Updated: Jan 29
How we buy insurance is changing. The old way called for users to go out and get policies directly from insurance carriers or their distribution channels. The new model does things differently. Rather than expect users to find policies on their own, digital insurance brings insurance to each consumer. Besides, the new sellers of insurance are not necessarily insurers, banks, or friendly neighbourhood insurance agents. Often, they are your favourite digital stores.
Policy offers are now bundled with the core offerings of these new sellers, like a warranty on electronics. They may also be embedded in the transaction process like home insurance tacked on to a home loan application. Powered by insurance tech, the new-age digital insurance platform is also leading to redesigns of traditional insurance products as well as the development of brand-new protection plans.
Insurance product development in the traditional way
Over the years, legacy insurers have designed insurance products based on historical claims, industry-wide data, and other broad-based information. These insurers also gathered information about their own customers over the years.
However, the data available was limited. That is why traditional policies have always been cookie-cutter products, often with two or three variations.
In effect, these old-school insurers were merely guessing what the customer might need. And because their insights were limited, they designed insurance products that would appeal to the majority. Once the product was ready, they would lavish money on marketing to draw customers and drive sales.
Insurance product development in the digital era
Digital technology and the new distribution models are wreaking havoc on the old value chain. Insurance as a service is spreading beyond banks and financial institutions. Digital insurance has started to show up at non-financial checkout queues and is bundled with everyday products such as furniture, mobile phones, hotel bookings, and so on.
The premise is that insurance should not be an afterthought. Risk management isn’t something you do after spending on home renovation, electronics, or travel abroad. Insurance should be an essential part of the purchase process, and insurtech is making that a reality.
We are in the era of big data, and that’s a good thing for insurance product development. What is the user buying? What do they need? What do they like? The answers to these questions help identify customer requirements and preferences. Any insights are then used to develop context-specific insurance products.
However, the data story does not end there. As more brands sell insurance online and users buy more embedded policies, their transaction history grows, giving sellers new opportunities to create fresh online products across various touchpoints.
Features of digital insurance today
More data: To attract digital consumers, an insurer today must look beyond historical data and their own database. Information like transaction history, order preferences, and location add heft to basic details like a customer’s age and gender. Data gathering will call for integration with other online sellers—not just banks or financial organizations but also eCommerce sites and online brands that consumers trust. Insurtech can make that happen.
More technology: Human underwriters cannot possibly analyse massive volumes of data in real-time. That’s where insurtech companies step in with their application programming interfaces (APIs). They bring advanced technologies like artificial intelligence (AI) and analytics to automate the underwriting process and move away from cookie-cutter protection plans. Customers receive personalized quotes at checkout, without lags, and with the option to buy insurance with just a click.
More touchpoints: With insurtech in the driving seat, insurance can appear wherever the consumer is—on an e-tail app, on a travel site, on a digital wallet interface…. The insurance platform looks different every time. Through alliances with partners from different verticals, insurers can access new data points and then use these to micro-target customers with even more relevant insurance products.
By leveraging data, technology, and new alliances, insurtech companies facilitate the process of getting the right insurance product to the right customer at both the right time and the right price.
Digital insurance product development: What lies ahead?
Data-driven insurance products are still at a nascent stage. Going forward, the focus is likely to be on hyper-relevant policy offers and the insurtech solutions that enable those offers.
Next-gen insurance solutions will cover three areas:
New products where risk protection plans do not yet exist
Complete overhaul of existing products to create new customer experiences
Minor price and feature changes to existing products
People are already buying insurance from non-traditional sellers like Amazon and IKEA. This creates value for both the buyer and the brand, as well as more conversions and higher order values. And there certainly is a huge market opportunity for online brands that enjoy their customer’s trust.
Turtlefin helps businesses grow in this untapped market. We use technology and digital distribution models to integrate policies into the digital customer journey. Turtlefin’s insurance API gives our partners access to insurance plans from leading insurers. Once the API goes live, its users can view and buy insurance directly from the sales platform.
Our insurance API collects customer data from the front end, uses analytics and AI to create tailored offers, and delivers these to the customer over digital pathways. By leveraging technology, insurtech companies like ours are building digital insurance solutions for a digital era.
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Big data is producing broad opportunities for developing and customising insurance products to create better customer experiences and value for the entire insurance ecosystem. Traditional models will continue to exist for some market segments, but insurance demand is likely to be driven by digital customers who are offered insurance at the point of sale.