Insurtech has revolutionized the world of insurance, creating new products and services that meet the needs of increasingly segmented and sophisticated clients.
Companies in the industry are moving into a new phase, focused on obtaining and analyzing data for personalization. However, that’s not all: this period is not just about offering insurance, but is going beyond that, looking for ways to improve the well-being of policyholders, as well as society in general.
Increasingly, insurance companies are leveraging technology to reach sectors of society that until now could not have access to a policy. At the same time, there is also a new insurance segment that is emerging to improve the general health of the population, thinking more about prevention and support for policyholders than about reacting to incidents.
Companies in the industry have embraced the idea that in order to create and innovate, it is essential to have a customer centric vision that allows understanding policyholders and their needs, in order to create proposals tailored to them and personalized experiences.
But how do they do it? We reflect on this topic with Ana Zamora, CEO & Co-Founder at Vitaance.
Emerging in 2021, Vitaance is an insurer specializing in life insurance, albeit with a different approach. What was usually the case with this type of product is that it was used only in the event of death or disability.
As Zamora comments, “it is a life insurance policy that provides value and helps you live better, through technology”. This is achieved through gamification techniques, with games, challenges and rewards. “We all know what we would have to do to have a better life, but we struggle a bit getting it. Our goal is to engage people to take better care of themselves and help them feel younger every day,” she explains.
This paradigm shift in the insurance industry seeks to create spaces for collaboration among players: both the youngest companies and those that have been in the industry for years –and even decades– are more and more inclined to exchange ideas, forms and even methodologies. “Surely there will be things where we compete, others where we don’t. We like to co-create with people in the industry, who have added so much value for so long, and I don’t think we should lose that,” says Zamora. The future, as we know, is collaborative.
Evolution of Insurtechs and the new generation
The term Insurtech evolved and made its own journey in terms of offerings and services. An initial stage, focused on the online distribution of products through digital channels and even social networks, gave way to a second period in which a new range of on-demand products emerged, more focused on “turning on or off” insurance, depending on the time of use.
We are currently facing the third generation of digital insurers. In this particular period, companies seek to establish a relationship with users throughout the life of the policy, leaving behind the traditional link that was merely transactional. “All these services are developed through intelligent use of data and behavioral patterns,” says Zamora.
The focus of this new segment of companies is centered on a new range of increasingly sophisticated digital users, accustomed to using high quality digital platforms. It is a sector that expects to have the digital services that make their lives easier in seconds and at any time, on their device. It is what Google calls Generation C, referring to people who seek connection, digital communities, and content creation. It is not a generation classified according to a particular age group, but by tastes, habits and mentality.
Applied to the insurance industry, companies must cater to a new generation that identifies with two major demands. On the one side, they require new digital products and services that are more convenient and accessible. On the other, they no longer value so much whether or not they are charged based on usage, but seek to create a relationship with brands, based on communication and supported by information technology.
For Ana Zamora, creating these user experiences that go beyond the product and its distribution and that aim to create a bond “allows us to establish a relationship with the user throughout the life of the policy, not only when it is sold or when you want to use it, but I want to help you prevent that risk”.
For example, instead of increasing the cost of the policy according to a person’s age or pathologies, companies can focus on helping to prevent claims and improve the quality of life “so that clients do not have to use the insurance, or delay it as much as possible”.
In short, in this third generation of insurtech companies, technology comes to create new solutions that add value, rather than simply being used to sell more to the insured, or to try to increase the number of online operations.
Current industry challenges
A common occurrence for many insurers in the traditional world was the addition of riders to policies that did not always add value to policyholders –because they were poorly communicated or negotiated in large volumes to optimize their costs– also driving up premium costs.
This is due to a multiplicity of factors, although the main one lies in the lack of observation of audience behavior. According to Ana Zamora, “there is still a very important lack of personalization. I would dare to say that this has to do with the observation of the data”.
However, there is good news. Policyholders are less and less afraid to share their data with insurance companies. This is because new consumers saw value in doing so, as they received help to drive better, were notified of weather alerts or even had recommendations to improve their lifestyle habits. They understood the use of data as a benefit and not as a problem.
Achieving personalization is not so simple: it requires the use and analysis of large amounts of data, combined with artificial intelligence tools that enable personalization and customization.
“It’s YOUR product, not the insurer’s product for a customer profile similar to yours. The product starts to adapt to you. There is a very important level of personalization and customization. This is what technology and data allow: to reach a point of customization where you feel this is for me, this speaks to me,” Zamora explains.
Beyond observing user behavior, it is necessary to propose new solutions to different problems. Taking this example, it was Henry Ford who said: “If I had asked people, they would have asked me for faster horses”.
Applied to insurtech, this reasoning allows us to ask for new ways and to use innovation and creativity to invent new solutions, not only to work on perfecting what already exists.
The insured of the future: change of mindset
To help in a bidirectional way –that is, for insurers to get more data and for this in turn to help users to have better services– the industry thrives on wearables.
The use of wearable technologies focused on the treatment of chronic diseases is expanding in Spain: 97% of healthcare providers using telehealth and solution management services targeted patients with chronic diseases, according to Statista. Thus, Spain boasts the highest adoption rate in Europe, followed by Italy (86%) and the Nordic countries (82%).
The road ahead will bring with it an approach by the health insurance sector to the personalization enabled by algorithms. “Traditional actuarial science, which is pure statistics, is no longer valid; we have to go to the person,” says Zamora. We have to see how we can help each of these people to delay death as long as possible and give them a product that adapts to their needs, that solves the problem they have. Using the data to provide the best possible solution.
If you want to learn more about how we can create and improve algorithms, contact me.