InsureTech Marketers Stand Up!
InsureTech Marketeers – the fast pace of change in the Financial Sector is your opportunity to seize!
It’s hard not to have noticed the increasing pace of change within Financial Services.
Banking had held the majority of the headlines as challenger and digital banks increasingly receive banking licenses to compete against the established players. Tandem Bank,Starling Bank,Tide,Monzo and Atom Bank (with their recent high-profile on-boarding of Will.i.am) have been leading the way. The investment sector has seen companies such as MoneyFarm,Moola and Nutmeg investing in robo-advisors which provide better, more cost-effective services for low capital investments and arguably provide better advice too. Payments, FX and money transfer are also being heavily disrupted with newer players such as Revolut,TransferWise and Azimo.
In the world of insurance the speed of change has been somewhat slower, possibly because the economic crash hasn’t forced change in the same way that it did in the banking world. FinTech investments have gradually increased over time, whilst ‘InsureTech’ has had a late but sudden rise in investments with record levels achieved in 2016. Inevitably, this has come with a lot of hype and the next challenge will be around practical implementation across the value chain.
Providing value to consumers through driving down prices and offering choice, has resulted in aggregators to gain an increasing share of influence in the market. Many insurers have (maybe reluctantly) subscribed to this channel to avoid losing sales. The challenge is that the customer journey and experience has arguably not been enhanced; the handover process is not seamless when going from one partner to the next and the products on offer aren’t always the best value as the price led model erodes quality.
Many insurers are pushing for better direct models to maintain customer loyalty through more control of and better experiences. Digital innovation has been the key facilitator of change – Direct Line and Aviva are two strong players in this regard through their integrated online customer portals.
Change is increasingly being driven by consumers who are demanding better service, value, engagement, clarity and flexibility. Although the industry has been slow in delivering change with legacy issues, the complexities of the market and the challenges to creating new competition, technology will be a key facilitator in this new era of innovation. For example, Blockchain has the potential to cause big developments, especially when it comes to data management and verification and developments in Artificial Intelligence provide opportunity to build further upon programmatic and automation. All this provides a huge opportunity for insurers to deliver more personalised CRM, propositions, pricing and experience to attract and retain customers.
Innovation in insurance will no doubt continue to be driven by start-ups that cater for the evolving behaviours, demands and lifestyles of customers. However the big question is whether the main disruption will come from a player outside of the industry as Uber did to the taxi industry, or whether it will be driven by the industry itself.
The sharing economy will create new segments and niche markets. New propositions will come to the fore to cover usage based and on-demand requirements of customers. Pure digital insurance propositions have been on the rise and these niche sectors are already starting to be covered by flexible insurance propositions such as Back Me Up for personal contents and Cuvva who provide instant hourly cover insurance on cars you borrow. Bought By Many who started out as a social broker providing recommendations on the best policies and negotiating on behalf of its members have now become a full-stack insurer launching their own-branded niche insurance propositions.
As for all FinTechs, a big challenge is still how to turn an ideology into profit, though that doesn’t seem to have stopped investors putting cash in!
One thing for sure is that Marketers have a huge opportunity to take ownership and lead the evolution of their sector through the unique positioning of understanding the customer, technology and commercial propositions.