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How InsurTech-Insurance Partnership Delivers New Product Innovations

4 minutes, 27 seconds read

In 2019, InsurTech funding reached $6 billion, acknowledging the pace that technology can bring to overcome the age-old Insurance problems, the State of AI in Insurance 2020 says. While Incumbents are known for their core competencies in end-to-end insurance processes (from underwriting to claims settlement and reinsurance), InsurTechs are enticing millennials with fully digital innovative products and solutions.

The current situation can be viewed as either growing competition for traditional Insurers or an opportunity to collaborate and procure maximum benefits from each other’s competencies.

The World InsurTech Report 2019 states that nearly 90% of InsurTechs and 70% of Insurers are interested in collaboration with other InsurTechs and Insurance firms.

[Quick read: 10 Key Takeaways from the World InsurTech Report 2019]

In this article, we will discuss how InsurTech and Insurance partnership is proving beneficial for the entire ecosystem along with some successful partnership stories.

InsurTech and Insurance Partnership Benefits

A recent study pointed out that 70% of Insurance Executives are interested in collaborating with InsurTechs for developing new offerings. While developing new & innovative offerings remains the focus, such partnerships can play a crucial role in improving operational efficiency, enhancing customer experience, and increasing data capabilities. 

InsurTech and Insurance Partnership outlook
Source: The State of AI in Insurance


Enabling Mobile-first Business Model

The current generation cares about self-managing everything that matters to them (including Insurance) on mobile. If it’s not convenient to use, the consumer is, perhaps, not ready to adopt it. For instance, each day, more than 5 billion people go online using their smartphones or mobile devices.

InsurTechs, as consumer-focused they are, have been leveraging mobile technologies for micropayments, mobility and IoT connectivity.

Insurer’s benefits:

  • Capability to extend their services/products to the mobile channel.
  • Attracting new customers who are more inclined towards self-service options.
  • Making information and services accessible and available everywhere, irrespective of geographical location, thus enhancing the customer experience.

Gaining Operational Efficiency at Scale

Insurers can harness InsurTechs’ capabilities on cutting-edge technologies like cognitive process automation, natural language processing, and ML-derived insurance analytics. Applications built using these technologies are scalable to the enterprise level. 

[Related: Cognitive Automation and Its Importance for Enterprises]

For instance, with cognitive automation, Insurers can improve the efficiency and quality of computer-generated responses. Forrester predicts cognitive processes will overtake nearly 20% of service desk operations.

Similarly, InsurTechs are investing in developing workflow automation solutions, using which Insurers can create new automated workflows and/or customize existing workflows. Workflow automation with intelligent document and data processing capabilities has resulted in over 80% operational gains over manual processes.

Another milestone in improving operational efficiency is achieved through the adoption of chatbots. NLP-powered chatbots seamlessly integrate with an organization’s workflows and are a great way to humanize machine conversation and at the same time automate customer service portals.

Opportunity to extend the portfolio

InsurTechs still require traditional Insurers’ support for underwriting and during risk mitigation. On the other hand, Insurers are sceptical about micro and on-demand insurance because of the distribution challenges it poses for low-profit products. Insurers and InsurTechs can easily bridge the gaps and at the same time extend their range of offerings through strategic collaboration. Since 2017, Insurance and technology firms have announced more than 180 partnerships, KPMG states

For example, American Family Insurance (AmFam) organizes its interests around innovation, advanced analytics, and connectivity. It has investments in CoverHound, HomeTap, Bunker, Wireless Registry, and LeaseLock.

“By making these investments, we do seek a financial return with the investment, but really we look for opportunities to work together, reconnaissance on how the world is changing.”

Dan Reed, MD, Managing Director, American Family Ventures

Source: Insurance Journal

Thus, InsurTech and Insurance partnership can also benefit from extending the product portfolio. Let’s now look at some remarkable examples.

4 Noteworthy InsurTech and Insurance Partnerships from Recent Years

1. Zurich Connect and Yolo

Zurich Connect, the digital arm of Zurich Italy, partnered with on-demand digital Insurance broker Yolo to provide virtual assistance to its customers. Together, they launched HomeFlix — to provide a range of Insurance coverage to renters and homeowners. 

HomeFlix offers laundry service, concierge maintenance services such as plumbing and electric, and cleaning services to its customers along with regular and short-term insurance coverages starting at a nominal price of € 3.55 per month.

2. FRIDAY and Friendsurance

FRIDAY is a Berlin-based InsurTech startup. It offers digital automotive insurance with flexible terms like kilometre-accurate billing and the option to terminate at month’s end. The company partnered with Friendsurance, an online peer-to-peer insurance service provider. Friendsurance business model relies on paying out a percentage to customers who do not use (or use very little) annual insurance.

This partnership helps FRIDAY to sell at its policies on the Friendsurance platform and Friendsurance benefits from providing a range of insurance cover options to its customers.

3. Generali Global Assistance with Lyft and CareLinx

Generali Global Assistance is a division of Italy’s Generali Group. It provides travel insurance-related services. The company partnered with  InsurTech Lyft and CareLinx to improve customer service and provide value-added services (e.g. CareRides, a door-to-door transportation service for special-needs individuals) respectively. 

4. Prudential Singapore and StarHub

Singapore-based Prudential Insurance Company is the subsidiary of Prudential Plc, a British multinational life insurance & financial services company. The company partnered with StarHub to create FastTrackTrade — a digital trading platform. Using the FastTrackTrade platform, users can buy/sell goods, track shipments, make transactions, access financing, and buy insurance.

We’re a recognized InsurTech100 company with main focus on developing AI-first products and solutions for modern Insurance enterprises. For more details, please feel free to drop us a word at hello@mantralabsglobal.com

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Retention playbook for Insurance firms in the backdrop of financial crises

4 minutes read

Belonging to one of the oldest industries in the world, Insurance companies have weathered multiple calamities over the years and have proven themselves to be resilient entities that can truly stand the test of time. Today, however, the industry faces some of its toughest trials yet. Technology has fundamentally changed what it means to be an insurer and the cumulative effects of the pandemic coupled with a weak global economic output have impacted the industry in ways both good and bad.

Chart, line chart

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Source: Deloitte Services LP Economic Analysis

For instance, the U.S market recorded a sharp dip in GDP in the wake of the pandemic and it was expected that the economy would bounce back bringing with it a resurgent demand for all products (including insurance) across the board. It must be noted that the outlook toward insurance products changed as a result of the pandemic. Life insurance products were no longer an afterthought, although profitability in this segment declined over the years. Property-and-Casualty (P&C) insurance, especially motor insurance, continued to be a strong driver, while health insurance proved to be the fastest-growing segment with robust demand from different geographies

Simultaneously, the insurance industry finds itself on the cusp of an industry-wide shift as technology is starting to play a greater role in core operations. In particular, technologies such as AI, AR, and VR are being deployed extensively to retain customers amidst this technological and economic upheaval.

Double down on digital

For insurance firms, IT budgets were almost exclusively dedicated to maintaining legacy systems, but with the rise of InsurTech, it is imperative that firms start dedicating more of their budgets towards developing advanced capabilities such as predictive analytics, AI-driven offerings, etc. Insurance has long been an industry that makes extensive use of complex statistical and mathematical models to guide pricing and product development strategies. By incorporating the latest technological advances with the rich data they have accumulated over the years, insurance firms are poised to emerge stronger and more competitive than ever.

Using AI to curate a bespoke customer experience

Insurance has always been a low-margin affair and success in the business is primarily a function of selling the right products to the right people and reducing churn as much as possible. This is particularly important as customer retention is normally conceived as an afterthought in most industries, as evidenced in the following chart.

Chart, sunburst chart

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        Source: econconusltancy.com

AI-powered tools (even with narrow capabilities) can do wonders for the insurance industry at large. When architected in the right manner, they can be used to automate a bulk of the standardized and automated processes that insurance companies have. AI can be used to automate and accelerate claims, assess homeowner policies via drones, and facilitate richer customer experiences through sophisticated chatbots. Such advances have a domino effect of increasing CSAT scores, boosting retention rates, reducing CACs, and ultimately improving profitability by as much as 95%.

Crafting immersive products through AR/VR

Customer retention is largely a function of how good a product is, and how effective it is in solving the customers’ pain points. In the face of increasing commodification, insurance companies that go the extra mile to make the buying process more immersive and engaging can gain a definite edge over competitors.

Globally, companies are flocking to implement AR/VR into their customer engagement strategies as it allows them to better several aspects of the customer journey in one fell swoop. Relationship building, product visualization, and highly personalized products are some of the benefits that AR/VR confers to its wielders.  

By honoring the customer sentiments of today and applying a slick AR/VR-powered veneer over its existing product layer, insurance companies can cater to a younger audience (Gen Z) by educating them about insurance products and tailoring digital delivery experiences. This could pay off in the long run by building a large customer base that could be retained and served for a much longer period.

The way forward

The Insurance industry is undergoing a shift of tectonic proportions as an older generation makes way for a new and younger one that has little to no perceptions about the industry. By investing in next-generation technologies such as AR/VR, firms can build new products to capture this new market and catapult themselves to leadership positions simply by way of keeping up with the times.

We have already seen how AR is a potential game-changer for the insurance industry. It is only a matter of time before it becomes commonplace.

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