Getsafe pushes for a digital-first insurance standard
The company, founded by Christian Wiens (CEO) and Marius Simon (CTO) in 2015, has so far managed to build up a client base of over 175,000. At the time of writing, its active markets include Germany (2017) and the UK (2020).
Notably, Getsafe champions a smartphone-centric model whereby customers can purchase and manage their insurance via an app, as well as file claims.
This ‘digital insurance revolution’ offers customers 24/7 service that is convenient and flexible - a paradigm that is quickly finding favour with customers and could be key to insurance’s survival.
Maintaining insurance’s relevance
Comparethemarket.com is currently one of the UK’s most popular insurance price comparison websites. As such, Getsafe’s decision to collaborate with it underscores the rapidity with which it is seeking to secure a footing in the new market.
“Getsafe is experiencing continuous growth – something the partnership with Compare The Market will drive even further,” commented Wiens. “We are determined to make digital, app-based insurance the standard throughout Europe in the coming years, and this partnership puts us on the right track.”
Getsafe also recently released the results of a study exploring British consumers’ attitudes and found a startling disparity between millennials and older generations. 50% of people aged 25 to 34 reported not taking out home contents insurance, compared to 90% of people 55 years old and beyond.
Clearly, if insurance is going to maintain its relevance, a new standard that correlates to modern expectations needs to become the norm.
The new insurance standard
COVID-19 has undeniably slowed down insurtech’s growth but it has far from halted its investment. Willis Towers Watson reported in January that the sector had netted US$7.1bn total for 2020, a new record.
These companies, which all share a digital-first, highly transparent, and flexible approach to insurance are showing the path that incumbents must follow. Digital transformation might be the foundation for the shift but it will soon be ‘table stakes’.
The true differentiator for insurance’s new standard is more likely to be the customer experience and how it’s nurtured through the mastery of digital platforms.
Image source: Getsafe
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.