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The latest thinking and expert insights into the insurance industry.
12 July 2016
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Insurance and technology: a match made in customer heaven?

The insurance industry uses technology in new ways to improve the customer experience, making processes faster and more transparent. Using a number of interesting examples, FRISS’ Chief Technology Officer Christian van Leeuwen explains how this insurance technology or ‘insurtech’ has the potential to change the insurance business for the better.

Insurance-and-technology-phone-in-water“The other day, my brother-in-law accidentally dropped his smartphone down the toilet. Such an event is a moment of truth for anyone: does my insurance company deliver what I expect? My brother-in-law immediately checked with his insurer and was told a quote from a designated repair company was needed.

This process, finding all the relevant parties and processing the quote, took a long time. In the meantime, my brother-in-law had already bought a new smartphone, because doing without was no option. He was overjoyed when he was told that he could have the phone repaired with no deductible excess . However, when actually delivering the phone at the repair shop, he was told it couldn’t be fixed. The insurer then informed him that he was only entitled to a small compensation, based on the current value of the phone minus a deductible.

 

”We all have insurance, but only when we actually have a damage or loss do we find out what it entails”

 

The outcome was absolutely a lose-lose situation. My brother-in-law was most unhappy: it had taken a long time, the process was far from transparent and the result disappointing. On the other hand, the insurance company had not been unreasonable. They just wanted to be certain the claim was correct and they had followed the policy’s rules. But they ended up with an unhappy customer.

A better customer experience

We all have insurance, but only when we actually have a damage or loss do we find out what it entails. And often it is not the happy, smooth experience both we and the insurers had envisioned. The customer’s expectations clash with the insurers’ need for certainty and truth.
I am pretty sure technology change a lot of the insurance experience. There are quite a few interesting developments in the field of insurance technology, or ‘insurtech’ for short.  We see new companies that combine a passion for insurance, customer experience and technology, discovering new ways to:

  • help the customer better
  • communicate more clearly
  • facilitate digital processes
  • improve risk assessment

Trust by blockchain

 Insurance-and-technology-Blockchain-handshakePerhaps the most important development is blockchain technology, the basic principle behind the digital currency Bitcoin. Think of a spreadsheet with data where everyone in the network has the exact same replica of the spreadsheet, so every mutation is instantly visible to everyone. The big difference from a spreadsheet is that blockchain data cannot be modified. Data can only be added, not changed and is therefore protected from hackers and viruses. And the only thing needed for data verification is computer power.   Blockchain technology has the potential to have an enormous impact on the financial world , because it automatically guarantees the validity of transactions. Everledger uses blockchain technology to register diamond certificates and their transaction history. This enables insurers to easily verify the authenticity of a certificate or a transaction. It immensely shortens the process of checking and looking for the truth, potentially speeding up the claim process.

Everything mobile

‘There’s an App for that’: customers can handle insurance matters from their mobile, without the use of an insurance broker. With apps such as Assisto and ClaimsDi, parties involved can settle the insurance side of a traffic accident on the spot without having to send in documents, maybe just adding pictures of the incident.

It gets even more interesting when insurers incorporate as much of their workflow as they can into the app: from customer data to designated third parties, such as repair shops and other experts. This offers customers a seamless digital experience when dealing with their insurance company, as they are able to see the status of a claim and get alerts of important changes. This would really have helped my brother-in-law – well, only because he had already bought a new phone, but still.

Insurance-and-technology-On-demand-insuranceMore personalization

The technology I am most enthusiastic about is on-demand insurance. Kasko develops products for various types of on-demand insurance. Trov makes it easy for customers to insure specific objects only, for a set amount of time and in the exact way you want: direct replacement, day value or maybe replacement value. Such as a beloved guitar that is taken camping for a week. Or, in my brother-in-law’s case, a same-day replacement of his phone.

The Trov App is a catalogue of all the consumer’s possessions listed by photograph, purchase date and price, type and serial number. Every object can have its own terms and conditions and any claims are dealt with within the app itself.

 ”The technology I am most enthusiastic about is on-demand insurance”

 

Transparent market places

The transparency my brother-in-law found so sadly lacking, is present in marketplaces and comparison sites. OpenClaims is a marketplace for insurers where they can request quotes for repairs from competing repair companies. OpenClaims says it improves transparency by mediating between consumer, insurer and repair company. It could have easily helped prevent the you-can-have-your-phone-repaired-oh-sorry-it-is-beyond-repair-confusion from my example. Saving a lot of time as well.
And if by any chance my brother-in-law would want to switch to a different insurance company then comparison sites such as GoBear, Independer and Confused provide consumers with greater clarity on costs and conditions.

So, where we now see customers and insurers sometimes get stuck in an unhappy relationship, I am certain that technology offers a great opportunity to get them really communicating again. This would make both parties realize that they were, and still are, a match made in heaven!

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