Rebuilding insurance

Platform provider, Tigerlab, believes the experience of the past year-and-a-half will stimulate demand for ‘bite-sized’ cover, better suited to our re-engineered lifestyles. Chief Operating Officer, Holm Schimanski, sets out what he thinks insurers need in their kit to provide it profitably

A perfect storm of technological advances, elevated customer expectations, cultural behaviour

change – and a pandemic – have

accelerated the rate of disruption in the insurance sector.

To survive and thrive in this new landscape, where opportunity and risk vanish just as quickly as they appear, insurers are reviewing operating models and approaches to customer experience.

Holm Schimanski, chief operating officer of Tigerlab, are saying ‘why do I pay the same price for insurance when I have nowhere to go and I can’t use my car?’.

“We’ve seen new insurance models benefit from the situation – they can adapt the pricing, and adapt the product to customers’ current situations. Customers have been forced to find alternative ways of purchasing, renewing or changing their insurances, and we see this trend in usage-based insurance in particular,” he adds.

Tigerlab’s developer sandbox is busy with responses to this new normal – from wedding cancellation cover in the light of unpredictable public protection measures, to electric scooter insurance as towns and cities embrace car-less commuting, and usage-based insurance for those still reliant on them. They’re all examples of how dramatic changes in the way society is organised threaten to make most traditional insurance irrelevant.

Tigerlab, which has grown into a global company from its innovation hub in Kuala Lumpa and now has a Swiss HQ, advocates ‘bite-sized’ insurance products that can be stacked to provide a range of cover, bespoke to the person buying it.

an omnichannel, Cloud-based provider of the i2go platform-as-a-service, working mainly with small-to medium-sized insurers, believes most people have grown increasingly dissatisfied with the level of service they received over the past 12-to-18 months, and are re-evaluating the merit of insurance as we know it.

He believes it heralds a decisive shift towards more modular cover, built around specific users, reflecting individual circumstances; products designed for modern living that move the industry away from the archetypal insurance policy, most of which people never read and half of which aren’t relevant to their needs anyway. Consumers will increasingly dictate the terms on which those products are offered.

Take motor insurance. Due to several lockdowns, social distancing measures and a rapid shift to remote working, vehicles have been more off the road than on, of late. But, while motor insurance customers might be spending less time at the wheel, they have most definitely been in the driving seat when it comes to forcing changes to suit their modified needs.

“Motor insurance is the prime example,” says Schimanski. “Customers

The problem is, modular products will almost certainly be pegged at much lower price points, and perhaps involve shorter cover periods. The challenge, then, is for insurers to find the right technology that can not only deliver these but maintain a relationship with the insured that inspires them to return – since volume, repeat and related purchases become key in monetising this model.

As the Internet of Things (IoT), and the sensors that connect our homes and vehicles to risk underwriting models, evolve, automation and up-to-the-minute data will play an increasingly important role in helping insurers to get hold of clear, actionable insights that benefit their customers, says Schimanski.

And, while he acknowledges that the new model is a challenge, he believes it can, in fact, flip traditional approaches to hard-selling insurance, through better engagement that informs customers and empowers them to choose from wider options that are more precisely tailored to their needs. He has three key pieces of advice to insurers…

Stack it high

“Insurers need to move away from trying to sell everything at once, to a point where they can stack different products and offer smaller products at lower prices,” says Schimanski.

“First, they need to understand their customers, that they are not dealing with a single cohort, but different personas. Each persona has a different customer journey and, depending on that journey, the engagement model will, of course, change.

“Our usual recommendation to clients is that they start small, choose a persona, a single target they can handle, because establishing a customer engagement strategy for their entire customer base is a lengthy process and might overwhelm most insurers.

“That’s why we provide additional services – for example, using data to simulate how their revenue would change, how their customer acquisition and conversion rates would change, if they implemented a certain strategy.

“We work with a lot of telematics providers, and we ingest a large amount of external data because, in an ideal world, you gather as much information as possible, pinpoint that to your persona, and then evaluate the upselling possibilities.

“It’s better to give a small, bite-sized product to your customer, and not oversell them something that, at this point, they don’t need. Stacking the products makes it very easy to just upsell a small portion of it, and customers won’t see that as necessarily a bad thing. You might have to sacrifice initial costs for the sake of retention, but, ultimately, we believe that engagement will drive revenues by driving retention rates

“If we incorporate that into a payment strategy, we can spread the additional premium across monthly payments, or offer a sort of pay-as-you-go service. Then customers are, from our experience, very happy to accept upsells and cross-sell options, if it provides the value they need.”

Customer-designed insurance

“The educated insurance customer doesn’t really look at price, but instead value for money and what they get in return. And that goes back to the idea of how insurers build their products. How big are they? What kind of value do they offer customers, and how easy is it to actually customise the product?” says Schimanski.

“A lot of Tigerlab’s clients put heavy emphasis on convenience. They don’t have strict cancellation rules. Customers can also pause their policies, then reinstate them.

“It’s about trying to give full control back to the customer so that they can manage their own policy with total transparency. This also translates to giving the customer a choice of ways to pay for the insurance.

“Distribution also needs to be right. Customers will choose insurers because they are accessible to them. A lot of insurers know online distribution is important; that they need to be online, to be on aggregators and to work with brokers or agencies. But they need to have a proper commission model that goes along with this distribution model, so that whenever a customer is looking for new insurance, they will find it.

“Another important aspect we bring to our clients is an omnichannel approach; we map out the customer journey and all the different channels, whether email, via the website, social media, agents or brokers. Insurers that build convenient products and convenient ways to communicate them will win eventually.”

Attention and retention

v

“Customer engagement is one of the most critical success factors for customer acquisition and retention,” says Schimanski. “Keeping customers engaged will lead to higher retention rates and, ultimately, higher revenue rates. So, you might have to sacrifice initial costs, for the sake of retention, but, ultimately, we believe that engagement will drive revenues by driving retention rates.

“There’s this age-old insurance conundrum where everybody says ‘how can we come to a situation where the customer actually starts buying insurance, instead of us constantly selling it to them?’. I think customer engagement might hold the key to that.

“As an insurer, and as a software provider, engaging in the right way, with the right customers, leads to trust. If we can convince them to stay with us, it also leads to upselling/cross-selling possibilities; customers will start buying insurances as opposed to feeling a particular insurance product has been forced onto them.

“Historically, customers don’t ever hear anything from their insurer unless their policy is up for renewal. Instead, insurers need to be closer to their customers, and have a high frequency of information, but keep that information flow relevant.”