The general stereotype of insurance companies is one of rather serious places, filled with rather serious people in smart suits. But think again, as thanks to the development of technology in this sphere, you’d more likely find a young, entrepreneurial and innovative technology e-commerce business.
The digital age of insurance
With everything now moving towards an e omnichannel experience, one of the biggest changes in this sector has been the shift away from “applying” for insurance. Long gone are lengthy, impenetrable forms, and instead in their place there is a slicker e-commerce shopping environment where prices and products are transparently comparable.
This customer-centric approach has changed the industry, but the most exciting innovations are found in the ways that digital is changing the very products themselves. The digital age has given us a lot more data, and the huge growth in analytics has given us new ways to analyse it. For insurance, the implications are huge – but it’s only the beginning.
What technological changes have we seen so far?
Traditionally insurance took broad social categories (men, women, young, old, poor, rich) and worked out on average how much ‘risk’ there is on them claiming for a particular insurance. For example, looking simply at the statistics, middle aged women crash their cars less often than young men and, the insurance premiums that each has to pay reflected these assumptions.
To counteract this we’ve seen a huge rise in personalisation – for example, a couple of major companies offer you the choice to install a little black box in your car, analysing how fast you drive, where you drive, where you park and even what times of day you drive. This means that your insurance isn’t based upon broad sweeping generalisation, it will be personalised specifically to your behaviours and circumstance.
But it’s not just cars... wearable devices such as the Apple Watch or Fitbit can be used to assess your health, sleep patterns and activity levels, and has led to a huge boom for health insurance companies.
But will people tolerate this kind of snooping?
The answer is, surprisingly, yes. Most people think they are better drivers than the average person, more sensible than the average person and just all-round more competent than the average person. The definition of ‘average’ means that this is actually not accurate, but if you offer a customer the chance to prove this and drop their premiums accordingly, people seem remarkably on board.
Some people alternatively will get behind the challenge of lowering their premiums. Aviva has hired a chief game designer from the Call of Duty games (a $11B gaming franchise) to “gamify” its insurance products through a phone app. It makes improving your risk level and reducing your premiums a bit of a game. If ‘Pokémon Go’ has shown anything it’s that if you add points, people can get into almost anything.
Serious places, filled with rather serious people in smart suits?
The insurance industry is growing and transforming at a rapid pace. How the industry responds to changing technology such as driverless cars, models of the sharing economy (consumers insuring each other) and different types of risk created by a fast changing world means there is still plenty to come.
Freshminds is currently supporting a FTSE 100 Insurance Company in its Graduate Scheme for this September. If you are interested in working in a fast paced entrepreneurial environment apply here.