Trōv unlocks new revenue streams for UK insurance market
Based in San Francisco, California, Trōv’s approach combines powerful software with bespoke insurance solutions to solve problems that the incumbent industry cannot.
Embedded insurance: A revolution?
Trōv considers embedded insurance - tech-driven products offered via non-insurance-based applications - to be a revolutionary idea: brands can explore new revenue streams while simultaneously retaining customers within their existing ecosystem.
This is an approach that has notably been present in the wider finance sector for some time, making its transition into insurance seem almost inevitable.
Indeed, ecosystems are fast-becoming the inescapable edifice of modern insurance and companies need to find a way to work with them, not against them.
Shay Alon, MD and Global Lead for Life and Annuity Software at Accenture, , “[Accenture’s] insurer poll found that 82% agreed ecosystems will allow them to grow in ways that are not otherwise possible. Furthermore, approximately 75% of insurers say they will generate half of their revenue or more through ecosystems.
“The industry has been on a steady path toward fundamental change, but the pandemic has been a real inflection point for why there is no time to waste in their journey to a more digital future. Customers have moved online and insurers must meet them there.”
Empowering digital insurance brands
The success of Trōv’s approach is demonstrated by the enduring confidence which Lloyd’s Bank holds for it. Having already succeeded in launching a unique digital renters insurance product for the bank’s Halifax brand, the insurtech scaleable and easily applied technology is expected to be equally successful with the Flexible Contents Insurance offering.
“It’s exciting to work with many popular brands and empower them to offer digital insurance products with Trōv’s technology,” commented Scott Walchek, Founder and CEO.
“While renters’ insurance is one of our foundational offerings, brands that work with Trōv will be able to rapidly launch a roadmap of embedded insurance products thanks to our scalable APIs and network of insurance carrier partners.
“Distributing insurance is complex and Trōv has done the heavy lifting, simplifying this for brands, enabling them to rapidly get to market and generate recurring revenue.”
Image source: Trōv
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.