking patterns, speed, turns, and overall consistency.

While many insurers have apps that monitor driving behavior to determine premiums, the key differentiator for Root’s solution is that it doesn’t provide a quote until after you’ve driven for a few weeks and provided them with enough data to determine your driving ability. If you are a bad driver, they won’t even give you a quote because they only want good drivers as clients. However, the upside to this is that there is no risk in trying their app.

Companies like Progressive, on the other hand, provide a quote in the traditional manner and then give you the option to use a tool like Snapshot to evaluate your driving. If you’re a good driver, your premium will go down. But if you are a bad driver, you risk an increase in premium. In fact, 20 percent of Progressive drivers using Snapshot see their rates increase after using the app.

Get Life Insurance Quotes Faster

For life insurance companies, improving the customer experience means streamlining the process of getting a quote online.

Traditional term life policies can take anywhere from 24 hours to months to get a quote. Incumbents will ask customers to submit to a background check, review of DMV records, medical exams, and lab tests to determine your risk profile.

InsurTech startups like Bestow take a fluidless approach to life insurance applications by delivering personalized life insurance quotes in minutes. Bestow, for example, collects all of the applicant’s necessary personal information together using AI, as well as eliminates lab work and time-consuming medical visits that slow down the process of getting a quote.

Because Bestow (and other life insurance InsurTechs such as Haven Life and Ethos) do not require a medical exam, they can provide quotes online in minutes. Bestow’s approach could result in higher premiums, since premiums are not based on current bloodwork. For some policyholders, the increased transparency in the process and the quick turnaround for quotes is worth it.

Enhance the Customer Experience with AI

While Root and Bestow have found ways to better personalize insurance quotes, home insurance startups like Hippo have focused on enhancing the overall customer experience with AI and other technologies.

Like Bestow, Hippo has found ways to backfill information into online applications from third-party data sources. Rather than asking people to fill out an endless series of questions, Hippo relies on their data analytics tools to seamlessly integrate property info and other relevant personal information into the application process.

Once you’re insured, Hippo makes it easier to manage claims. In the insurance industry, speed and accuracy matter, so Hippo ensures that there are no voids in communication. Consumers have a single point of contact that helps them avoid unnecessary—and frustrating—calls to the contact center.

How Incumbents Can Learn from InsurTech Startups

Many startups were born in the cloud, which means that they have been quick to adapt to the latest big data analytics and AI technologies. Traditional players, however, have lagged further behind, thanks to legacy technology and outdated processes.

But when the pandemic struck, it became clear that insurers needed to continue developing digital products and monitoring digital performance results, both for customer-facing websites and client portals. Now, insurers need to invest in new data analytics tools and strategies that help them understand their users better so that they can deliver personalized, intuitive user experiences that meet each policyholder where they are.

Lemonade Selects Bestow as Its Platform for Life Insurance

ITC 2021: Rick McCathron, President of Hippo


Kristina Leach // Kristina Leach is a director of BFSI (banking, financial services and insurance) insights at Quantum Metric. As a go-to-market and industry lead, Kristina provides expertise that supports financial institutions ability to optimize the digital customer experience. Prior to joining Quantum Metric, Kristina earned her MBA at MIT Sloan School of Management and worked for Bain & Co, Fidelity Investments and MassMutual holding roles across various functions.

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