Adopting a customer-centric approach in insurtech

Nobody ever wants insurance – at least, not until they really need it. And so, for insurtech innovators, providing a compelling proposition for customers is a critical business challenge. With technological advancements and the march of digital transformation, customers expect insurance to be more compelling and more convenient than ever.

That makes it increasingly important for insurtech firms to place customers squarely at the centre of their processes and offerings. Here, we examine how insurtech companies are putting customers first and how the industry is likely to evolve in the future.

How are insurtech companies putting customers first?

According to PwC, the revenue opportunity from disruption in the insurance industry could be worth as much as £50bn. The biggest potential comes from greater utilisation of data – currently, insurers only collect some data on consumer behaviour and the level of risk against which they are insuring. New technologies, like artificial intelligence (AI) and machine learning (ML), could help insurtechs to make smarter decisions by providing greater access to information about customers and their behaviour.

Ultimately, however, any advantage that insurtechs gain through smarter use of AI and other technology must be channelled into providing a better customer experience – whether that’s more targeted products and services, or smarter pricing for insurance options.

Paul Morgenthaler, managing partner at CommerzVentures, says: “Given the highly intangible nature of insurance, the customer experience matters more than anything else. Insurtech provides a superior experience to consumers at all touchpoints, from purchase and policy management to service interactions and claims.”

AI can be used by insurtechs to improve the underwriting process, gathering more data points that can then be used to provide greater insight into the level of risk that exists with every customer and every policy. With sound use of AI, insurers can reduce the number of man-hours that go into assessing risk, improving both the speed and cost of onboarding new insurance customers.

Take Cognizant, the New Jersey-based professional services company. In a case study published in 2021, they revealed how they were able to utilise AI to increase the efficiency of underwriting by ten-fold. Cognizant was approached by a reinsurer planning to enter the US flood insurance market, who were seeking a smarter way to assess risk. The platform that Cognizant created took into account multiple data points – including flood hazard maps, geospatial data from geographic information systems (GISs), and historical claims – to provide the insurer with a clearer view of the flood risk involved in new policies. And the Cognizant solution equips the insurer with an ongoing snapshot of risk by assigning homes and businesses with their own risk score.

How is AI helping insurers to make smarter decisions?

AI can be used in so many other ways to aid insurtechs, too. The technology has the capability of converting huge data sets into meaningful insights for insurers. Not only does this help assess risk, it can also streamline the processes involved with handling claims as they come in. Laborious tasks can be automated and AI can be used to identify anomalies that might be indicative of fraudulent or problematic claims.

For consumers who don’t currently hold a policy, AI can be used to reduce the workload on human customer service representatives through chatbots and other interactions. The vast majority of customers today get their information on insurance products through a company’s website or app, meaning that reliable and up-to-date information is incredibly important in asserting trust and persuading visitors to convert into customers. Most insurers will constantly review their FAQs and informational pages to improve the experience for users, but chatbots can use AI to constantly learn about how visitors are behaving on site and what questions they are asking – perhaps because they weren’t able to find the answer elsewhere.

With this in mind, personalising the insurance proposition is increasingly important.

Teo Blidarus, CEO and co-founder of FintechOS, which helps financial institutions to bridge the gap between legacy and future-proof systems, explains: “Whether it’s life insurance, health insurance or pet insurance, personalisation is a must in the insurance industry, and the quality of that customer-centric service can make or break a business.

“The modern customer has much higher expectations, and personalised interactions and connected experiences across digital channels are a priority. Personalisation can help to serve existing customers by offering them intuitive, relevant experiences built on a foundation of rich data insights. It can also be an effective way of driving new customer acquisition for insurance companies. Ultimately, if done well, personalisation at scale can provide a direct route to lower rates of customer churn and higher sales.”

And Paul Morgenthaler, managing partner at CommerzVentures, agrees: “The ideal insurance experience reflects the best of digital and human processes at the same time. This is especially true in claims. AI-based claims automation providers, such as Omni:us, substantially reduce the need for manual claim processing. This frees up claims handlers to focus on complicated cases that may require an increased level of human interaction and empathy with customers.”

How will insurtech evolve in future?

With the number of fintech options available to consumers constantly growing, it becomes important to target the right products in the right places. Consumers are used to seeing travel insurance as part of the checkout process for their summer holiday, or contents insurance when they buy high-value electronic items such as laptops or televisions.

As the technology becomes more accessible, these placements will become even more commonplace, and it’s possible that consumers will become more demanding. AI can help to provide better product recommendations by utilising more data about consumers, their interests and their behaviour.

“Insurance is already embedded in many products and consumer experiences,” Paul Morgenthaler continues. “I certainly expect embedded insurance propositions to become even more prevalent, given how seamlessly these solutions can be integrated into checkout processes with technology.”