German neobank N26 to launch insurance
The startup, which was founded in 2013, says its first insurance product is a smartphone cover plan for its German customers.
But the neobank plans to extend the range as soon as it can, with the products all accessible via N26’s mobile app and website. Further plans in development to be launched at a later date, include home insurance, pet insurance, private liability insurance, coverage for bikes, large purchases and electronics.
N26’s decision to enter into the world of insurance will see it come up against some of the fastest-growing fintechs in Europe.
The digital bank will be a competitor of fellow German fintech GetSafe, which recently launched in the UK following its homegrown success. However, this is in contrast to N26, which closed all its UK accounts in April 2020 as a result of Brexit,
Banking and insurtech platform
According to reports, N26 is planning to have all products and services available via its online app, and customers will be able to buy, manage and make claims through the platform that they already use for their banking. The ease of use of the insurance service is a big selling point as customers won’t have to download additional software to access it or create a new account.
In order to facilitate its new insurtech service, N26 has partnered with Simplesurance.
Speaking about the move, , co-founder and CEO of , said, “When it comes to insurance, customers today still have to contend with complex and outdated processes and paperwork. The space has long been ripe for disruption and we are now offering a one-stop digital solution for our customer’s insurance needs.”
N26 insurance services
Initially, customers will only be able to purchase smartphone insurance through the N26 app, with plans to expand into home, life, travel, private liability, bike, electronics and pet insurance in the coming months.
Reports suggest prices will start at €6 per month, depending on the make and model of their mobile phones. Users will also be able to choose from annual cover to monthly plans.
Currently, N26’s Metal customers have smartphone coverage built into their subscription plans, while both Metal and You subscribers have travel insurance built into their premium packages.
N26 insurance API
The new N26 Insurance product is the first release of the new API-driven offering. Streamlining and ease of service are central to the platform’s technology. Partners will be able to integrate their products onto the system, and N26 will initiate easily shared KYC (know your customer) files to transfer funds between the neobank and its partners.
To date, N26 has more than seven million customers in 25 markets. The company also employs more than 1,500 employees across eight office locations, namely Berlin, Barcelona, Madrid, Milan, Paris, Vienna, New York and São Paulo
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.