All Insurers Must Become Insurtechs

Insurance is finally changing. It cannot but do so, to stay competitive in a technology-driven world. Customers' ever-increasing expectations, together with the increased importance of digital channels, are forcing all players to adapt. But major insurance players struggle to meet customers' demands for the ease of use, transparency and accessibility that they already have it in other sectors, like banking and shopping. Customers want insurance coverage tailored to their needs, via the channel they prefer. But insurers don’t seem very able yet to take advantage of this opportunity. Rigidity and complexity, that’s what customers often associate with insurance coverage and insurers in general. Insurtechs provide a fresh alternative to the incumbent’s model of doing business in today’s and tomorrow’s connected world. A deep collaboration between incumbents and insurtechs is necessary. Incumbents should embrace the solutions put forward by insurtech startups, which are legacy-system-free, resourceful and creative but usually lack in-depth knowledge about the insurance sector. Whether the result of a partnership is risk reduction, cost optimization or context-based pricing, the advantages are becoming clear for incumbents. See also: Top 10 Insurtech Trends for 2017   To cite Matteo Carbone, an insurtech thought leader, to stay relevant in the future insurance companies must themselves become insurtechs. And how better to do that than by working closely with the newcomers? Push mobile microinsurance is a very good example of how insurtechs have found a solution. This new approach to selling insurance manages to address existing challenges by using digital (mobile) channels for communication, registration, payment of premiums and claims processing (claims submission and claims payouts). I believe that the potential of microinsurance to revolutionize the insurance sales process is very high. It could help reduce the protection gap in developed countries for several types of risks, and it can be a way to target millennials with limited financial education and low trust in traditional intermediaries. The main scope of microinsurance is to deliver innovation to customers who seek it. At the same time, it helps the insurer get more insight on the individual client. Microinsurance can also be considered a form of micro-financing because it offers low-cost coverage for a limited period, and its applications could be huge. Investments in microinsurance will continue to climb because of the rising amount of data available out there and the ability to analyze it in a way that brings added value to both insurer and customer. Consider microinsurance as a concrete way to handle usage-based needs by covering specific risks for specific durations. As with all financial services lines of business, insurance providers are leveraging sophisticated data and insights to provide highly personalized products to meet consumers’ increasingly specific expectations. The sharing economy demands niche products, and only those products that are relevant to users’ usage and behavior patterns will remain successful. Italy represents the worldwide leading-edge experience in car insurance innovation and, thanks to the use of the black boxes, which started 10 years ago, the Italian market is the only market worldwide where auto insurance telematics is already mainstream. There are almost five million active black boxes in the country, and the penetration is higher than 16% of all cars. This (from some points of view) incredible performance has been possible thanks to the collaboration between insurers and tech companies. Due to this extremely successful experience with car insurance, Italy represents a “Silicon Valley” for the evolution of innovation in the insurance industry. My company, Neosurance, provides a virtual insurance agent for customers, who are not only under-insured but are also unaware of their potential needs for coverage. Neosurance, like an insurance agent, knowledgeable and capable, stimulates the protection need by offering the right coverage at the right time on the customer's smartphone, stimulating an impulse purchase of small-ticket insurance. See also: How Insurtechs Will Affect Agents in 2017   Solutions like ours can bring the insurance sales process to the next level, potentially transforming every old insurance company into an insurtech.