The digitization of customer management at new insurance tech companies

Chris Kaye is the founder of Sherpa and a new player in the insurance market. The motto of the digital insurance company, based in Malta, is: “Now it’s personal.” Kaye explained what’s behind it at the student convention “World Business Dialogue” in Cologne in 2017 by posing two questions to the students in the lecture hall: “Do any of you have insurance?” Most of them raised their hand. “And do any of you love your insurance?” All hands went back down. “You see,” says Kaye, “that is exactly what I want to change, because the insurance industry has lost the emotional connection with its customers.”

This year, Sherpa wants to launch its personalized insurance products to reach out to the young digital generation and make insurance “sexy.” “We insure our customers for precisely what affects them the most, so that everyone has only the insurance they really need. At the same time, we want to get rid of emotionless jargon,” explains Kaye, who previously worked as a consultant at the Boston Consulting Group. “We want to go back to basics, because an insurance company should be there for customers, should really help them.”

Plans for “substantial growth”

Sherpa has chosen Great Britain as its first market. Apparently, Amazon also wants to put its ambitious plans in motion here. For product liability insurance, Amazon has up until now been cooperating with established insurers, such as Ergo or the London General Insurance Company. But now the company appears to be entering the insurance market itself. This is indicated by current job ads for the London area, according to which Amazon wants to redefine the customer experience with product liability insurance and “disruptively change how the policies are bought and sold.”

Amazon’s digital edge

What does it mean for the relationship between clients and insurance companies if their insurance company is also one of the world’s leading online retailers with a correspondingly extensive pool of data and technical infrastructure? The principle would naturally apply here as well that the more the company knows, the better its products would match the needs of its customers — and successful online retailers know a great deal about their customers. Moreover, there is a great deal of interaction with customers and therefore opportunities for cross-selling and up-selling. If a new mountain bike is purchased, for example, there could be special cover for sports accidents. If a customer buys a luxury broadband TV, free home contents insurance would be plausible as a discount, and anyone putting big packs of diapers in their shopping basket might be open to buying coverage for their young family. That will put established insurers under enormous pressure. Why? As regards digitization, Internet giants like Amazon or Google are light years ahead in most cases.

Digital services for better client loyalty

There is movement in the insurance tech scene in Germany too. Up until now, there were essentially only start-ups that offered digital insurance folders that consumers could use to manage their contracts digitally. Now, real digital insurance companies are coming on the scene. One of them is Element, a start-up in Berlin, which overcame the final hurdle in the property insurance sector at the end of 2017 by obtaining a license from BaFin, the financial regulatory authority for Germany. For Element, personalization is paramount. The company wants to use digitization to break down rigid products into insurance that responds better to the needs of the individual. These days, for example, an insured amount of 650 euros per square meter is no longer appropriate for home contents insurance, because not everyone owns enough furniture to justify this sum. In a sense, Element wants to make things more fair in this regard.

But they also want to bridge the gap between the old and the new insurance world. The start-up belongs to FinLeap, a company that provides a platform for fintech companies with the Solaris Bank. The advantage is that the financial start-up does not have to apply for a banking license, because it is tied to Solaris Bank, which was specifically established for this purpose. Digital insurer Element is expected to operate according to a similar principle. Established industry insurance companies will have the opportunity to join the digital trend: other insurance tech companies or insurers supply the products; Element provides all the digital services. “Currently, the insurance sector can’t offer the development and processing speed that clients and partners expect and experience within other sectors,” explains the CEO of Element, Wolff Graulich. “Many brands and businesses have been reaching their limits time and again in cooperation with insurance companies. So they can’t take full advantage of the potential from insurance offers, especially for customer loyalty and additional turnover. We’re going to change that. And we’re reducing the time period for the market launch to a few weeks — everything is digital, from the application or contract to claims service.”

Sick leave via app

Munich-based provider Ottonova is currently causing a stir in social media as a digital health insurer. The company is led by doctor and consultant Dr. Roman Rittweger, who wants to make Ottonova “the Tesla of health insurance.” “Only a new, private health insurance company that adapts its products, organization and systems to the digital natives can really make full use of the opportunities in the health care sector brought by the digital revolution,” explains Rittweger. For example, with Ottonova it will be possible to acquire a sick note from a doctor digitally, without having to visit a doctor’s office.

But that is only the start, because the digital world offers opportunities for new customer dialogue strategies. A smartphone app is available to Ottonova clients as a contact channel. Let’s say a client injures his foot while on vacation. He can turn straight to his health insurance while still on the beach. The “concierge” (a chat-bot) will explain to him that in addition to a traditional doctor’s appointment, he can take advantage of a digital consultation. So the client can talk to an Ottonova doctor via video-chat. The doctor will be able to examine the injury using the phone camera and assess whether the client can help himself, perhaps with an ointment, or whether treatment is needed. This way, the service can prevent an unnecessary hospital visit abroad. Via the app, Ottonova also provides aftercare and prevention tips to its clients.

Likewise, contracts can be arranged and finalized via smartphone within as little as half an hour. Moreover, the reimbursement of health care costs is also expected to happen in record time when using Ottonova. It’s as easy as taking a picture of the medical bill and uploading it via the app. The reimbursement should then take place within a few hours. And of course, the app also offers a calendar feature for doctor’s appointments and other health-related events.

Benefits for consumers

The new digital variety is beneficial to consumers in many ways — not just because competition generally leads to low prices. The crucial thing is better and more personalized customer service. The example of Ottonova gives a first impression of what is possible. “We treat each of our insurance clients as an individual, and as a person whose risks are changing all the time,” explains Chris Kaye from Sherpa. “We want to show our clients which insurance benefits are important to them at the moment — and which are simply a waste of money.”

Author: Editorial team Future. Customer.
Image: wutzkoh – AdobeStock