In part 1, I looked at how most of the current wave of insurtech compares with “convenience tech” like Alexa, Uber and Nest. Is it possible to turn what is a grudge interaction like insurance into something usable and accepted by the mass consumer through an insurtech app or service?
I then went on to propose the new term “grudgetech” to represent the tech that has to overcome “grudge” transactions. But grudgetech has actually been around for years …
Curiosity only gets you so far
Apart from insurers, what is one of the other institutions that most of us don’t like having to deal with?
And yet if you think of how most of us now conduct our day-to-day banking, the vast majority will use either a handheld app, or online banking, or both. That’s grudgetech – and it’s been around for almost 10 years.
However, until banking grudgetech meant that you could do everything you could previously have done in a branch, take-up of online banking was consigned pretty much to early adopters.
Partial solutions to everyday problems, like being able to view your account transactions online but then not being able to go on and make payments easily, are messy and confusing for the end user. Human nature dictates that we are much more comfortable with the convenience of a single point-of-access for getting things done, than having to go various routes to achieve the same thing.
Early adopters and tech nerds will be curious, but scalable, sustainable success can’t be built on curiosity alone.
Likewise with insurtech.
The whole enchilada, please
Where we have seen early success in terms of consumer take-up and financial performance* is with products like Lemonade. In what is de facto grudgetech, where they have won is by enabling customers to bite-off the whole of their home insurance needs in one mouthful.
So many other insurtech apps out there only allow their customers to “nibble at the edges” by restricting them to insuring only certain items, certain categories of insurance or offering only certain services. Those customers still have to maintain another insurance relationship with someone else to take care of their “full” buildings and contents requirements. As a result, the relationship is fragmented, and surely there’s only one thing worse than having to deal with an insurance company, and that’s having to deal with two … right?
Although by no means perfect, Lemonade wins by being able to offer the full set of buildings and/or contents insurance. It doesn’t claim to try and accommodate everyone. However it does offer everything its target customers need from home insurance. There’s a big difference.
There’s no need for a Lemonade customer to maintain a relationship with any other home insurer, in contrast to almost any other current insurtech offering out there.
Just like with online banking – offering the full service is what has attracted paying customers. And once you’re in, why would you want to leave? As soon as you start to look around, you’re back into the land of “oldtech”. I’m sure the publicity around the claim that Lemonade paid in 10 seconds is also a lure, alongside the tech-hipster-attracting “AI Jim” bot sitting behind it, but the product wouldn’t be anywhere near as appealing if it only insured your phone, or your laptop or some jewellery.
So the idea of a framework for early insurtech success that we introduced in part 1 is clearly defined for now. Find a genuine customer need and then offer something that solves that need in its entirety. Don’t break off a piece, wrap it up in a new tech coat and expect customers to stay for the long-term.
Let the tech be complex and invisible, the customer solution has to be simple but complete.
* Financial performance of the operation, not underwriting performance of the book